12. Jeremy Rogers, CIO, Better Society Capital - Investing for Impact Without Losing Sight of Returns

In this episode of The CIO Chair Podcast, we speak with Jeremy Rogers, Chief Investment Officer at Better Society Capital, about the evolution of impact investing and the role investment can play in tackling some of the UK's most pressing social and environmental challenges.

Jeremy brings a particularly interesting perspective to the conversation, having worked across both the financial and social sectors, including a senior role at JP Morgan, Big Issue Invest and The Prince's Trust. At Better Society Capital, he has spent more than a decade investing in and helping to develop the UK's social impact investment market.

Jeremy shares his perspective on how financial returns and positive social outcomes can work together, rather than treating impact as something separate from investment decision-making. He also reflects on his experience helping to develop the UK's social impact investment market and the importance of experimentation, collaboration and looking beyond traditional investment frameworks.

The conversation explores impact investing, systemic change, social investment and investment opportunities, as well as the challenges of measuring impact and identifying where capital can genuinely make a difference.

Finally, Jeremy reflects on what he's learned during his time at Better Society Capital, what he's most proud of and his advice for people beginning their careers in investment. His message is simple: rather than trying to predict exactly where the industry is heading, find an environment with a steep learning curve, a strong culture and opportunities to deliver good ideas.

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SPEAKER_00 0:09

Welcome to the CIO Chair, a collaboration between the CIO Investment Club and Pension Insurance Corporation, hosted by me, Sean Thompson. And me, Heart Edge Singh. The CIO Chair's guest today is Jeremy Rogers. Jeremy has been the Chief Investment Officer at Better Society Capital since 2013. He has over 25 years of experience in the charitable and investment sectors with over 15 years in impact investing. Jeremy set up and ran JP Morgan's European High Yield Trading Group, growing it to become the market leader. He has held multiple voluntary and non-executive roles at charities and social enterprises, including the Prince's Trust, Big Issue Invest, Pilot Light, Lanka Lee Chase, and the Rockefeller Foundation. He is also a member of Access, the Foundation for Social Investments Joint Investment Committee and an industrial professor at UCL, teaching impact investing. As we will find out today, Jeremy is passionate about finding sustainable ways to tackle social challenges and using them to improve people's lives. Welcome to the CIO chair, Jeremy. It is a pleasure to have you here. I hope you are sitting comfortably. So far, yes. Thanks for inviting me on.

SPEAKER_01 1:31

Really looking forward to the conversation. Fantastic. So, Jeremy, great to bump into you professionally again. Let's start at the very beginning. What was your first job? Thanks, Sartaj. So my first proper job was working in the back office in SG Warburg, now part of UBS. So I left school at 18, pretty keen to get into investment, sent my CVs to a lot of banks. Didn't hear that much back. I think I eventually ended up standing outside banks' offices with my CV until somebody took pity of me and got me a job in Futures Reconciliations. Definitely not the best job in finance. And I think most of it has been automated by now. I guess I showed I I could do that. So they offered me the chance to move to the futures trading floor, you know, the place with colored jackets you've seen where people sort of shout and sign at each other. And I really got my first chance then to put on trades. It wasn't planned, but actually the trading pit was a pretty incredible place to start if you were interested in markets and getting a sense of how people respond to news, uh, emotion, all the things that, all the things that drive stuff. That's great. So that was obviously a really uh unique first job. Um and then how did that lead to where you are today? So I did then end up going to university, um, after which I joined JP Morgan and where we first met Hartage. Um I was tasked there to set up uh a European high-yield trading desk. This was the late 90s. The uh high yield market was just getting started, the euro was about to arrive, which would sort of allow a deeper and more diversified market. Um, so their plan to train me up was to send me to work with the more experienced high-yield traders in New York, but to trade London hours from there. So each day I would arrive at JP Morgan's offices on 60 Wall Street at 2 a.m., sit alone on a 300-person trading floor, um, trading with European clients. The other traders would then arrive at 7 a.m. to see how I had done. And definitely, you know, trading can be a pretty humbling experience on the rapid feedback when you get it wrong, perhaps especially when you're doing it by yourself. So I'm not sure it started very well, but I think it got better. So, you know, as you've heard, over the next decade, um we then built that business out. We added credit derivatives, we added distressed. And I was lucky enough to become JP Morgan's uh youngest managing director globally in my in my late 20s. Um after JP Morgan, I took on advisory roles, including as a partner in an event-driven hedge fund. Actually, really important to be building that multi-asset experience that maybe we can come back to, joining some of the investment committees uh you just heard about before joining the SC as their CIO shortly after their founding in 2013. And really since then, uh I've been building out the team, uh, approach, portfolio. We've now committed over a billion into social impact investments across the UK and helped bring in over four billion from other investors. And so, you know, there's obviously a huge amount of sort of variation there in terms of your journey. What was there serendipity? Did the did things just happen as you were doing them, or was there a long-term plan that brought you to sort of something like what you're doing today? There was there was definitely a plan, but I've also had, I think, my share of lucky breaks. Um, actually, a notable one was when Chase bought J.K. Morgan in 2000. Much of the New York high-yield desk I was on lost their jobs. Anyone who's been through a bank merger will know how arbitrary those processes can be. So I kept mine, but actually I only found out why later. So um a client of ours, Andrew Jessop, who ran high yield at Goldman Sachs Asset Management, had rung, he rung my new boss and he said that the kid on the KPM desk you should keep. I believe he said something like, I had good ideas, worked hard, and tried to do the right thing. So definitely taught me the importance pretty early on of doing a good job for your clients. Absolutely. And and did your background influence your direction? Uh, because it feels like a non-traditional journey. Look, I'm I'm I'm sure it did. Um so I grew up around the world. Uh, my dad worked for the British Council, my mum was a maths professor, she ran charities, and both certainly influenced me to want to deliver positive change in the world. I think, in some ways, we lived in South Korea, Philippines, Pakistan. I think in all those countries, you could really see firsthand the power of capitalism and companies to bring people out of poverty. And so I think I've been fascinated ever since in terms of what markets can do and where investing really can be a force for good. And I guess a final question before we go on to your actual role today. Uh, so there's obviously many ways of doing good in the world. Sort of how did you choose this one? So I think my original plan actually leaving JP Morgan was to go and directly run charities and social enterprises, perhaps slightly naively. Um, I think I realized quite quickly that um, you know, while I loved investing, I was lucky enough to be doing well in that. I didn't necessarily have the same same skills and talents to jump into the social enterprise world. So uh I joined actually the investment committee of an impact fund, um, actually started to see what was possible in terms of investing to uh deliver good in different ways. So that really sort of brought me to this world and and and ultimately the job of ESC. That's amazing. So on to better society capital. Um, what is it and how did it start? So I guess simply we're we're a market steward and an investor on a mission to grow the amount of capital tackling social issues in the UK. We were founded by Sir Ronald Cohen, who is the founder of the private equity fund Apex, and also Nico Donohoe, you might remember Heartge, who was the former global head of research at JP Borgan. Um and our capital came from Dormut Bank accounts, and then investments from Lloyd's, NatWest, Barclays, and HSDC. And so does better society capital exist because there's a lack of funding elsewhere, or does it serve in another way? So to an extent, yes. Um we act as an early stage investor for impact investment vehicles. Um there's lots of good reasons, I guess, why many investors don't look at unproven funds. So we invest to develop those high potential ideas and ultimately create the proof points that investors need to deploy capital that will enable those areas to scale. That's great. And and what was better society capital like when you joined it? Like how how early in its journey was it? So it was about 20 people. We had deployed, I think, about um about 20 million of capital, that that that sort of order order of magnitude. Actually, one of the things um you learn when entities like that are set up, often with um government-linked um that they happen slowly and then very quickly when government decides to sort of get them going. So even though some of the planning had been going on for some time, actually, we were then sort of really thrown into it at the deep end in terms of, you know, with this significant amount of capital to put to work and in what at the time was a pretty, pretty small market. Yeah, absolutely. So so what does success mean for better society capital? And are there any measurements that you show various stakeholders? Yeah, so the key success measures for our are the growth and sustainability of the social investment market and also the social impact of our investments. So since our inception in 2012, we've now helped grow that market 13x to just over 11 billion. Um, our investments now support over 4,000 enterprises. So across the country, I think they reach over 15 million people and they deliver measurable social outcomes that we see at each of those individual companies across housing, health, economic opportunity, climate, uh, and energy. But I think crucial for our own long-term success, and certainly my job is generating good returns across our portfolio that ultimately attracts more capital and also delivers our own uh long-term sustainability. That's brilliant. Now, so so just for my understanding and also to bring it to life a bit, could you give us an understanding of what type of assets you invest in? And just, you know, an example or two from each type if that's possible. Sure. So about a third of our portfolio is direct lending of different types. So those are SME loans to enterprises delivering local services such as health and education or local community energy. Uh, we invest through funds and also social banks, targeting uh 5 to 10% returns sort of across all of those different vehicles. A typical underlying investment there would be something like Bradford Trident that works in a deprived area, delivering local community centers, nursery, health services, uh, and sports facilities. Then another third of our portfolio is social and affordable housing. So this targets 6 to 8% returns. Um, I think, as we all know, the need here is significant, over a million people on housing waiting lists. Um, yeah, as a country, we've really significantly underinvested in new housing since the financial crisis. The issue in London actually is particularly stark. So we're now at the point where, in the average London primary school classroom, one child will be homeless. Um, and an example of investment there that really helps that challenge is the residents housing pathway fund. So that provides accommodation to those families to ensure they have a permanent place to live with revenue coming from government payments. Then the balance of the portfolio is split between three areas. There's impact venture, that's early stage investments in impact businesses, harnessing technology, targeting 10 to 15% net return. So, an example there is Switchy, which delivers smart thermostats for social housing. The next area, actually, which we think is a really interesting one, is something called social outcomes contracts. Uh, this targets 6 to 8% returns. This is where investor money is used upfront for a particular preventative intervention. That might be children on the edge of care or youth unemployment with payments from governments for then delivering those social outcomes. Um it's probably, if you like, the ultimate non-correlated asset class. We saw this in our portfolio most clearly in 2022. You remember bonds were down, equities were down, but our social outcomes contracts really were continuing to deliver high-digit single returns. Um, and then finally, there's intermediary investments that we make to help grow the market, social banks, arrangers, uh, other companies like that.

SPEAKER_00 12:16

So, Jeremy, how do you decide on what areas you're going to allocate your monies to?

SPEAKER_01 12:23

Um, yeah, so I think we probably do this quite differently from from many of the people that are on your on your podcast. So given our market creation mandate, what we do is we start with the social issue. We're looking for those areas where investment can be a significant part of the solution. There are lots of places it can't to be clear, but in the right place and at the right time, we see how investment can be transformational. Um, we're then looking for those areas that can bring in significant amounts of capital. So we underwrite in price investments where others will be um willing to uh to invest over time. So we are um deploying capital uh for where we see opportunities. We do then allocate across our portfolio. So we size, if you like, much more on financial risk return so that our portfolio will deliver um good financial outcomes across multiple scenarios for us. So we're picking what to do by where we see where the greatest opportunities are, and then we're sizing in our portfolio for our own financial return and long-term sustainability.

SPEAKER_00 13:25

And are these monies managed externally, or do you manage them in-house yourselves?

SPEAKER_01 13:32

So a little bit of both. We invest direct where we are catalyzing new areas, but in the majority of our portfolio, and very much what we are aiming for over time is to work with other managers because ultimately we believe that they can bring in more capital. We, you know, our sort of key objective for us, I guess, is growing the market rather than being the market.

SPEAKER_00 13:51

So, in essence, are you are you sort of a fund of asset managers? Effectively.

SPEAKER_01 13:58

So that is um about 80% by value, much less by by number. But certainly when we think about where we want to get to, which is seeding areas and ultimately scaling them by bringing in capital for others, then uh we think we do that much more effectively through through working with leading managers, leading venture managers, leading property managers, leading lending managers, et cetera.

SPEAKER_00 14:20

So, what what are the types of institutions that actually um allocate money to you? I mean, who who's actually investing with you?

SPEAKER_01 14:29

So most of the capital we run is our own permanent capital, actually from our from our original shareholders. We do also run a listed investment trust with Schroeder's, the Schroeder BSC Social Impact Trust, the investors in that are pension funds, family offices, um uh foundations. Um, but the majority of investors who invest alongside in all of the different investments that we are are are institutional investors. They're seeking ultimately market rate returns for their objectives in different ways.

SPEAKER_00 14:59

And do you see interest growing from institutional investors wanting to invest in in products like what you're offering?

SPEAKER_01 15:07

Well, the market's been growing a lot. So I guess that gives you some indication. And look, I think a really important thing beyond the returns on offer is uh the diversification benefits for our types of investment. That's certainly something investors are looking for uh a lot currently. So many of our investments have a pretty low correlation to mainstream markets, you know, with revenue sources that are pretty stable through uh economic cycles. We saw that through COVID, for example, in terms of our affordable housing investments and others. So there are often multiple factors over and above the financial return or the impact that people might be looking for, the types of investments we're making for their portfolios. That's great. So, what does the day-to-day role that you fulfill as CIO of Better Society Capital entail, like day-to-day? So a lot of it is the same as other CIOs. Yeah, it's building a picture of economies and markets, it's developing our pipeline and portfolio, it's considering portfolio construction to balance those different objectives that you've heard, building our team and approach. Um, but there are, I think, some things that are different. So, given our market capitalist role, I spend more time working out what's needed to create new markets, how you support emerging business models. And really, a crucial part of my role is building the partnerships that can help us get there. And you have built a team sort of at JP Morgan, you've also built a team at Better Society Capital. How do the people that sort of come together in those organizations, how are they different? Yeah, so I think first thing I'd say is I'm really lucky, I think, to have some of the best people I've ever worked with at BSC. Um the heartge, I would say the mindset is pretty similar to that we that we knew at JP Morgan. So they're ambitious, they're structured thinkers, they're focused on development and growth. Um also pretty important for us there is a sense of social purpose. What we do is pretty hard. Um, and you need people who are um resilient and committed to that, about delivering genuine change. One of the things we see actually is that quite a lot of our team have direct lived experience, either themselves or through their family, for the social issues that um that we're aiming to tackle. Uh, we also are consciously bringing in people from all of the different markets that we interact with. Do you think it helps make better decisions? We hire people from government, we hire people from the social enterprise sector as well as uh more traditional routes. And and just to sort of follow up there, um, have many people that uh come to BSC for roles, have they worked sort of on purely financial outcomes to start with and then come? Or do you think a lot of people chose never to sort of go to financial only outcomes? Definitely a portion have. And actually, when people ask me, as they often do, who are looking to get into the industry what they should do, I really encourage them to find the best possible job they can, you know, where they can learn the most. I don't think that needs to be in a, you know, ultimately the skills we need to do our job well are the same skills. We're just um targeting and addressing it in a different market. That yeah, that makes sense. So, sort of going to the portfolio now and your um sort of investment process, and what are the core principles or filters that guide your investment philosophy? So almost what won't make it past the sort of like basic filter that you'd do? Yeah, so I guess we touched on sort of some of how we think about constructing the portfolio. That's starting with the social issue, the sustainable business models. Um actually, a key filter for us that we've developed over time is really seeking out those areas where delivering and measuring impact is integral to the business model. Um, what we call impact as a source of value. So, for example, if you're tackling homelessness through government revenue sources, it's important that you can evidence and show the impact that you're delivering, or actually, in some cases, where the impact business is best placed to win in a competitive area. So, for example, a salary finance provider who can evidence to corporate customers the positive impact their product has on employee well-being. So, you know, we're looking for those places that can both deliver high impact, but also where impact can win ultimately. And what tends to feed your funnel of opportunity sets? Is it the external partners you work with, or do some come to you and then you sort of work with your external partners? What does that process look like? So we we track about 50 business model groups that um uh that we are interested in or invested in. So that might be areas such as community renewables or supported accommodation for survivors of domestic abuse. Um, we then either work with existing managers, we look for new managers um in those areas, or we co-design new products. Actually, when you look at those areas that are in our portfolio today, a lot of them we've originally seeded through call for funds or co-creating with new managers. So you take an example in social outcomes contract, we started investing direct, we then invested in arrangers who could help create new investments, we then cornerstoned new funds, and today we are helping scaling those funds as the uh as the product is become more successful. And then when you sort of have the opportunity that looks interesting, what's the process from there? So let's say, let's say what's your due diligence investment committee type process? Yep. So again, a lot of it will look familiar. Um, pre-DD screening, quick nose where appropriate, then detailed diligence on market, financials, team, referencing, especially important for us actually in uh working in new markets. Um maybe some of the differences is are we run a parallel process on the impact case with the same rigor. We use a proprietary tool called the Impact Canvas that forces us to be explicit on the change we think the business creates, uh, how we'll measure that. And you know, if the impact doesn't stack up, as you've heard, then that will that we think that calls into question the financial case as well. Um I think uh an important part we think we have edge on the on the investment process is both insights from the current portfolio. You've heard the scale of it, but also drawing on parts of BFC from beyond the investment team. So in our organization today, we have a policy team who can provide great perspectives. We run Impact VC, which is a global uh network of a thousand impact funds. We run a website called Good Finance that enterprises use to look for investment. That's had 700,000 unique users so far. So all of those are primarily set up for market building, but they also really help us build a much more complete picture of the market and what might be possible.

SPEAKER_00 21:41

So, with all of these different types of investments, I'm assuming that the way you measure them is slightly different to how asset managers generally would uh measure uh the assets that they're investing in. Because you're looking at social outcomes, you're looking at impact investing, etc. So, how do you actually go about measuring the risk? Score or the outcome for each of the uh investments that you might make.

SPEAKER_01 22:06

I mean, in terms of financial risk return, we will be looking at much like um any asset manager will. I mean, that's important for us, but it's also important because our goal ultimately is to bring in other um other managers who will be looking at it on on very similar metrics. Um importantly, though, alongside that, we're also um aiming to measure in depth the impact that's taking place. But then at the portfolio level, we're also looking to measure um what we call systems change or market development. So, where where can we evidence that there are shifts in um shifts in markets, both market growth, but also actually sort of shifts in mindset, shifts in um in behaviors that um that suggest we're moving in the right direction in terms of in terms of developing the market that we want to?

SPEAKER_00 22:54

And how about investors who who might suggest that investing in these types of um funds or or mandates might not generate the type of financial return that other types of asset classes might do you see that changing? I mean, I'm assuming it must be, but but is it more about that you're you're taking a hit on your return because you actually you want better outcomes on the impact or social side of things?

SPEAKER_01 23:22

They're definitely not. For the for the majority of the investments um that we make, and also the majority of investors who are investing in this world, they are looking for them to play an equivalent part in the portfolio and other assets and you know the track records of many of the funds that we invest in who are on fund two, three, four are sharing that if you like. I mean, one thing that um maybe makes it a little bit more complicated is there is a smaller portion of our market that is concessionary in nature. It might be making um concessionary loans to microenterprises. That's often supported by governments and foundations. Foundations will not invest in that from the endowment, they'll invest in it from a sort of a program-related um investment bot. But when you look at that 11 billion and sort of the market composition, you know, that the size of that area is you know is less than 500 million or something. So the for the vast majority of the market, it's institutional investors, and that's really what's changed actually in the last decade. It's institutional investors becoming comfortable that this is an area that can play an important part in their portfolios.

SPEAKER_00 24:25

Thank you. And and in terms of um an example perhaps of an investment that um that maybe you're sort of quite proud of in terms of it producing both a strong economic return and also made a strong social impact. I mean, is there an example that you could give us?

SPEAKER_01 24:41

Sure. So um, yeah, so so one area we identified, um, I think it was back in 2015, was uh tackling the poverty premium. You know, so starting with the social issue, working out what are the business models that can tackle that. So that the poverty premium is the fact that people on low incomes often pay more for certain goods and services, such as fuel and finance, and at least some of that issue actually can be solved by business model innovation. So we worked with the Joseph Roundtree Foundation, who are a leading expert on UK poverty to better understand the issue. We commissioned research from Bristol University. We set up a Sai by Design program to influence policy, and then importantly, we then cornerston of a venture fund with Ascension Ventures to seed new tech business models. The Joseph Roundtree Foundation also then invested out of their endowment into that fund with us. Um today that fund has supported businesses that have helped save over 300 million uh for those suffering the poverty premium that was tracking to a uh to a 14% IRR so far.

SPEAKER_00 25:43

That's amazing. Well done. Um, and I'm obviously going to have to ask this question. So that was a good example of one. What about one where an investment perhaps didn't actually work out? I mean, more so, you know, what are the reasons why you might have come out of a particular investment that you might have invested in?

SPEAKER_01 26:02

Yeah, so our investment in market infrastructure have been definitely been a mixed bag. Um, 10 years ago, we backed crowdfunding platforms, arrangers, firms whose job was to package deal and bring investors in. Uh, we believed at the time that crowdfunding could become a meaningful part of the investment landscape. We really like the technology, the lower cost, the idea you could widen access to who gets to invest into a social enterprise. Um it's fair to say that thesis didn't play out, um, and not helped by changes in regulation, but also more fundamentally, the quantity and quantity wasn't there for the investments that were distributed. I think you've seen the same actually in the more commercially driven crowdfunding universe, interestingly. Um, yeah, some of our other infrastructure investments have definitely been better, an equity investment in a social bank delivering high teens returns, many of our GP investments compounding as they deliver AUM growth. But um, yeah, definitely the crowdfunding investments are one we got very wrong. And sort of talking about the size of the opportunity, I guess one of the questions um that I'd love to ask is are you turning away lots of opportunities? If you had 10 times the amount of capital, would you be able to invest it without uh compromising your return on capital or risk tolerance? It's always a challenge to us. I mean, if they could deploy 10x for capital. Um I think the answer is yes, but over time, you don't you don't want to scale anything too quickly. So the markets we operate in are really significant. Health, housing, energy, if you think about the portion those are of the economy, and just the investment gap and affordable housing over the next decade is over 100 billion, to give you some idea. Um, you know, when you think of all of the uncertain paths for markets, technology, that's a demand that's not going away, actually, which is one reason it's quite attractive to investors. Um, you know, again, perhaps unusually. You know, we operate in areas with significant shortages of capital. Actually, when you go back six or seven years when spreads were very tight, that was also the case in our universe. It's often been the case that there's too little capital. It means our managers are able to be pretty selective in finding the best opportunities, but it also means I think the returns can be pretty resilient actually to increased investment. And and sort of in terms of, let's say, the societal impact, um I I know you mentioned earlier on uh sort of youth unemployment or or I guess there's that phraseology like NEETs. Um are there societal contracts that are trying to get younger people who are outside of the job and training market into the job market? Uh definitely. So actually, a um a program we worked on with government uh last year was something called the Better Futures Fund. So this is a social outcomes contract program. Um it's trying to tackle um exactly that issue and it will ultimately help about 200,000 young people. As I mentioned, it's a 500 million fund. Um, and the types of interventions that it will be supporting are exactly those that help that transition into employment. Um, we that came from, I think, uh quite a lot of the evidence that we could show about what was working already across the our portfolio. We did some research that showed for every pound that had been invested in social outcomes contracts to date, it's led to uh more than nine pounds of social value. So yeah, it's the the positive evidence for those sort of big national issues that that leads to you know some of these sort of future programs. Absolutely. That sounds like a really important one to tackle. So you talked about at the very start, uh it was you know, UK dormant accounts and there's a lot of sort of UK involvement. Will better society capital always be a UK sort of focused entity? So our balance sheet has this targeted UK mandate. Um yeah, it's where our expertise lies. Um I think my thought is, you know, for today, there's more than enough for for us to do that.

SPEAKER_00 30:05

What about other institutional investors who might not be investing as much as maybe they should in the UK? What would you say about that? And how can we convince them to do more and more perhaps with yourselves?

SPEAKER_01 30:19

So I think a really important thing, given some of the conversations that are happening currently, is that nobody should be mandated to invest more in the UK. It always needs to work to their objectives. Um, we certainly believe we need to deliver the returns to earn a place in people's portfolios. Um, actually, listening to some of your previous shows, I think people have talked about incentives, they can definitely help. Um, we already make use actually in some of our investments, the guarantees and tax reliefs that uh uh that exist. We also work with government where they may need to do more to attract investment. You know, I think actually our main experience working with institutional investors who are interested uh in investing more in the UK, it's about making it easier for them to do so. Um there's often barriers, including regulation and that. So, for example, at the moment we're working with DC Masters Trust, where obviously there's some challenges there around daily pricing and others. Interesting, when they look at our set of investments, they really value the returns and the diversification. But for them, it's also a chance to invest in areas that matter to their beneficiaries. Um Legal in General did quite an interesting survey recently where they found that 60% of pension savers would engage more with their pension if they knew it was tackling real-world issues such as housing, especially in the UK. So, as I think your listeners will know well, actually the biggest constraint on good uh retirement outcomes for most people in the UK is lack of engagement with their pensions. Um, and there's increasing evidence, actually, that some allocation to UK investments can really help with that. So I think for any set of institutional investors, it's about um, you know, is there a reason for it in the portfolio around risk return diversification? And then are there also additional reasons for their beneficiaries why why this might this might be interesting to them?

SPEAKER_00 32:05

I think you're absolutely right. And I think more so around the DC side of things as well. So I totally agree with you on that. Do you um or or does the government still play a role um within Better Society Capital? Do you still work with them or do they still advise you in any way such?

SPEAKER_01 32:21

So so we're they're a really important partner to us. Um we're fully independent from them, which um I could tell you has definitely been a good thing over the last decade, if you think of all the change that's happened. Um but look, they're a really important counterparty for us. They're a customer for many of our investments. Um, as we've talked about, they're a potential source of incentives to help drive investments into areas they care about. But ultimately, you know, we need to be providing in the businesses that we support higher impact at a lower cost, um, you know, helping them with their policy priorities. We don't have any um have any right for that. But given the knowledge that we have of what it takes to bring investors into different areas, actually, they're often really interested to talk to us about the the policy priorities that they have. And you know, most noticeably, uh, you know, our new prime minister on his first day in Downing Street obviously said that his first priority was tackling homelessness. And for him to do that effectively, uh certainly investment needs to be uh an important part of that.

SPEAKER_00 33:20

Do you still have access to dormant bank accounts that uh are still out there today?

SPEAKER_01 33:26

Yeah, so interestingly, the the amount of dormant bank accounts is much greater than actually we we we first thought. So um it started with just bank accounts, but actually it's moving now into new areas such as insurance. The crucial thing here is that um, you know, those are um those are accounts that nobody has touched for 15 years. They go into something called the reclaim fund. And if anybody ever comes back, then those funds are available for people to uh receive. But the government has effectively backstopped it because actually people don't tend to go back after a after a certain period, whatever that change in in life has been that they leave that behind. So, yep, there are uh ongoing allocations of dormant bank accounts. There are um a handful of entities today that can benefit from them. So it's not just us as an organization, there's also an organization that um focuses on financial inclusion, there's an organization that um focuses on youth, um, another one that focuses on social investment. So um, yeah, that's where we are today.

SPEAKER_00 34:28

Excellent. And um I started off by saying that you're very passionate about uh finding uh sustainable ways to tackle social challenges, and and clearly what we're hearing today um from you is exactly that. So I'm interested to learn from you. So since you've been with Better Society Capital, um what one, what valuable lessons have you have you learned? But I suppose what's also intriguing is to know what you are most proud of.

SPEAKER_01 34:57

So lots of lessons, definitely. Um in our first seven years, um 75% of our investments were in first-time managers, teams, products, really to catalyze a market off a small base. Um, I think that certainly guarantees you a lot of learnings. Um, we've tried to be really systematic actually about capturing those. We have an internal learnings database with hundreds of entries across different business model types, what helps change systems, what makes teams effective in different ways. Some of the biggest lessons we've touched on already about starting with a social issue, where impact business models can win. Maybe one I'd add is around partnership. We've definitely got better at um meeting people where they are rather than rather than where we'd like them to be in terms of all types of partnerships. Um, alongside that, we built a toolkit for market change, challenge prizes, match funds, data platforms, impact standards. Um I guess if your listeners are interested, actually, we wrote up a lot of this in a in a report a couple of years ago called 10 Lessons from Growing a Market 10X in 10 Years. And that includes actually a lot of those key lessons, but actually a number of examples and case studies. Um can they find that on your website? Definitely. Yeah. Perfect. Um look, I think what I'm most proud of is um is you know the team that I have developed and what they are going on to achieve. So much of what we as an organization have achieved over the years and especially are achieving today comes down to them. Um and yeah, as any leader of a team, you spend a lot of time on that. And it's definitely something I'm very proud of in terms of in terms of where we've got to. And sort of when you're building a culture where you you know you have both the financial and the societal impact objectives, how do you create a culture where you have sort of very clean free feedback and a responsibility to give feedback? What are the kind of things that you you would do within the Better Sci Capital? So we tried to be really, really intentional about our culture. We have a number of tenants that we've touched on already, being mission-driven, finding untapped value between worlds, prioritizing long-term interests over short-term interests. Um, another one actually is about always bringing a day one mindset. Um, we need to be continually reinventing ourselves to what's needed today. Our job is to be on that innovation frontier, finding the new areas. So it doesn't matter what we've done in the past. Actually, we can learn from it, but what matters is what are the opportunities in the future. The most important one there actually is what you just touched on, Heartedge, which is bringing a developmental mindset to everything that we do. So, in terms of implementing that, we do, I think, maybe some more common things. Those furthest from the investment always speak first, frequent and direct feedback, but we also do some, I think, a little bit more unusual things. So we aim for radical transparency on all investment decisions. Our IC is open to the whole office, and then after the IC, we run a challenge forum where all non-IC members go into a room and they feed back on the IC discussion. They talk about where we might have got things wrong, they talk about where I might have been biased. Um, and the notes of that conversation are then sent to the IC and feed into all of our decisions. Um, I guess given our market building role, we found that particularly helpful for tackling blind spots, potential wishful thinking, which I think there's a real danger of in impact investing. Um, you know, we've got a great team and we want to be bringing all of their views into uh into our investments. Definitely not come across that before. I think that's fantastic. Um risky. Has it ever sort of uh you know opened the door to people just sort of having a rant at something they don't like, or has it been responsibly used? I would really recommend it. I think it is um we always get great insight from it. Um, you know, and sometimes people bring things up that you know that you may disagree on or were are worth talking more, but that's also really valuable. But the vast majority of it is actually really helpful in terms of um giving different perspectives. I think all committees, however hard you try, will have a tendency to groupthink. They will have a tendency to uh to being nice, and it's quite a good counter to that, I think.

SPEAKER_00 39:13

I think if you can allow people to have that opportunity to say something without feeling that actually is going to come back at them badly, um and they can say whatever it is that they feel that they want to say, with you all listening but not always agreeing, I think that's fantastic. So well done.

SPEAKER_01 39:31

And given it this is a clearly leadership role, um I'd like to ask sort of being a leader in 2026, it feels like a thankless task. But how has that changed from you know about a leader 10 or 15 years ago as as you were at JP Morgan? Uh what is more important, what is less important? I think I think the most significant uh one is around familiarity with technology. Um, you know, the exponential changes ahead are uh across multiple fronts. Um we've been talking actually about how transformation, reinventing our teams and workflows, that's just going to be constant. And that's that's never gonna stop to an extent. Um and I think I believe you can only do that in your building yourself. So, for example, one of my summer goals is to be build a suite of agents who will support my work as CIO. I think that will make a difference to my role, but actually the most important is it'll help me understand what's possible in the in the team and portfolio. And I think that'll be increasingly important going forward.

SPEAKER_00 40:32

Sorry, Chairman, can you just explain that in a little bit more detail? When you say a suite of agents, what what are you actually meaning when you say that?

SPEAKER_01 40:41

So it's effectively building an agent who will be a data scientist for me, who will be a researcher, who will um be an executive assistant, and then a chief of staff who will so taking all of the incoming that comes to the in different ways and um really experimenting with using agents to dissect and bring that together in different ways. I mean, I guess what you see is that if you just do that through a single um, you know, a single agent, you get a very different response than if you actually build a collection that you have given different roles to. So we actually across our investment portfolio at the moment are experimenting with various sort of agentic workflows, differing perspectives and personas, and seeing what we can learn from that, I guess, when we are when we are looking at investments.

SPEAKER_00 41:28

Interesting. I'm I'm doing something similar, but probably not uh so advanced as uh as you. But yeah, it's it's uh it's an interesting concept at the moment.

SPEAKER_01 41:38

I think uh the really a really important thing we've done. So we took a former investment manager of ours. Um, actually, he went off and ran a startup and we persuaded it to come back and be our head of AI. So he he understands the investment process. I think you need people who are doing and building these things who have been investors themselves. I think this is a workflow technology, not a sort of typical um technology transition. And yeah, so you need those people who genuinely understand what you're solving for, who are building the tools for your team, I think.

SPEAKER_00 42:07

Yeah, no, absolutely, absolutely. So, um, what's the reason someone should think about working in social impact investing? If you were out there now looking or thinking about it, why should you be thinking about it?

SPEAKER_01 42:18

Yeah, I mean, I guess as you've heard from my background, I mean, my view is any job actually analyzing businesses, markets, allocating capital is a pretty incredible one, actually. Um, but you know, people come and work in social impact investing, you know, as we've touched on, because you're putting those skills to um to delivering change, to making things happen that people care about. Um, so for my team specifically, the chance to do that at the system level, at the market level, actually to create that long-term change of um, you know, the structure of markets and what's possible is definitely a key motivating factor for people.

SPEAKER_00 42:54

And and what advice would you give to someone who's starting early in their investment career in terms of not just necessarily going into where you are now with better society capital, but just generally is um thinking about the future and where best maybe that they would uh or should think about going.

SPEAKER_01 43:14

I think I think you need to be quite careful at sort of predicting the future and going into different areas. As we touched on earlier, I think the most important thing for me is just finding the area with the with the steepest learning curves. You know, for me, that was sitting on the trading floor at uh at 2 a.m. Um, you know, the most important thing is the role, the culture, the development opportunities. Um, actually, maybe going back to the story we started on on my JP Morgan Chase merger, avoiding being fired. Um, you know, I think the best thing that people should think about in terms of the role they get into, but also what they should focus on is go to a place where you can be delivering good ideas, where you can work hard and um, yeah, where you can prove yourself effectively.

SPEAKER_00 43:58

So I'm just gonna take you back a little bit further. Than that. So I think you mentioned that your father uh worked for um civil service, um, the government. My father did as well. Uh he was a diplomat. Uh, and in fact, we went to the Philippines and Pakistan as well. Wow. Um, I was actually baptized in Pakistan um as a as a young um six-month-old baby. Um, so that going back to those times, um, you know, what what did you see about what you were going through? How you were back in did you go to boarding school?

SPEAKER_01 44:34

I went to school in those countries for a period. And then later on, I did come back to boarding school in the UK, yep.

SPEAKER_00 44:40

So you actually schooled in those countries where where you might have been for X number of years and then having to move on and school somewhere else. So, you know, going through that in your in your life, was that one of the reasons why maybe you ended up where you are today? Um, was it sort of seeing what was happening around the world and wanting to make a difference? I think so to an extent.

SPEAKER_01 45:01

I mean, I yeah, I think I went to five schools in seven years at one point. So, you know, I definitely got pretty good between jumping between worlds, and actually that's a pretty important part of my role today. In the morning, I might be working with charity leaders and then working in government, and then working with a group of insurance executives or something. So I think that's probably played an important part. But yes, definitely, I think um growing up in lots of places and short, it sounds like you experience the same. You you you really get a sense of the difference that finance and economics can make, both when it works and actually, actually just as much when it doesn't. Yeah, very interesting. Thank you. So, in a in a volume high, information low world, how do you stay informed and be as objective as possible? Really, really good question. So uh, you know, I've always been a voracious reader. I think you have to be actually in investing, perhaps even more so in the world that I'm in. So news, research, books on economics, uh development, politics, financial history, really important. Um actually, for me, books on user-led design have been pretty important, actually, to what to what we do. Um I think increasingly I try and read investment letters, publications from those who go through the anguish of allocating capital. I think, I think those are the uh the most useful authors, you know, I'd seek those out as much as I can. I I find podcasts like this hugely valuable, right? That's a newer thing in terms of uh, you know, investment leaders who will share their perspectives in different ways. Um, I've actually been experimenting recently about you know using AI to synthesize sources, some of the stuff I look at less often, um, finding areas that I might be missed. And actually, it it definitely can be really helpful for highlighting blind spots, highlighting where interesting content that we'd be missing, for example. And in terms of books, is there an author that stands out as as uh as someone who's influenced your thinking or few authors? Um so yeah, so our product is decisions, as as most of your people on this podcast would be. So, you know, authors like Daniel Kahneman, Shane Parrish's Farnum Street blog, those are all required reading for our team, along with Harold Marks, um, you know, his book, The Most Important Thing, really uh consider about considering risk reward. But I think probably the most influential um book for my career was Nassim Taleb's first book, uh, Fooled by Randomness. Um honestly, it's not a great book, but um, one of the protagonists in it is a successful New York high-year bond trader drawing the wrong lessons from his success. And I read it while I was a New York-based bond trader drawing the wrong lessons from my success. Um, and the central lesson in it is uh is about being fooled by survivor bias, the importance of understanding financial history, fat tales, not allocating capital or momentum. It actually really changed my approach. And it helped me build a portfolio that then, you know, went on to consistently make money, including through the financial crisis. And I think if I hadn't read that book, I probably would have still been doing the things I had done previously. He's got some great books. Um, so I know you've come on this podcast to make sure you get Sean's sort of ready money round after this. But one final question before we hand over to that is uh what would you like your legacy as a CIO to be? Wow. Um so I guess firstly, that our process and portfolio is delivering impact for the long term. We're targeting the benefiting 20 to 30 million people in the UK over the next 10 years. Um but actually a really important part of that is durability. So the portfolio is set up to deliver good returns through, as we've discussed, is going to be a period of real change, help accelerate market growth, continue to recycle into different opportunities. Um yeah, I think for me, the most, yeah, the one that matters to me personally will be the people I've helped develop. So we've already had people from our investment team go on to be CIOs, CEOs, heads of investment across the impact investment sector and foundations, pension funds, asset managers, and then there's future leaders at BSC. Um we really believe we're just getting started in what we can achieve. So hopefully my most important legacy will be uh what my team does when I'm no longer around.

SPEAKER_00 49:25

Fantastic. Listen, Jeremy, it's been an absolute pleasure. Thank you so much for being with us today. But before we go, um I'm sure you know we have uh the favorites around. Um a quick fire. Um favorite sport, uh basketball.

SPEAKER_01 49:42

So as you heard, I grew up in American schools, played for my university, absolutely love the sport. Fantastic. Who who did you or do you support? Um uh Chicago Bulls, suddenly. Oh, Chicago Bulls, okay. In the NBA as a child of the 90s.

SPEAKER_00 49:56

Brilliant, brilliant.

SPEAKER_01 49:57

Uh favorite film or TV drama? Well, what one that springs to mind, actually, which is great if if people haven't seen it, is The Last Dance. So this is the story of Michael Jordan and his last season with the Bulls. So it's amazing on his focus, you know how how he generates motivation. But actually, the really nice part about it is this moment where he realizes he needs his team to be successful and changes his approach as a result. But yeah, it's a great show.

SPEAKER_00 50:24

Fantastic. I'll I will watch that. It sounds like Hartez, I think, has uh seen that. Uh, favorite drink? Coffee. Coffee, very good. With sugar or without? With without quite a lot of it, unfortunately.

SPEAKER_01 50:39

Uh favorite book? Um, what I'm enjoying at the moment um is the infinity machine. So this is uh about Demis Hasibis, his team at DeepMind. Um, lots of lots of great stuff in there, actually. Uh favorite hobby? Going surfing with my kids, which I which I love. Very nice, very nice too. Where bad should you live? So we live in Oxford. Um not big for surfing.

SPEAKER_00 51:02

Not not big for big for surfing, so it's much more about when we can get the chance. Lovely. Listen, Jeremy, thank you so much. Thoroughly enjoyed it. Uh, we hope to uh speak to you again sometime soon. Thanks, Jeremy. Thank you so much. Thank you so much for listening. Be sure to stay tuned. In the meantime, follow the CIO Investment Club on LinkedIn, Threads, and X to stay in the loop about our upcoming guest interviews on the CIO Chair Podcast. For more information about us, please visit our website at www.cioinvestmentclub.com. Thank you and goodbye.