A New Way of Approaching Investments at Ufi

Ufi VocTech Trust is furthering its mission by aligning its £50m investment portfolio using frameworks from the UN Sustainable Development Goals and appointing Credit Suisse to implement its new approach.


Reflections from Rebecca Garrod-Waters, CEO of Ufi VocTech Trust and Joe Ludlow, Impact Investment Director, Ufi Ventures

This week we have finally been able to announce the misssion-alignment of our Ufi VocTech Trust investment portfolio to further our impact in the area of skills for work. This means that our c.£50m fund will now have a holistic framework across all our funding instruments – grants, venture investment and investment capital - to support vocational educational technology and have a positive impact.

This is a significant piece of work, which we are personally very excited about, and which started as the kernel of an idea back in the early 2010s when Rebecca attended a charity investment event to ponder the question: 'What if you could use your whole investment portfolio fund to deliver impact and go beyond grant investing only?’

It is hard to imagine now, but impact investing has come a long way since the term was first used fifteen or so years ago. Pioneering charities have worked hard to think creatively about new ways of investing to increase social impact whilst achieving financial returns, and, simultaneously, the impact investing offering and product suite has also significantly matured. We have learnt greatly from people like James Perry and Mitch Kapor, and organisations including Friends Provident Foundation, Panahpur Trust, Access – The Foundation for Social Investment, and the Social Impact Investors Group.

As these developments happened, we have kept curious about the opportunity. For example, with increasing public consciousness of the social and environmental impacts of investing such as the drive to divest out of fossil-fuel investments, what if more charities could pro-actively invest their funds in more mission-aligned ways – including to bolster skills for work?

In 2019, Ufi developed our new five-year strategy, 'Learning Without Walls: Beyond 2020'. Part of that plan related to our core investment portfolio, and highlighted our early thinking.

Outside of Ufi Ventures, we also put our money in investment funds. Recognising that all of our investments have a social and environmental impact, we are looking carefully at the impact of these fund investments.

Our goal is to invest in funds that contribute towards our mission whilst continuing to generate the financial returns we need.

To achieve this, we are assessing our current portfolio, developing our investment policy, and we will then make changes to our fund investments to deliver greater impact.

What proceeded from this point forward, and as an output of our theory of change, along with advocacy, communication of best practice, and seeding new experimental ideas to the benefit of workplace learning, was a complex and positive process which enacted a new Investment Policy and Investment Strategy.

Listen to the story behind Ufi VocTech Trust’s announcement on its new investment strategy in this episode of the VocTech Podcast:

After many constructive initial Trustee conversations and processes, we coalesced a team around the idea, with an Impact Investment Director – Joe Ludlow, and a new Trustee with Impact Investing experience – Paolo Fresia, and an external advisor – Paul Blyth. We ran an extensive process to find a firm who could work with us to implement our new policy, and we were really encouraged by the quality of proposals we received from specialist impact investment firms and long-established mainstream financial institutions.

The selection process was articulated at two levels. First, it was imperative that the charity met its financial goals to support its grants and venture investing programs. Therefore, we asked first and foremost that investment firms provide us with a sound financial plan. A key way to achieve clarity on this and to avoid potentially vague board-level discussions about risk tolerance was to focus our ask on investment solutions that could match our expected cash flows by progressively switching out of equities into bonds as the charity matures.

Secondly, we asked responding firms to articulate exactly how they could squeeze as much impact as possible out of Ufi’s investments. Key to this was asking them to map out how their proposed portfolio would align to the UN SDGs closest to Ufi’s mission, after Ufi board and staff agreed on a ranking. Additionally, we asked potential managers to use the Impact Management Project framework to categorise such impact by classifying holdings into 1) potentially harmful, 2) acting to avoid harm, 3) benefiting stakeholders, or, ideally, 4) contributing to solutions to support the UN SDGs. And lastly, especially for categories 1) and 2), (i.e. investments that might be financially necessary but that are not yet per se impactful,) we asked that they articulate how they plan to engage with such companies, to support their change to become more responsible corporate citizens. At a more systemic impact level, Ufi requested that all investment firms commit to report on their own impact stewardship, and that they propose synergies to enhance the impact of Ufi’s ventures portfolio.

Ultimately, the process led to our appointment of Credit Suisse to support the delivery of the new Investment Strategy, whose team also include experts in this space including, James Gifford, Head of Impact Advisory, Credit Suisse, a world leader in impact investing, Kirill Pyshkin, senior portfolio manager for thematic investments in the area of educational technology, and Helen McDonald, the UK Head of Foundations and Impact Advisory Services at Credit Suisse, who themselves have a skills focus and have funded 61 Future Skills programs to the benefit of thousands of young people.

Our new mission-aligned investment strategy invests Ufi funds achieving impact within major social and economic themes that affect our mission, including educational technology, robotics and automation, gender equity, smart mobility, smart cities and digital health. This gives us even greater opportunity to effect change than previous fund investments which were sat in real estate and infrastructure and did not speak to our core belief in the transformative power of digital and humans put together.

This week, as we announce the shift in our investment policy and what it means, our aim is to help like-minded organisations to learn from our experience. Each organisation differs in so many ways and each will have their own journey to undertake; our hope is that our experience will be of benefit to them.

As such, please do take the time to read our forthcoming document on “how we did it” or listen to the VocTech Podcast episode on the story behind the policy change. We hope these tools will help to relay the real detail of “how” we implemented our strategy, and the processes and tools we used and some of the outcomes. These tools are not investment advice or legal advice but will hopefully help if you are setting out on a similar journey of curiosity about how to align your investments with your mission and values and we encourage you to share it with your networks.

As we go into this next phase of the pandemic, and the post-vaccine world beyond, there has never been a better time to seek out creative ways to support high-impact vocational technology and social good to help close the skills gap in the U.K for those who need that most. We are excited about the opportunity that this shift will unleash. If you would like to discuss this further, please do not hesitate to contact us.

This has been a hugely important piece of work for Ufi (and for me personally). We passionately believe in the power of vocational education and the importance of good technology to support it.

Working with Credit Suisse to achieve the best possible positive impact from our investments is an important part of our commitment to both the sector and positive social impact more widely.

Rebecca Garrod-Waters, CEO of Ufi VocTech Trust

Ufi’s new investment strategy completes our aim at Ufi to aligning 100% of our resources and activity with our mission, and to join the group of pioneering charitable foundations innovating in this way. The impact investing field has matured significantly such that we can now take this approach.

The impact of new technologies and the pandemic on jobs and employment, especially for the most disadvantaged in society, means we need to lever more investment to solve some of the biggest problems in skills development for the underserved.

Joe Ludlow, Impact Investment Director of Ufi Ventures

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Investing for Impact: changing the portfolio

How Ufi aligned the investment portfolio with the UN's sustainable development goals

Read the report