Place-Based Impact & Local Investing
Frequently Asked Questions (FAQs)
Looking for more information about local investing or place-based impact investing? Then take a look at some frequently asked questions.
Under the UK government’s Fit for the Future consultation and the draft Pension Schemes Bill, local investing is defined as investment made “in, or for the benefit of persons living or working in,” the area of the specific Local Government Pension Scheme (LGPS) scheme manager or the broader area of their asset pool partners. It expands the traditional definition of “local” from a single council’s jurisdiction to a regional or pool-wide footprint.
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Bill Landing Page: Pension Schemes Bill 2024-25 – Parliamentary Bills
- Our White Paper: Scaling-Up Local Investing for Place-Based Impact
To qualify as a local investment, an asset must demonstrate quantifiable external benefits to the local area. According to government guidance, these benefits often fall into three categories:
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Economic Growth: Supporting local SMEs, infrastructure, or regeneration
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Social Impact: Funding affordable housing or community facilities
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Environmental Sustainability: Investing in local clean energy or net-zero projects
No, the government does not mandate specific investment decisions. However, under the new “comply or explain” regime, funds are required to set an ambition (a target range) for local investment allocation. Importantly, these investments must still align with fiduciary duty, meaning they must not compromise financial returns for scheme members.
The government is currently consulting on draft regulations. Final statutory guidance, which will provide technical details on how to set targets and report on impacts, is expected to be published in early-to-mid 2026, ahead of the March 31, 2026 asset pooling deadline.
Place-based social impact refers to the transformative effects of initiatives and interventions that are designed to address and uplift specific geographical communities. Unlike broader approaches, which may target societal issues at a national or global scale, place-based impact initiatives focus on local neighbourhoods, towns, or regions, recognising the unique challenges and opportunities that arise within these distinct settings.
By concentrating efforts on a particular place, stakeholders can cultivate strong partnerships, leverage existing community assets, and foster a sense of ownership among residents, thereby facilitating sustainable change and creating lasting positive outcomes for the people and the environment in that specific area. Through this deliberate localisation, place-based social impact endeavours pave the way for more inclusive and resilient communities, promoting meaningful progress towards a Good Economy, one that works for everyone.
Place-Based Impact Investing (PBII) is an approach to investing defined by a number of traits.
The original White Paper identified five traits which were simplified to four in the PBII Reporting Framework – two related to Place and two to Impact. At its core, PBII is about investing in a way that responds to locally-identified needs and priorities, involves collaboration with local stakeholders and listening to community voice and is intentional about maximising benefits for local people and place.
Place
Defining Place and Understanding Local Priorities
Defining Place and Understanding Local Priorities
Collaboration and Stakeholder Engagement
Impact
Intentionality to Create Positive Impact
Impact Management, Measuring and Reporting
Local investing is effectively the regulatory implementation of Place-Based Impact Investing (PBII) for the public sector. While PBII is the broader methodology of directing capital to specific locations to reduce inequality, the government’s “local investing” definition provides the statutory framework for LGPS funds to execute and report on these strategies within their specific regions.
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