Investing in Education

Lightspeed Through the Cycle 2 private equity portfolio, Wiltshire Pension Fund is invested in a company called Lightspeed, a provider of essential educational software resources for schools across the UK, USA and globally. Software provided by Lightspeed gives schools web filtering, student online safety, classroom management and teaching tool solutions. This is essential for ensuring students use online resources safely and effectively. Investment in this company benefits from a growing market due to mounting concerns on student safety and well-being.  WPF holding £0.3m (Jun-22).

Brunel use EOS at Federated Hermes, ‘EOS’ to engage with companies on their and the partnership Funds' behalf. EOS has developed an approach to reporting on the SDGs which attributes a direct link between one of their engagement themes and an SDG if they believe their engagement objective at a company directly supports at least one of the UN’s targets underpinning the relevant goal or is aligned with the spirit of the goal. It does not include the many engagements which would more indirectly support the ambition of other SDGs or corporate governance more broadly. This means that whilst there are currently only a small number of engagements linked directly to SDG 04, there is a much larger number of engagements indirectly linked, including on the Just Transition which is a strong focus for EOS.

The investment team will continue to push Brunel and EOS to include education as an engagement theme where possible. As the Fund moves forward with the decarbonisation strategy, the team will seek to understand how this can be achieved without compromising jobs.

EOS at Federated Hermes, ‘EOS' further analysis

UN Sustainable Development Goal % of engagement objectives linked to SDGs 01: No poverty 1.8% 02: Zero hunger 0.3% 03: Good health and well-being 4.9% 04: Quality education 0.3% 05: Gender equality 10.3% 06: Clean water and sanitation 0.9% 07: Affordable and clean energy 8.0% 08: Decent work and economic growth 9.3% 09: Industry 3.2% 10: Reduced inequalities 8.6% 11: Sustainable cities and communities 2.1% 12: Responsible consumption and production 15.7% 13: Climate action 26.0% 14: Life below water 1.2% 15: Life on land 2.2% 16: Peace 4.6% 17: Partnerships for the goals 0.9% Source: EOS - The pie chart shown here is provided to illustrate approximate proportion of engagements where EOS have been able to map a direct link to an SDG (noting that one objective or issue may link to more than one SDG) - This analysis is based on 1,209 engagements to July 2022; approx 40.2% of engagements were mapped to more than one SDG - No engagements were mapped to Education in isolation - The pie chart labels show SDGs selected by Wiltshire Pension Fund Committee as engagement priorities, see page 9 Responsible Investment Policy 2022 (PDF) [4MB] (opens new window)

Where can I find more specific information?

As mentioned previously, EOS engage directly with companies on behalf of clients and published case studies related to Human Capital, along with annual engagement reports for Wiltshire Pension Fund specifically: Stewardship, voting and engagement. Ongoing engagements can often be on corporate activity outside the public domain and therefore issue details are confidential.

Beside investment holdings, Brunel are providing educational workshops delivered by webinar and available on YouTube. A detailed programme designed by industry professionals to provide the insight, knowledge and direction needed to pursue a career in the investment industry. Their goal is to tackle underrepresentation across the industry and increase social mobility - by addressing the intersectionality between ethnicity and social mobility. Research shows that diversity in boards contributes towards better decision making, and considerations of different viewpoints can lead to improved risk management.

It was pleasing to learn that education is an area of focus for Partners Group in the Private Infrastructure sector - Partners Group have a specific Social Infrastructure investment subgroup which encompasses education as an investable theme. Partners Group specifically sees the trend towards continuous self-improvement and lifelong learning as drivers of demand for education software and personalized education solutions.

Partners Group will assess education under their ESG engagement strategy; however, they are disciplined when mapping ESG credentials to the UN SDGs. This is to ensure a measurable contribution can be made before declaring they are fully aligned to a specific goal. "While we have some investments in the education space, they do not contribute in a measurable way to UN SDG 4".  Two examples of education assets follow:

International Schools Partnership ISP provides private education operating 50 schools in 15 countries, however as they operate in countries that provide free state-run schools, this does not incrementally contribute to SDG 4.  WPF holding €1.83m (Jun-22).

Parmaco  Parmaco is a leading provider of high-quality modular buildings for the public education sector. The company provides modern and sustainably constructed buildings for 343 schools and day care centres. With ageing educational building stock in many countries and constrains on new investment, these modular building solutions are benefiting from market tailwinds.  WPF holding $2.8m (Jun-22).

Ninety One do not specifically consider all investment rationales with an SDG lens, but stated that "The value of education is unquestionable". In general, "where an SDG theme, including quality education, is a material issue for a given company or sector, it is considered by the analyst as part of their integrated fundamental research". This forms part of their ESG scoring framework.

There is reassurance that education feeds into the work on assessing current and long-term operational performance of companies, but at this stage it is not covered by a distinct area of analysis unless an apparent issue with education arises, in which case Ninety One would engage with the relevant company in the same way they would any other issue.

Ping An - Offers intensive training for new insurance sales agents. But in addition runs a variety of health information resources for both its customers and potential customers. It is one of China's most important provider of health-care information.  WPF holding value £3.4m (Jun-22).

Hon Hai Precision - A major employer of unskilled labour which it then trains in basic employment skills. Hon Hai invested NT$ 151m in Foxconn University and provided 73.08 million hours of training, resulting in 77.2 hours of training for each Hon Hai employee, facilitated graduations of 1,010 employees with undergraduate degrees and above.  Hon Hai's education drive is to ensure that employees continue to improve and expand their skill base. Labour underpins nearly all business operations, so improvements in labour skillset at a firm that continues to expand its revenue streams from being a legacy Apple assembly manufacturer, to now a sustainability lead Electric Vehicle manufacturer, means that this education will also help guide transition to a low carbon economy. WPF holding value £3.7m (Jun-22).

Ninety One were unable to provide examples of engagements directly related to SDG 4 over the past 12 months (within the Emerging Markets Equity Fund). This may suggest no issue has been surrounding education has been flagged, however moving forward it is anticipated that wider analysis will be conducted in the education space.