Impact investment - A story with Eleanor Bucks, Chief Investment Officer, Lloyd's
Recycling phones; jet washing using recycled water; carbon sequestration; these may not be the types of businesses which are immediately associated with the Lloyd’s insurance market, but a new investment fund created by Lloyd’s is changing that perception.
Sustainable, environment-positive businesses around the world are the target of our new initiative launched in April 2023. Called the Private Impact Fund (PIF), it invests capital lodged with Lloyd’s by organisations that support the market’s underwriting. But our new fund is not just about making a financial return, as Lloyd’s chief investment officer Eleanor Bucks emphasizes.
“The PIF is the first of a series of funds that will be available to Lloyd’s investors on what we call the Lloyd’s Investment Platform,” Bucks explains. “Although we’re seeking to generate better returns for our investors, we also want to demonstrate a direct impact on things that we care about.”
And what does the PIF care about? In short, climate change mitigation, the UN sustainability development goals and identifying those businesses operating in the circular economy that stand a strong chance of thriving in the emerging new world order. An impact fund like the PIF makes investments with the intention of generating positive, measurable social and environmental impact alongside a financial return. These goals complement our objectives of increasing climate resilience and supporting economies as they transition to net zero.
“We set out to create attractive and targeted investments that have an ESG impact,” says Bucks. “There are levels of how fund managers think about ESG. On the first, you want to understand the companies in which you’re investing. On the next, which is where the PIF sits, is to have an impact — to have specific objectives that can be measured.”
That desire to have a quantifiable impact marks out our PIF as both pioneering and market-leading, so much so that Insurance Insider magazine shortlisted the fund for its ESG Initiative of the Year 2023. “There’s not a lot of this type of investment right now,” says Bucks. “It’s cutting edge. While we’ve set up this fund on that highest impact level, others have not. They say it’s too hard. By contrast, we asked: ‘Why wouldn’t you do it?’”
The fund plans to invest in private assets such as small business and core infrastructure including wind farms and solar parks. “Investing in private assets is more challenging but by lending directly to businesses, the outcomes tend to be better,” says Bucks.
In order to manage the fund, Lloyd’s has partnered with financial institution Schroders Solutions, which works with specialist fund managers BlueOrchard and Schroders Greencoat, who form a core part of its delivery.
“I’ve done a lot of investment in this space previously,” says Bucks. “I’m passionate about it having invested in renewable wind from 2015.” What’s different about the PIF, Bucks explains, is its global scope; previously, her remit was UK-centric. She feels the bulk of ESG investing remains focused on Europe. “The thing I love about Lloyd’s is that it’s truly global. If you think about climate, it’s global by definition. Lloyd’s is really, truly a global marketplace. It doesn’t concern Lloyd’s to invest globally, which isn’t true of other institutions.”