Grant-maker puts £10m towards experimental investment scheme

The Esmée Fairbairn Foundation will put £10m towards an experimental investing pilot aimed at producing financial returns that have a positive societal and environmental impact.

The grant-maker will take the money from its investment portfolio and target investments that have a clear and articulated social or environmental purpose that aligns with its impact goals.

The foundation said that in contrast to its social investing, it would invest exclusively in funds rather than direct investments, and investments would not need to have a UK-only focus.

Funds will be required to target, and report on, social or environmental performance as well as financial.

It plans to use the pilot to inform its longer-term investment strategy.

Ben Smith, head of social investment at the Esmée Fairbairn Foundation, said: “The financial world is changing and seeking financial returns alone without giving any regard to the effect investments have to society and nature is unacceptable.

“We believe that investment can be a force for good. Based on the learnings of our extensive experience in social investment, and the positive work we have achieved through our ESG, testing impact investing in this way may inform how we invest our endowment and, we hope, influence others, whilst having a positive benefit to society and the environment.”

Sarah Gordon, chief executive of the Impact Investing Institute, welcomed the pilot.

“Their thoughtful, experimental approach to this area, with a view to further developing their long-term investment strategy, is one we heartily endorse.

“We hope that their commitment to deliver this £10m of investment with impact, while delivering a risk-adjusted market rate return, will inspire others to do the same,” she said.

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