A new framework being developed by a collaborative working group will soon be available to local government pension schemes to demonstrate how their members’ money is having a positive impact locally. LGPSs and other asset owners are currently involved in the working group’s efforts to refine reporting metrics and definitions.
The working group forms part of the Place-Based Impact Investment initiative launched by The Good Economy, Pensions for Purpose and the Impact Investing Institute last year. The PBII initiative seeks to mobilise institutional capital into impact investments that help tackle inequality within and between places and contribute to a just transition.
The initiative, which is funded by the Impact Investing Institute, calculates that LGPSs alone could put £16bn to work in these real-economy investments, which are characterised by their intentionality and stakeholder engagement. Core areas for PBII activity (termed ‘pillars’) are clean energy, housing, infrastructure, regeneration and SME finance.
TGE is now chairing a working group on PBII reporting that involves both asset owners like LGPSs and fund managers (see a full list of members below). Involving both asset owners and fund managers underscores the working group’s partnership approach.
The group responds to the PBII white paper’s third recommendation – to promote the adoption of reporting on place-based impact. It is one of several areas of further work to take the initiative forward and help scale up PBII activity in the UK.
Impact measurement, management and reporting is a key part of this effort. As asset owners need consistent, comparable and transparent data to understand the impact of their place-based investing through fund managers, and to report this to their scheme members, the working group is now refining the initial set of metrics shared in the white paper. Drawing on the Impact Management Project’s dimensions and classification of impact.
In addition, the working group is defining what is included in each of the five PBII pillars and developing a consensus over a methodology for capturing and sharing data.
The working group aims to publish its reporting framework in January. This will enable LGPSs and other asset owners to report their performance in their annual reports to members later in the year.
"As managers of our scheme members pension savings we have a duty to explain to them how those savings are being used not just in terms of cash returns, but also in terms of the way those savings interact with people and planet. This initiative aims to provide a key part of the toolkit which will allow us to achieve this.”
George Graham Fund Director – South Yorkshire Pensions Authority
“West Yorkshire Pension Fund believes effective place-based impact investing is compatible with our fiduciary duty to our members.”
Robert Hulme Responsible Investment Engagement Manager – West Yorkshire Pension Fund
“We are delighted to participate in this working group. Triple Point are passionate about putting capital to work through purposeful and profitable solutions and we see great alignment in what we seek to do and the goals of Place Based Impact Investing. We believe success for the PBII initiative will come through industry collaboration and credible application of the concept, for which consistent, comparable and transparent measurement are critical.”
Lindsay Smart Head of Sustainability - Triple Point
The current working group comprises 14 members, including:
- Impax Asset Management
- South Yorkshire Pensions Authority
- St. Bride’s Managers
- Triple Point
- West Yorkshire Pension Fund
Asset owners and fund managers wishing to contribute to the working group should contact Andy Smith at TGE (firstname.lastname@example.org).