Place-based impact investing (PBII) is an innovative approach that seeks to drive inclusive and sustainable development by connecting capital with local communities. It aims to address the unique needs of specific places, enhancing their economic resilience and prosperity. The Good Economy (TGE) has been at the forefront of this movement, facilitating PBII Innovation Labs across the UK to test how to develop new institutional and commercial pathways to mobilise private investment that is responsive to local priorities and helps drive inclusive and sustainable development for local people in communities across the country.

We set up the PBII Innovation Labs so that we could practically engage directly with the market and be a catalyst for change – using our knowledge and relationships with investors to help build a shared understanding of local problems and facilitate collaborative and innovative ways of working that would unlock productive forms of investment to benefit local communities – connecting capital to places.

This blog provides a summary of the findings from the PBII Innovation Labs – the full report can be downloaded here.

The PBII Model

The PBII conceptual model brings together places and investors around a number of ‘pillars’, underpinned by a solid social and financial rationale for investing. These pillars are dual structures: priority areas of local development strategies, and real economy sectors that fall within institutional investment strategies and asset classes. The model also highlights the importance of blended finance, combining different funding sources to maximise impact and financial returns.

Key Findings from the PBII Labs

The PBII Labs have yielded valuable insights into the challenges and opportunities of place-based impact investing. Some common themes emerged across the labs:

1. Local Government Challenges: Local governments face increasing complex challenges with diminishing resources. PBII offers a potential solution by attracting private investment to address local needs.
2. Engaged Asset Managers: There is a growing number of asset managers who are eager to contribute to sustainable development. PBII provides a platform for them to align their investments with positive social and environmental outcomes.
3. Building Trust and Understanding: Both local governments and investors often lack a clear understanding of each other’s needs and capabilities. A collaborative PBII approach fosters open conversations and builds trust between these stakeholders.
4. Common Language for Social Outcomes: Developing a shared language to discuss social impact and establishing common measurement frameworks is crucial for the success of PBII. This enables effective communication and evaluation of project outcomes.

Case Studies: PBII in Action

The PBII Labs were implemented in various locations across the UK, each with its unique context and challenges.

• South Essex: The lab for South Essex Councils focused on accelerating the delivery of affordable and net-zero homes. It identified a pipeline of projects and explored innovative financing models to achieve these goals.
• Manchester: The Manchester City Council lab tackled the issue of funding social housing reprovision within the context of estate regeneration. It highlighted the need for changes in grant funding policies to support such projects.
• Bath & North East Somerset: For BANES, the lab addressed the challenge of providing affordable housing for middle-income earners and key workers. It emphasised the importance of considering the total cost of occupancy and evaluating the social impact of housing projects.
• Dunoon, Scotland: The lab with the Dunoon Project focused on community-led regeneration through adventure tourism. It explored ways to raise investment for this ambitious project and emphasised the need for a robust impact measurement framework.

The Future of PBII

The PBII Labs demonstrated the potential of place-based impact investing to drive positive change in local communities. The lessons learned from these labs were used to establish the PBII Network, a trusted environment for knowledge sharing and collaboration between local authorities and investors. The network also supports research and development to further refine the PBII model and promote its adoption across the UK.

Conclusion

The PBII Labs may not have uncovered the ‘silver bullet’ for funding solutions to local problems. However, they have fuelled the groundswell of interest in PBII as the new paradigm required to achieve sustainable development. They have also helped to build new relationships, develop mutual knowledge and understanding between local government and private investors and uncovered systemic issues that need addressing.

Place-based impact investing is a powerful tool for addressing social and economic challenges at the local level. By connecting capital with communities, PBII can unlock new opportunities for sustainable development and create a more equitable and prosperous future for all. The Good Economy’s PBII work has paved the way for a new era of impact investing, one that is rooted in collaboration, innovation, and a commitment to positive social and environmental outcomes.

PBII Labs Findings Report

Download the report here to read the full findings

Get Involved

Get in touch to find out how you could get involved in the PBII movement.