The Place-Based Impact Investing Project: focusing capital on the opportunity of place
The Place-Based Impact Investing (PBII) Project was founded by The Good Economy, the Impact Investing Institute and Pensions for Purpose
to explore how to scale-up institutional investment into opportunities
that enhance local economic resilience, sustainable development and the Levelling Up agenda.
To receive updates about the PBII Project and learn about opportunities to participate in the next phase of the PBII Project (the PBII Innovation Laboratory) please contact Sarah Forster via email@example.com.
The PBII Project
Place-based inequalities are more extreme in the UK than in most comparable economies and have persisted for generations. Meanwhile, the pandemic coupled with Brexit have moved this seemingly intractable reality to the centre stage of public debate.
With the costs of the “Levelling Up” agenda expected to exceed £1 trillion over the next 10 years, there is a clear need for private capital to be mobilised alongside public investment. Currently, only a very small fraction of UK pension money is invested directly in the UK in sectors that could drive more inclusive and sustainable development.
The PBII Project was launched to explore how to scale up institutional investment focused on the opportunities of place. A six month research programme – led by TGE and backed by DCMS, the City of London Corporation and Big Society Capital – culminated in the publication of a white paper on 26 May 2021.
While the report focused primarily on the role of the £326 billion Local Government Pension Scheme, the report built a powerful case to suggest PBII has the potential to become a new paradigm or lens for all kinds of investors.
As such, the project harnessed the interest generated amongst local government pension schemes, local authorities, fund managers, asset owners, consultants and other place-based stakeholders by inviting them to participate in the second phase of research which is currently ongoing.
PBII White Paper findings:
- Assets identified as place-based investments already exist in portfolios of local government pension schemes and can provide stable, risk-adjusted returns and low volatility
- Currently, place-based impact investment is limited, with local government pensions schemes investing around 1% of their portfolio in ways that could directly support local and regional economic development and positive place-based impact creation
- However, there is a legacy of local investing by local government pension funds, reflected in statutory guidance allowing for 5% of funds to be allocated to PBII. If this level was achieved, £16 billion of investment would be focussed on delivering both financial returns and responding to the needs and opportunities of specific places.
The White Paper is timely and relevant to anyone with an interest in scaling-up institutional investment into opportunities that connect capital to place.
PBII investment opportunities include social and affordable housing, small business finance, clean energy, infrastructure and regeneration. As such, these opportunities would include delivering investment in local businesses, quality jobs, affordable homes and town centre regeneration.
While the initial phase of the project has focused on the role of the £326bn Local Government Pension Scheme, the project believes PBII has the potential to become a new paradigm or lens for all kinds of investors.
As such, this project offers exciting potential to anyone interested in understanding how investment can yield financial returns, as well as generating social and environmental impact to enhance local economic resilience and sustainable development.
To receive updates about the PBII Project and information about opportunities to participate, sign up here.
PBII Innovation Lab
The PBII Innovation Lab represents the next exciting phase of the Place-based Impact Investing Project. After widespread market and policy interest in the model of Place-Based Impact Investment (PBII), TGE now proposes moving from concept to practice with the establishment of a ‘PBII Innovation Lab’.
Reaching across the UK, the Lab will provide solutions-focused walled gardens for local stakeholders, investors, businesses and experts to come together to develop PBII projects. The Lab creates a unique opportunity to connect local stakeholders directly with investors and vice versa. It will create a trusted environment where a mutual perspective can be gained on the reasonable expectations of local stakeholders and investors.
The expected outcomes of the Lab’s work are in line with the PBII White Paper’s recommended actions, namely to:
- Raise awareness and strengthen the identity of PBII as an investment approach that contributes to UK inclusive and sustainable development
- Build capacity and competence in PBII by sharing knowledge and learning across the ecosystem and focusing operational resource on co-creating investment solutions
- Develop and adopt reporting on place-based impact that provides accountability and transparency to all stakeholders over investments’ local social, economic and environmental benefits
- Connect investors and PBII opportunities
- Scale-up the development of existing and new institutional grade PBII products and funds.
Benefits for Local Stakeholders
- Exposure to new funders and funding mechanisms, leading to better understanding of the investment marketplace and investors’ needs and financing requirements
- Identify and develop ways in which local stakeholders can play a role in projects to reduce their risk and alter expected returns / overall attractiveness
- Establish how projects and therefore work commitments and resources can be prioritised based on their likelihood of securing external investment
- Examine the wider social benefits from projects and define how impacts can be measured, prioritised and reported.
Benefits for Investors
- Engage directly with local stakeholders and better understand the nature of local investment opportunities and place-based impact potential
- Develop local partnerships and explore how use of local or central government funding could be deployed in blended finance models
- Share due diligence and be at the forefront of the design of place-based impact investing strategies
- Develop and test place-based impact measurement, management and reporting approach.
To receive updates and learn about opportunities to participate in the next phase of the PBII Project (the PBII Innovation Laboratory) contact Sarah Forster via firstname.lastname@example.org.
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