A conversation between Gurmeet Kaur, Principal, Impact Investing at NPC, and Shamez Alibhai, Head of Community Housing and Managing Director at Man Global Private Markets (Man GPM).
As a key player in the social investment market in the UK, NPC has a long track record of working alongside investment managers, supporting design and implementation of rigorous impact due diligence. One of them is MAN GPM, a community housing fund manager who NPC has been working with since 2019, setting up a social impact framework to guide their due diligence on impact of potential investments. In line with the good practice in the sector, MAN GPM have integrated impact due diligence deeply with the investment process, where NPC represents the ‘impact voice’ on the investment committee reviewing impact of potential investments under consideration. As the MAN GPM Community Housing Fund comes to the end of its investment period, we spoke with them about their views on the importance of rigorous impact due diligence.
Gurmeet: Hi Shamez, could you say a little about why Man GPM wanted an impact partner in the first place and what expertise you were looking for?
Man GPM’s Community Housing team delivers new, high-quality housing in the UK, which is affordable to low- and median-income households; including key workers and young families. However, equally important to us is considering how households will live in their new homes including, for example, schools, transport and local amenities – the lived experience. To evaluate the impact of our homes on the households and communities where we invest, we sought to create a robust impact framework. To ensure that our impact framework would be able to give a better insight into our investment activities we looked for a partner with experience in investments, real estate, and the evaluation of social and environmental impacts.
Our ‘Impact Framework’ is transparent, quantifiable and is used to assess potential investment opportunities and report against it. We believe it is best practice to benchmark our impact, and by partnering with an organisation like NPC we can ensure we incorporate an independent perspective in the development of our Impact Framework and our investment process.
Gurmeet: What support did you need initially and how has that changed over the years?
Firstly, we wanted to ensure that we had a high-quality framework for assessing social and environmental impact, and that we followed the advice and guidelines provided by NPC. To do so, we included NPC in our decision-making processes, through various meetings and discussions. We also shared our annual impact audit report with NPC, prior to publication, for input.
Thinking back to when we first started working together, three years ago, an area of focus for us was to analyse in detail the local communities, and in particular the schools, within the areas we were looking to develop. This included considering local school capacities, Ofsted ratings, and transport connections.
More recently, in one of our latest developments (a Net Zero project) we discussed energy generation with NPC, specifically whether it would be generated on or off site. There was a specific focus on how net zero is determined, in respect of regulated carbon from heating, hot water, and the lighting of the homes. It is conversations like this that help us to continue evolving and improving our developments; ensuring that the homes that we are building are future proofed, as energy saving initiatives continue to change alongside social drivers.
Gurmeet: What has been the experience of your investment teams in having NPC on the investment committee as an impact partner? Where was NPC’s input particularly helpful?
The experience has been a really good one. NPC offer insightful feedback and challenge us to be better, think outside the box, and consider different viewpoints during our decision-making processes. We work in collaboration, so we can develop the decarbonisation agenda together. NPC bring particular expertise in areas that focus on ecological sustainability, and we have continued to develop our sophisticated research and analysis in this area over the past few years.
Gurmeet: What’s the biggest thing you’ve learnt about balancing impact due diligence with financial due diligence?
We aim to apply the impact lens when evaluating our developments, as well as the financial one. A project has to work for us on both fronts for it to be really worthwhile. We aim to achieve the dual objective of providing attractive financial returns and well defined social and environmental outcomes, accelerating the provision of new affordable homes in the UK. We strongly believe that social outcomes and financial returns are complementary.
Gurmeet: Based on Man GPM’s experience, what advice do you have for other fund managers who are looking to raise impact venture funds, especially around impact measurement expertise?
We would encourage them to establish an Impact Framework as early as possible, and to seek the advice and opinions of experts when curating this framework. By partnering with an organisation like NPC, we’ve been able to hold ourselves to the highest standards and remain accountable. Alongside this, I’d encourage managers to be bold and brave and know it is possible to deliver meaningful projects that positively impact both residents and the wider community, while achieving positive returns for investors.
If you’re a social housing fund manager looking to develop your impact practice and you would like to learn more or enquire as to how NPC might support you, please do get in touch with Gurmeet.