TGE starts work on project to mobilise institutional capital for place-based impact

Fri, November 20th, 2020

The Good Economy, the Impact Investing Institute, and Pensions for Purpose have joined forces to lead a collaborative market-building project with the aim of mobilising institutional investment, particularly UK pension funds, to support place-based impact investments.

Project aims

The aim of the Place-Based Impact Investing initiative is to build market knowledge and influence pension and other institutional investors to consider the opportunities to invest in asset classes that deliver long-term financial returns as well as tangible place-based environmental, economic and social impacts. This could include investments in housing, clean energy, infrastructure and SMEs.

TGE has appointed former L&G Capital CEO Paul Stanworth to work on
the project alongside the company’s CEO Sarah Forster and co-founder and Director of Research and Policy Mark Hepworth.

Speaking to Social Housing magazine, Mark said: “The project is about how to connect capital to communities, particularly those that need it most. The trick is how to create investment formulas which are sympathetic to place-based policy and also reflective of the fact that we have investors who need to make returns?”

A key part of this will be to address the lack of current data on existing investments that have the potential to have a positive local impact including affordable housing, clean energy, infrastructure and SMEs. “Investors like to see a long history of returns in an asset class before they get involved in it, which is rather difficult from an innovator perspective because you’ve got a chicken and egg problem,” said Paul Stanworth.

Photo by Okwaeze Otusi
The trick is how to create investment formulas which are sympathetic to place-based policy and also reflective of the fact that we have investors who need to make returns?
Mark Hepworth, co-founder, The Good Economy
PBII context

Traditionally, place-based policy and projects relied on government and EU funding, as well as grant funding from foundations. While the project partners insist public finance must continue to play a critical role, the project will focus on opportunities for private capital to invest in ways that deliver inclusive and sustainable development, as well as long-term, risk-adjusted financial returns.

The project is timely given increasing market demand for ESG and impact investing opportunities from institutional investors, and the development of impact strategies and products by mainstream asset managers.

Meanwhile, Covid-19 has made the place-based ‘levelling up’ agenda has given added relevance to the project. The negative impacts of Covid have highlighted the need for large-scale investment and innovative collaborative approaches to the post-Covid economic recovery.

The Good Economy team is currently conducting stakeholder interviews with local government pension fund managers, corporate pension funds, local government, central government, investment managers, investment advisors and relevant trade bodies. The plan is to publish a White Paper outlining its recommendations in early 2021.

The PBII initiative is sponsored by the Department for Digital, Culture, Media and Sport, as well as the City of London Corporation and Big Society Capital.

Want to know more?

If you would like to learn more about the project or be part of the process, please email sarah@thegoodeconomy.co.uk.

Our Publications
Project summary Mobilising institutional investment for place-based impact: a collaborative market building initiative A project summary for the Place-Based Impact Investing initiative led by The Good Economy, the Impact Investing Institute and Pensions for Purpose (October 2020)
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