Scaling up institutional investment for place-based impact
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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.
Led by The Good Economy, the Impact Investing Institute and Pensions for Purpose, the place-based impact investing project was set up to explore how to scale-up institutional investment into opportunities that would connect capital to place. These investment opportunities include social and affordable housing, small business finance, clean energy, infrastructure and regeneration.
While the initial phase of the project has focused on the role of the £326bn Local Government Pension Scheme, 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 exploring how investment can yield financial returns, as well as generating social and environmental impact to enhance local economic resilience and sustainable development.
The project has been funded by the Department for Digital, Culture, Media and Sport; City of London Corporation; and Big Society Capital.
The power of the Local Government Pension Scheme and beyondOur research initially focused on the £326 billion Local Government Pension Scheme (LGPS) and the potential to unlock £16 billion aimed at delivering both financial returns and responding to the needs and opportunities of specific places. While the LGPS are a natural partner for this work, place-based impact investing is a relevant lens that can be adopted by all investors. The £1 trillion ‘levelling up’ agenda and efforts to build back better after the coronavirus pandemic are long-term, national challenges that need to be addressed in regional and local communities and economies across the UK. We need to mobilise different private sector actors to meet these ambitions.
Focusing on investment opportunitiesThe report shows that there are real opportunities for investors to secure financial returns while addressing place-based inequalities and support more inclusive and sustainable development across the UK. There are no hard barriers to scaling up place-based impact investing.
The five pillars of place-based impact investing Our research shows that investments within five key sectors – affordable housing, small- and medium-sized enterprise (SME) finance, clean energy, infrastructure and regeneration – can deliver risk-adjusted financial returns in line with institutional investor requirements. Those five pillars are underpinned by a solid social and financial rationale for investing.
Impact measurement, management and reporting are key Impact measurement, management and reporting are critical to harnessing place-based impact investing opportunities. It is a golden thread that can align and bring together stakeholders, and it can build trust. Good impact reporting can provide transparency and accountability for how money is invested.
Video recording
Audio recording
Speakers
Jamie Broderick (moderator)
Director and Lead Expert, Impact Investing Institute
Jamie Broderick (moderator)
Director and Lead Expert, Impact Investing Institute
Before working with the Institute and its predecessor Impact Investing Taskforce, Jamie was head of UBS Wealth Management in the UK. Jamie joined UBS after nineteen years at J.P. Morgan Asset Management, latterly as Chief Executive of its European operations.
Sarah Forster
CEO and Co-Founder, The Good Economy
Sarah Forster
CEO and Co-Founder, The Good Economy
Sarah Forster is CEO and Co-Founder of The Good Economy. She has worked at the forefront of finance for positive impact for more than 25 years, working in the fields of sustainable economic development, development finance and impact measurement and management.
Sarah co-founded The Good Economy in 2015 to enhance the role of business and finance in inclusive and sustainable development. She acts as a trusted advisor to clients across the private, public and social sectors.
Sarah Teacher is Executive Director of the Impact Investing Institute, a non-profit organisation that seeks to accelerate the growth and improve the effectiveness of the impact investing market in the UK and internationally. Sarah came to the Institute from Lendlease Europe where she served as Social Impact Investment Manager within its European Investment Management business. Sarah was responsible for developing the impact investing strategy at Lendlease and supporting the development of impact investing propositions.
Prior to her work at Lendlease Sarah worked in roles at the intersection of social impact, sustainability and private capital – be that corporate investment or philanthropic. She was a Consultant at Sancroft International (2013-2017), an international sustainability consultancy focused on the social, environmental and ethical risks faced by major businesses; an Associate at On Purpose, a one-year programme for early-career professionals identified as future leaders in social enterprise (2012-13); and Director for Next Generation Philanthropy at the Institute for Philanthropy (2006-2010), leading workshops for philanthropists interested in increasing the impact of their giving.
Sarah graduated from Lady Margaret Hall College, Oxford, in 2005 with a first-class degree in Modern History, and obtained an MPhil in Development Studies from Clare College, Cambridge in 2011. She serves as a Director of Rockefeller Philanthropy Advisors and its European Chair.
Mark Hepworth
Research and Policy Director and Co-Founder, The Good Economy
Mark Hepworth
Research and Policy Director and Co-Founder, The Good Economy
Mark Hepworth is The Good Economy’s research and policy director, leading its work on inclusive and sustainable development. Mark is a multidisciplinary economist whose international career spans academia, public policy and business consultancy.
His focus at The Good Economy is on business-led inclusive growth, Place-Based Impact Investing and the UN Sustainable Development Goals as future drivers of business model innovation and transformative policy.
Mark has deep knowledge of the UK economic development landscape through his research at the Universities of Newcastle and London and policy consultancy at the Local Futures Group, which he co-founded in 1997 (now part of Grant Thornton).
Paul Stanworth
Principal Advisor, The Good Economy
Paul Stanworth
Principal Advisor, The Good Economy
Paul Stanworth is currently CIO of 777 Asset Management and a former CEO of Legal & General Capital, which he set up to pioneer the drive for socially useful investments by large institutions.
Prior to this, he was Managing Director with Merrill Lynch and Deutsche Bank providing derivative and structured solutions for insurers and also previously held executive positions at Royal Bank of Scotland and Prudential (UK). He has held positions across asset management, finance and insurance.
As a principal associate at The Good Economy, Paul has co-led the PBII research programme alongside Sarah Forster and Mark Hepworth.
Karen Shackleton
Founder, Pensions for Purpose & Non-Executive Chair, Resonance
Karen Shackleton
Founder, Pensions for Purpose & Non-Executive Chair, Resonance
Karen Shackleton has worked in the finance sector for over 30 years. She provides independent investment advice to pension funds, is the non-executive Chair of impact manager Resonance and founder of Pensions for Purpose, an information-sharing platform on impact investment.
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