The Place-Based Impact Investing Project
Mobilising institutional investment for place-based impact: a collaborative market-building initiative led by The Good Economy, the Impact Investing Institute and Pensions for Purpose
The Good Economy has joined forces with the Impact Investing Institute and Pensions for Purpose on a collaborative project designed to mobilise greater flows of institutional investment to more inclusive and sustainable development across the UK.
The aim of the project 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 affordable housing, clean energy, infrastructure and SMEs among others.
The project is being led by The Good Economy’s directors Sarah Forster and Mark Hepworth, and Paul Stanworth, a former CEO of Legal and General Capital.
What is Place-Based Impact Investing (PBII)?
For the purposes of this project, we use the following working definition of place-based impact investing:
Investments made with the intention to yield both financial and social and/or environmental returns with a focus on addressing the needs of specific places, particularly marginalised communities, to enhance local economic resilience, prosperity and sustainable development.
This is a wide and inclusive approach to place-based impact investing. It recognises and encompasses the pioneering work that is being done to scale-up social investment for social enterprises and charities tackling social issues in specific places led by organisations. Our focus is on building the market for institutional investment that delivers place-based impact alongside financial returns.
We assess PBII as having three core characteristics:
- Intentionality to direct capital towards a specific region or local community to enhance economic resilience, prosperity and sustainable development
- Engagement and collaboration with local stakeholders to ensure investments respond to local needs and priorities, benefiting local people and businesses
- Patient approach to investing with an aim to achieve long-term, sustainable financial and social value creation.
Investments made with the intention to yield both financial and social and/or environmental returns with a focus on addressing the needs of specific places, particularly marginalised communities.
What are the objectives of our PBII initiative?
The overarching aim of the project is to help mobilise greater flows of institutional investment into place-based impact investment (PBII), which delivers both financial returns and positive impacts for communities, towns and regions, particularly those afflicted by long-term under-investment.
The specific project objectives are to:
- Develop a conceptual framework to characterise, define and measure the impact of PBII that is useful to both investors and local stakeholders and is taken forward for widespread consultation and adoption
- Build an evidence base on the current level of PBII by Local Government Pension Schemes (LGPS) in the UK and the PBII opportunity from a financial performance perspective
- Carry out a critical review of existing institutional asset management models that focus on PBII-aligned investments, present findings on where gaps exist and make recommendations on how to scale up existing, or develop new, models to mobilise greater flows of institutional investment to PBII.
The outputs and findings from this project are expected to help raise awareness, address the barriers and increase confidence in place-based impact investing among LGPS and other institutional investors.
An idea whose time has come
The Government has made tackling the UK’s extreme place-based inequalities a high priority and impact investing is gaining ground with mainstream institutional investors, including pension funds. These converging policy and investment trends suggest place-based impact investing may well be an idea whose time has come.
Interested in being involved?
We want to involve key stakeholders in the project, including LGPS trustees and managers, other pension funds and asset owners with a place-based interest, asset managers, local authorities, central government, pension industry bodies and potential investee funds and organisations. If you would like more information, please email us at email@example.com.