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  • Writer's pictureAnna Clare Harper

Sustainable Investing

Anna Clare Harper and Michele Giddens OBE

Co-Founder and Co-CEO of pioneer Bridges Fund Management, Michele Giddens OBE, joined Anna on the podcast.

Michele has 30 years experience in sustainable investing and international development finance, from chairing the Community Development Finance Association, the UK National Advisory Board on Impact Investing, and a Global Working Group on Policy for the G7 Impact Investment Taskforce to running pioneer Bridges Fund Management. So she is the perfect guest to talk about sustainable investing, pioneering new strategies and making financial and social returns from retrofit.

They covered:

  • The thesis behind Bridges and the Spectrum of Capital which ‘went a bit viral’ !

  • How to pioneer: what we can learn from prolific pioneers about the process of bringing innovative ideas to market, for example carbon optioneering

  • How to create attractive financial returns alongside social and environmental impacts in Article 9 funds

  • Example investments such as retrofitting an old vinyl factory with cross-laminated timber to the material health benefits for residents from assisted living schemes 

Listen in here:

This transcript is AI generated. Please excuse any typos. If you’d like to see a human-edited version, please reach out to

[Anna Clare Harper]

Hi and welcome to The Return: Property and Investment Podcast. I'm Anna and I'm delighted to be joined by Michele Giddens OBE, who is co-CEO and co-founder of Bridges Fund Management. She personally and her company Bridges are leaders in sustainable and impact investment.

And as a quick guide to why I'm so excited to have her here, Michelle has 30 years experience in sustainable and impact investment and international development finance. She founded Bridges alongside Philip Neuberer and Sir Ronald Cohen, who gets described on the internet as the father of British venture capital. She has advised the UK Treasury's Social Investment Task Force, chaired the Community Development Finance Association, the UK National Advisory Board on Impact Investing, and a global working group on policy for the G7 Impact Investment Task Force.

She sat on the BBCA council and served as non-executive director on the board of CDC, now British International Investment, which is the UK government's development finance institution. So she is incredibly well-placed to talk about the key themes today, impact investing, pioneering new strategies, and making financial and social returns from retrofit. So welcome to the podcast, Michelle, and thank you so much for joining me.

[Michele Giddens]

Thanks so much, Anna, for having me with you on the podcast.

[Anna Clare Harper]

So personally, I first encountered Bridges while researching a book on sustainable residential investment. The Bridges spectrum of capital is widely used and referred to across the investment world, including in the G8 Social Investment Task Force's 2014 report. I wondered if you could just start by explaining in layman's terms, what is the thesis behind this and more broadly behind Bridges?

[Michele Giddens]

Absolutely. And I have got a copy of your book, actually, as I sit here, and I was delighted to see the spectrum of capital in there. It's interesting.

That's a piece of research that Bridges did about 14 years ago, but it really did kind of go viral and I'll explain why. So the beginning of this story goes back to 2000, 2002 or so, when myself and Phil and Sir Ronald were thinking about the issue of initially inclusion in the UK and why some parts of the country were really not developing with the speed economically that other parts were and they just kept being the parts of the country that were getting left behind. And we thought, well, could an investment firm be set up that would have the goal of making a positive impact on society, as well as making attractive financial returns?

Now, when we came up with that idea, there was no terminology for impact investing. When investors even began to think slightly about the ethics of investing, it was frequently investors making large public equity allocations and worrying about whether they should invest in thin stocks like tobacco, like armaments. And we thought, well, why on earth is the private investment community not looking at what we now call impactful investing?

And part of the reason for that, and that's the reason for the creation of the spectrum of capital, was that back in the day, there really was a view that there was a complete dichotomy between the two things you could do with money. You could invest it, in which case you should be investing it simply for the best risk-adjusted return, or you could be caring about social and environmental issues, in which case you should give it away in philanthropy. And I think what the last 20 years has shown, complete sort of emergence of a whole set of investment opportunities that sit between those two parts of the dichotomy.

So, we believed that with Bridges, the philosophy of Bridges was that it was possible to invest in a way that generates positive outcomes and attractive financial returns. And by about 2008, 2009, what we felt was that the investment market was quite confused about what the difference was between ethical investing, sustainable investing, impact investing, ESG investing. And that's why we put together this spectrum of capital that really explains this range of different investment opportunities that sit between pure profit maximization without regard to impact on society and at the other end of the spectrum, philanthropy.

And if we look now at the world of investment, impact investing is one of the fastest growing trends within investment. ESG is a completely, just an accepted baseline for all investing. And so, I have seen in my career this transformation from in 2002, this idea of a dichotomy into a sense that now much or if not most of the investment market accepts that thinking about the environmental and social impact or footprint of investments is a core part of thinking about their long-term financial value.


[Anna Clare Harper]

It's not just that you've seen it, I think you've been a key part of it. And as a pioneer in sustainable and impact investing, I wondered if you could maybe share some standout examples of investments made by Bridges Fund Management and talk about what the key factors are that made them successful from a financial and social and environmental perspective.

[Michele Giddens]

Yeah, I'd love to do that. Thank you. Perhaps a bit of background for your listeners first.

So, Bridges is a private funds manager that is completely dedicated to investments that can achieve one of two goals, which is investments that will help build a more sustainable economy or investments that will help build a more inclusive economy. And of course, there are some investments that do a bit of both. We have three verticals at Bridges.

We invest in growing businesses through our private equity strategies. We invest in outcomes partnerships. And then most relevant for today's podcast, we have quite substantial property funds.

All of those are rooted in those goals to invest in a more sustainable and more inclusive economy. So, we actually started with private equity. The reason that we got very interested in property and in buildings was we looked at the contribution that they make to emissions.

So, buildings are responsible for about 39% of global energy related carbon emissions, about 28% of that is operational carbon from the operation of the buildings, about 11% from the materials and construction of those buildings. And in the UK, where we do a lot of our investing with our relatively old building stock, it's even higher. So, these were the kind of macro drivers that got us interested in launching a property strategy back in 2008, 2009.

We had made investments that had kind of led us to that learning. For example, we had created one of the very early SME business space companies, the Office Group. And through that, that was done in our private equity funds.

And through that, we learned a lot about environmental retrofitting of buildings. And we also created the Hoxton Hotel, which back in the day was a substantial part of the regeneration of part of East London. And all of that led us to create property funds.

We're now on our sixth vintage of our property funds. Just to give a little bit of a sense of what we're interested in terms of property, we are value add opportunistic investors. So, what's often called property alternatives.

We're very interested in investing in future trends in the way that people live, in healthcare, and in logistics, what some people call beds, meds, and sheds. Why is that? Well, there are macro drivers.

So, the world's population will be approaching 10 billion and the global building stock is expected to double. So, we really got to look at how that building stock becomes more environmentally friendly. In the UK, as you know, we've got a real housing crisis.

So, we need to be building at least 300,000 new homes a year to keep up with demand. And that's, again, also needs to be done within our net zero ambitions. And then we've got an aging population.

So, the number of people aged 65 years or older worldwide is projected to more than double, rising from 761 million in 2021 to 1.6 billion in 2050. So, we like to look at those macro trends and think about investments in the context of it. Now, given your focus of your book and your podcast, maybe it makes sense to focus not on our healthcare so much or our logistics themes, but on our living scene.

And there we've done quite a lot of experimentation. So, our goal is to stay ahead of regulatory requirements like BREEAM and EPC. We have tried a range of new approaches.

So, I remember, for example, one of the early residential deals that we did was actually on the site of what used to be the vinyl factory at which the Beatles records were printed, which we always thought was quite cool. And on that one, we were taking that old redundant building, converting it into new build residential. So, at the old vinyl factory, we tried an innovation called cross laminated timber.

It was an incredible success for us. The buildings went up much faster than standard buildings, which improved not only carbon emissions in terms of transport of materials, but also improved our IRR. However, when you look to scale things like that, to do a lot more building, even in the UK, in cross laminated timber, would take forests the size of Spain.

So, very innovative, but not something that we could necessarily roll out across all of our activities. We've also done passive house housing. For your listeners, that is where you really insulate the envelope of the building and the result is about 90% less energy usage than standard UK buildings.

So, we are continuously trying to innovate in all of those areas. Maybe I'll give you a couple of examples then. So, one important to know with bridges is that when we're designing or working with architects design buildings, we have to think about the environmental features, also the social features, and also the health and safety features.

And there is sometimes a need to balance the three of those in getting the right design for a development. But I'll give you an example, perhaps one of social and one of environmental impact, if I may. So, the social one would be a residential deal that we did called Queen's Quarter, which is in Croydon.

We were financing the build of 513 residential units and the social impact we were able to make there was that this was land owned by the local council. They had previously given out a permit based on only 15% of affordable housing. We were able to go in and talk to them about the ability to really push up that affordable component.

For us as an impact investor, as long as we can make our investors the double digit returns that we're looking to make, we're always trying to see if we can build more affordability. And through careful work with the local authority, we were able to take that to 51% affordable units. We were also, we worked with a joint venture partner called Hub, which we've done, I think, about 14 different deals with.

They're fantastic at the consultation process with local residents and that one also created a new public park called Queen's Gardens. So, that meant that the scheme went from 60 to 262 affordable units compared to the prior planning consent. So, that's an example of a deal we're very, very proud of from a social perspective.

In terms of well-being, we also assess most of our buildings under the well or fit well certifications and we find that that's the opposite of compromising returns. So, 49% of building owners are willing to pay more for buildings which are demonstrated to have a positive impact on health according to fit well. And then I've given the example of a very early focus on environmental sustainability in the old vinyl factory.

In that case, it's just worth mentioning that the cross-laminated timber construction saved 16,000 tonnes of carbon. It was faster, it reduced pollution as well because it required less transportation of materials and the whole structure was assembled in five days. But as I did say, it does need a forest aside of Spain to do buildings that way more generally.

So, now we would be thinking about sustainability much more broadly and always thinking within the context of wider planetary boundaries. So, perhaps we can go on to talk about some other examples on the environmental side.

[Anna Clare Harper]

Yeah, absolutely. And those are such brilliant examples. So, thank you for providing a bit of colour on what this looks like in practice.

And one of the topics that we first discussed offline was what my business GreenResi is doing, pioneering new technology in a very traditional market residential. In our case, it's about aggregating granular residential in the UK. As a pioneer in launching and proving new strategies, can you walk us through the process of bringing innovative ideas to market and how you overcome the many hurdles in the way of that innovation?

And I wonder if you can share some of the key lessons that you've learned from your experience, especially in the realm of sustainable and impact investing.

[Michele Giddens]

Sure. So, at Bridges, we've been doing PRS since about 2014. And so far, we've financed the build of over 5,000 living units, typically lower cost and affordable rental or student.

And as I think I said before, we're trying to provide living development solutions in a range of ways, innovating in a sector that people recognize in response to housing crisis. So, our culture is to try to focus on pioneering. That's one of our values and every team member is assessed against it.

We work very closely. The first thing to say is that when thinking about retrofit, or new development of any building, including residential, the key to the most sustainable positive impact building is starting very, very early in the process of design. So, we often work with joint venture partners, with developers that are expert in their areas we've worked with many times before.

We like to work with like-minded progressive developers who are going to, like us, think from the beginning of the design stage, how we can design a building that is going to be as environmentally friendly as possible and as good for the health and well-being of those that are going to use that building. So, in terms of expertise that we bring to it, we have our own environmental engineer on the team who works with those developers to try to put in the design from the very early days. We also learn from external specialists about best practice and we think about alignment through contractual arrangements.

So, minimum expectations on service, for example, if you think about the construction process, then we will be setting expectations with our construction partners about recycling on site and also treatment of employees, both the social and the environmental dimensions of the construction period. I suppose our vision is to try to say, essentially, we're often building or retrofitting buildings for an institution to come in and buy from us. So, we're always trying to stay ahead of investor demand and build future-proofed assets for institutions.

We're an Article 9 fund, so that's the highest level of sustainability in terms of the European regulations. And we work, of course, with industry bodies to try and positively influence the direction of regulatory capital. The good news, I suppose, is that over the last, I'd say, five to six years, we're really seeing strong demand from institutional investors for the most environmentally-friendly buildings, from residential all the way through our other key sectors.

So, we see it makes sense because more environmentally-friendly buildings, in our experience, tend to fill up faster in terms of occupation. So, in one of our latest exits, for example, occupation, which this was 239 apartments in Wembley, was 100% at the time of exit. And we think, in part, that's because it was very environmentally-friendly and carefully thought through.

So, I suppose the key takeaway is to start very early in the process of design and to start with a mindset, not of how can we do what's required by the regulator to de-risk this building from an environmental perspective, but rather to ask the question, within our commercial constraints, what is the most that we can do in order to reduce the emissions, both in the construction phase and the occupation stage of the building?

[Anna Clare Harper]

Okay, that's super interesting and helpful. And one of the things I wanted to ask you about was Birch Grove, which was launched by Bridges, and it's a great example of pioneering in its approach to assisted living. I wondered what lessons can be drawn from this model in terms of impact within living communities and how you see the same principles translating into broader residential development?

[Michele Giddens]

Yeah, well, we came to the idea of Birch Grove on the back of having financed the build of a large number of care homes, end-of-life care homes, typically, often very environmentally sustainable. But what interested us was whether we could create a company that would offer an attractive place for an ageing population to live well before they had the critical requirements that normally mean that somebody needs to go to a care home. So, Birch Grove was the first mover, really, in this country in providing assisted living accommodation solely for rent, providing choice to an ageing population and really a new offering in the market.

We came at it from the direction of social impact, very aware that in our society, as people age, we can see rising levels of social isolation. We see people staying within large family houses that may not be best suited for their health and their well-being. And Birch Grove is all about creating a community where residents can form connections, reduce social isolation, stay healthy and really feel at home.

So, what does that mean? So, Birch Grove enables social interactions through having terrific communal spaces at the heart of the development, a lounge, a restaurant, outdoor space, encouraging and creating events to take place in these spaces, developing residents' interests and hobbies, enabling these groups, but also giving residents a kind of sense of being able to create their own or follow their own hobbies and encouraging the local community to use the spaces too. So, for example, we've got a new development at Hampton Court where we'll have publicly accessible communal spaces. And of course, one feature of Birch Grove as well is that it does help to free up family housing in the local area for housing.

What we've found as a lesson, and it's a very encouraging one, is that as people typically who will be 80 years old plus when they come and live with us in Birch Grove, they tend to improve in areas like health, dexterity, mobility, brain health and cognitive function, and also a sense of belonging. Surveys show 80% of our residents feel at home. So, what have we learned from this?

We've obviously learned a huge amount about the opportunity to do so much more than a building, but to really create an important sense of community, in this case, a community which results in actually longer, healthier and more fulfilled lives, pretty important stuff. And when we try to take this learning into our wider residential developments, thinking about building a community and events calendar around what residents would like to see and do rather than what we think is right. And this in turn is relevant as we're evolving another new theme, which we hope we've spotted is going to be interesting to institutional investors.

Perhaps another early mover opportunity from Bridges, which is around shared living and co-living developments.

[Anna Clare Harper]

Well, we're going to turn to that next. So, great timing. Great lead in there.

Awesome to hear about the kind of impacts that having that community has. I think it's so important to firstly measure that, but secondly, to be able to have that impact on people's lives, especially when getting older can be a lonely process. And it's amazing to be able to kind of reverse that, but through the living arrangement.

So yeah, that's really, really amazing. Great to hear. So turning to another specific living impact strategy, Retrofit.

I wondered if you can share some insights on the opportunities and the challenges in converting underutilised brown office space into green co-living or living schemes, which you're working on as a strategy.

[Michele Giddens]

Yeah, I'm really excited about this one. This is a relatively new theme for us. It does fall into that same challenge that we simply have not delivered enough housing in London over the last decade.

The shortfall in London is I think around 90,000 homes and the pipeline of new homes in London is falling. Planning activity in London has slumped to its lowest level since 2010. So there's just this ongoing theme of housing shortages.

And we think that converting offices presents a real opportunity to boost London's housing supply and maximise the quantum of new housing delivered. But it's also tracking new trends in the way that people live. So we've all seen the changing work patterns, young people not being asked to go to the office more than two to three days a week.

Well, what does that mean about where they're going to want to live and whether they're going to be working potentially for two to three days of their working week? We wanted to look at buildings that would respond to that need. So the focus on co-living is again, back to this idea of community.

So we will be taking often fairly unloved office stock, which is inefficient anyway, not compliant with the EU taxonomy in terms of sustainability. So what we don't want is for those office buildings to be brought back into office use and actually the occupational demand is probably not there anyway. So what if we take those buildings and instead convert them to rental of small apartments with very large communal space, particularly shared working space so that those young people can have a social community in which they can be working the two or three days a week in which they're not asked to be in the office.

So really meeting the needs of those changing lifestyles, possibly table tennis, possibly even a shared cinema, and then offering that workspace also to the local community so that building becomes a resource for the local community. So that's one side of what we're excited about in terms of co-living. The other side is back to this idea that the existing office stock is inefficient.

Now, of course, it could be knocked down and it could be a very environmentally friendly, a building could be put in its place. But we're really thinking now not only about the carbon emissions in occupation of buildings, but in the embodied carbon through the whole life cycle of a building. And what we're finding is that retrofitting those buildings with a green retrofit is a better way to get lower lifetime carbon from the building.

So we're very excited about this new trend in terms of ability to offer the kind of living space which is relatively affordable, which is what is needed for changing lifestyles. And at the same time, taking old leaky buildings and converting them into exciting, environmentally friendly space. But it's not completely without its challenges.

So not all locations are suitable for an office to co-living conversion, it has to have the right kind of floor plates, it has to have natural light so that we can provide high quality spaces. So there's a real science behind the way that you pick buildings that are going to work and it won't work for every office building. But we're beginning our first couple of substantial sites in London as we speak.

[Anna Clare Harper]

I'd say it all sounded very perfect and tied neatly in a bow. So it's about challenges that you have to overcome as well. Okay.

And you've talked a little bit about how retrofit can be used to drive that social impact in terms of starting to tackle the chronic shortage of housing. Are there any other sort of ways you could highlight that retrofit can be used to drive either financial or the kind of environmental and social returns? And just if there are any other final lessons that other real estate projects can learn, either from the strategy you just mentioned or from general retrofit strategies, what would we learn from those?

[Michele Giddens]

Yeah. So the way that we think about it that we would love others to be thinking about is what we call carbon optioneering. So it's take a site, in this case, take one of these 1960s office buildings and look at a set of options.

Look at what would be the lifetime carbon impact of demolishing and rebuilding, even if a very environmentally friendly building, and then put that alongside what would be the carbon impact of a light retrofit, what would be the impact of one with a substantial retrofit, maybe building on a couple of other floors. And then what we will do, we will look at the carbon impact of those different options. And then of course, we also have to weigh up what are the health and wellbeing requirements in the building and what are the financial return considerations.

And if you take that approach from the very, very beginning, then ideally you're starting with the best possible outcomes in terms of whether retrofitting is the right answer and then how to think about the retrofit. We've seen so deep retrofits usually deliver significant cuts in operational energy use. So we've seen sort of over 60% and that allows buildings to transition away from fossil fuels and achieve improved EPCs.

And the key thing I think to take away is to consider whole life carbon alongside issues such as quality programme and cost rather than just looking at the operating carbon. Last thing I'll mention is that quite often these office buildings are located in quite positive areas in terms of sustainability. They're quite often well located for public transport.

So would have less car reliance than some other residential sites. They bring back vitality to urban centres where the office market and the move to hybrid working can have led to local businesses and cafes suffering, the local economy suffering. So those are the things that we've seen as very positive at taking a thoughtful approach to whether to retrofit or whether to rebuild from the very, very beginning and then thinking about the wider benefits that might accrue to those sort of city centre sites where often these offices are located.

[Anna Clare Harper]

So interesting and helpful and so thoughtful as an approach. So yeah, thank you so much for sharing that. And if listeners want to find out more about you, Bridges, or get in touch with either you or Bridges, what's the best way for them to do that?

[Michele Giddens]

Well, so probably go to our website, which is or email me, easy to find because my email

We're always interested to speak to potential investors, to speak to JV partners, and to share thinking. You know, we're on a journey to improve the environmental and social footprint of all the properties and we're always keen to go on that journey with others.

[Anna Clare Harper]

Thank you so much for joining me and sharing your insights.

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