Joint project on place-based investment

The Impact Investing Institute, together with the Good Economy and Pensions for Purpose, is working on a collaborative project aimed at mobilising more flows of institutional investment to address place-based inequalities and support more inclusive and sustainable development across the UK.

Place-based impact investments include investments in social and affordable housing, clean energy, infrastructure and small and medium sized businesses.

What is place-based impact investing?

We define place-based impact investing as “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.”

We assess place-based investing 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.

The coronavirus pandemic has heightened public awareness of place-based inequalities across the UK and the importance of the Government’s agenda to tackle them. We believe it is the right time for mainstream institutional investors, like pension funds, to consider the opportunities presented by place-based investing, both with regards to financial return as well as positive social, environmental and economic impacts in local communities across the UK.

What are the goals of our joint project?

Our goal is to build market knowledge and influence institutional investors, such as local government pension schemes, to consider the opportunities to invest in asset classes that deliver financial returns alongside positive social, environmental and economic impacts in local communities, towns and region. The three main project objectives are to:

  1. 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
  2. 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
  3. 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 findings of the project will be published in a White Paper in 2021.