Schroders Capital: Tangible positive change delivered by private markets business

November 13, 2024

Schroders Capital today publishes its Sustainability and Impact report evidencing how the firm’s private markets' commitments are contributing to decarbonisation and societal progress, while meetings clients’ return expectations and focus on delivering positive change.

The report offers in-depth insights into Schroders Capital’s investment focus on environmental and social issues across infrastructure, private equity, real estate and private debt and credit alternatives, while demonstrating the critical importance of sustainability in delivering long-term, competitive returns for private assets investors.

Georg Wunderlin, CEO, Schroders Capital, said:

'Sustainability is more critical than ever to deliver long-term competitive returns. It is simply a once in a generation business opportunity. Our ambition is to build a new type of private markets firm, one which is anchored in sustainability and delivers the superior performance and real-world difference our clients expect from us.'

Significant progress was made across all of Schroders Capital’s business lines throughout 2023 and the first half of 2024. The report spotlights the work Schroders Capital’s teams have been doing through detailed case studies for each asset class.

To date, Schroders Greencoat, Schroders Capital’s specialist renewables and energy transition infrastructure manager, has invested $12.6 billion across wind, solar and energy transition assets, generating 12.3TWh of renewable energy, avoiding 5.7 million tonnes of CO₂ compared to what would have been generated by non-renewable energy sources, and powering 3.6 million homes. As at 2023, it was the largest investor in UK green hydrogen.

Last year in the UK, Schroders Greencoat was also the first to launch a renewables-focused LTAF and a sister global semi-liquid Article 9 fund, recognising that broadening accessibility to private markets is crucial for steering more investments towards sustainability.

Evidencing Schroders Capital’s commitment to sustainability and impact, 64% of our General Partners were UN Principles for Responsible Investment signatories in 2023, rising from 52% in 2022. Furthermore, Schroders Capital’s private equity SDGs-aligned co-investments have achieved 32% Net IRR, underlining our ability to balance financial returns with sustainable impact.

As the private credit market is set to double to $2.8 trillion by 2028, Schroders Capital reports the closing of its seventh sustainability linked loan by the infrastructure debt business, spearheading efforts to future-proof strategic infrastructure.

Meanwhile, Schroders Capital reports that, to date, $817 million has been invested in Insurance-Linked Securities transactions specifically designed to contribute to reducing the 'insurance protection gap'. This is vital as, for example, in Asia, an alarming 85% of economic losses from natural disasters between 2014 and 2023 remained uninsured.

Schroders Capital has also delivered impact through its real estate business. With 1.29 million UK households on housing waiting lists, the Schroders Capital Real Estate Impact Fund, which has recently received £50 million from Homes England, has been focused on addressing the shortage in social and affordable accommodation, as well as the regeneration of town centres.

More generally, there is a significant opportunity to deliver new homes in areas of high demand in Europe, seeking to maximise our positive contribution to the lives of residents, improving their ability to work, study and be healthier.

Schroders Capital also invested about $1 billion across 175 transactions through its impact investing specialist BlueOrchard, following the assessment of 444 investment opportunities.

Maria Teresa Zappia, Head of Sustainability and Impact Schroders Capital, and Global Head of Impact Schroders, Deputy CEO BlueOrchard, said:

'Investors remain committed to sustainable and impact investing, despite immense challenges. We see a strong, ever-growing client demand for sustainable and impact investing across all segments and geographies. To deliver above and beyond on their imperatives, we strive to combine agile, diverse Sustainability and Impact capabilities with a seamless execution approach.'

Ingo Heinen, Global Head of Business Development at Schroders Capital, added:

'This business is not about us - it is about those who entrust us with their money to drive change and create value. Building on Schroders firmwide strengths and distinctive approach, we are here to solve investor needs with end-to-end propositions.'