Our goal

We are producing an evidence base for institutional investors of impact investments across asset classes and geographies. UK pension funds in particular, are increasingly adopting sustainable responsible and impact investing practices, reflecting the desire of members for their pensions to be sustainable and reflect their values. We want to make it easier for pension schemes to identify and embrace impact investment opportunities. As well as UK-specific asset classes and broader opportunities outside the UK, we have also produced evidence to help investors consider impact investments in emerging and frontier markets. 

What we are doing to achieve it

We developed a set of case studies of impact investments in emerging and frontier markets made by institutional investors including pension funds, providing concrete examples of impact investments that meet the specific needs of UK institutional investors.

The case studies were developed in partnership with Dalberg Advisors and with support from the Foreign, Commonwealth and Development Office’s IMPACT Programme and cover multiple asset classes, themes and geographies, including emerging and frontier markets in Africa, Asia and other global regions. They are accompanied by asset class profiles, which summarise key asset class trends and opportunities in emerging and frontier markets from the perspective of institutional investors.

Our evidence shows, most importantly, that significant and measurable impact can be achieved while delivering a risk-adjusted financial return that is suitable for pension funds.

The case studies also show:

  • Contrary to a prevailing misconception, pension funds can and do make impact investments in emerging and frontier markets. More and more pension funds are integrating emerging markets impact investments into diversified global investment portfolios. This includes pension funds based in Europe and in countries such as the US, Canada and Japan.
  • There are diverse impact investment opportunities available to pension fund investors in emerging and frontier markets. Pension funds invest in both public and private markets, across different asset classes, thematic areas, geographies and expectations in terms of financial returns and environmental and social impact.
  • Impact investing opportunities in emerging and frontier markets are becoming more innovative and sophisticated with the increasing need and opportunity to attract more institutional capital. Asset managers and intermediaries are developing innovative solutions to address the most common concerns of institutional investors, for example around currency, liquidity or ticket sizes, that may prevent them from investing in emerging and frontier markets. Partnerships between private and public investors in the market are important and include the key role that can be played by development finance institutions and multi-lateral development banks in providing investment opportunities with conditions suitable for pension fund investors.

In the coming months, we will engage with UK pension funds around the case studies and broader opportunities for impact investing in emerging and frontier markets and support them in embracing those opportunities. If you are a pension fund trustee, consultant, member of an in-house investment team, or an investment manager interested in finding out more, please contact us at [email protected].

Case studies

Ninety One Africa Credit Opportunities Fund 2 (ACO 2) is a senior private credit fund investing in market dominant companies in African financial inclusion, infrastructure and telecoms sectors.

The fund targets the development of the African Debt Capital Markets (DCM) by creating an alternative asset class, crowding in African pension funds.

BlueOrchard’s Schroder International Selection Fund Emerging Markets Climate Bond Fund (CBF) launched in Q2 2021 with seed capital of $75 million. The UCITS fund purchases mainly green bonds, as well as sustainability bonds, sustainability-linked bonds and general bonds aligned to climate action.

HS Fund II SA (FII) invests in the acquisition and development of affordable residential real estate in South Africa targeted primarily at lower- and middle-income households with an average market value per unit of less than ZAR650,000 (adjusted by consumer price index from January 15).

Publications

Reducing and absorbing carbon emissions at the speed and scale needed to safeguard our planet requires vast amounts of capital. At the same time a global consensus is emerging that to be sustained and successful, this transition needs to be socially inclusive. Capital will need to be invested in ways that support a Just Transition towards a Net Zero world that is fair and beneficial for all – including the delivery of the United Nations’ Sustainable Development Goals (SDGs).

In 2017, Dame Elizabeth Corley, Chair of the Impact Investing Institute, convened the first meeting of the Taskforce for Growing a Culture of Social Impact Investing in the UK. Since then, the impact investing market has developed significantly – but until now there has not been an estimate of the size of the UK market in its totality. Our report, “Estimating and describing the UK impact investing market”, published in partnership with EY and supported by the Department for Digital, Media, Culture and Sport and Big Society Capital, sets out to change this.

This document presents a summary of the key insights gathered in each session of our Knowledge Exchange Series from market-builders operating in a variety of national contexts, as well as leading practitioners and thought leaders who were invited as guest speakers in different sessions. These insights provide an accurate reflection of the challenges, opportunities, solutions and lessons learnt from impact investing champions across the globe.

News & Views

The Impact Taskforce, the independent, industry-led taskforce supported by the G7 Presidency, has released its recommendations aimed at financing a Just Transition to a climate-secure future for all. The recommendations are focused on transforming the quality and transparency of information on the impact of investment decisions and deploying financing, especially in emerging markets, that delivers positive social and environmental impact.

The Leadership Council, in partnership with the charity pilotlight, have published a new report, The Great British Talent Swap, calling for a sharing of talent and experience between the charitable and commercial sectors.

The Impact Taskforce, established under the UK’s 2021 presidency of the G7, is pleased to announce the group’s members.

The new Taskforce is composed of global leaders from the world of business, public policy, and the social sector, including senior figures from BlackRock, Temasek, Schroders, Mahindra Group, Morgan Stanley, S&P Global, BASF, the World Bank, the International Monetary Fund and the European Commission.

Events

The Finance for Impact Summit on Monday, 18 July 2022 will bring together leaders of finance, business, governments and other institutions from around the world to discuss how we can better harness finance for the good of people and the planet. This one-day event will be held in person at Mansion House in London, and streamed live to a global audience.

Research by MOBILIST and Intellidex has highlighted a growing tension between ESG investment strategies and flows to emerging and frontier markets. While…