We aim to make it easier for pension schemes to invest with impact. We help them reduce negative impacts and risks like carbon emissions, biodiversity loss, poor governance and inequality that arise from their portfolio. One of the Institute’s top priorities is debunking the myth that impact investing means sacrificing financial returns. We have also demonstrated that an impact approach is entirely compatible with pension trustees’ and advisors’ fiduciary duties.
What we are doing to achieve it
We are working across the pensions industry – with pension schemes, investment consultants, asset managers, policy makers, lawyers and industry experts – to debunk some common myths about impact investing. The most common misconception among pension trustees and advisors, who are understandably concerned about their fiduciary duties, is that impact investing means sacrificing financial returns.
Fiduciary duty is not a barrier to impact investing
To address the common myth that impact investing is at odds with pension trustees’ fiduciary duty – the legal obligation on trustees to act in the best interest of the scheme’s members – we produced a legal paper that explains how fiduciary duty and impact investing are compatible. The paper was written and attested by five leading law firms.
We also produced a short explainer video debunking some of the most common misconceptions about impact investing with the generous sponsorship of Barnett Waddingham.
Practical principles to empower pensions to invest with impact
Together with leading practitioners from across the pensions sector, we have developed four Impact Investing Principles for Pensions. They are a practical guide to impact investing and provide four concrete steps pension schemes can take to pursue an impact investing strategy.
In partnership with Pensions for Purpose, we run the Adopters Forum – a member forum of pension schemes, investment consultants and fiduciary managers that have committed to the Impact Investing Principles for Pensions. Current members have over £16.8 billion in assets.
We have also published case study examples of pension funds that are already successfully integrating impact into their investment decisions to help others do the same.
How were the Principles designed?
The Principles were designed and tested through consultation with people across the pensions industry, in partnership with Pensions for Purpose.
The Principles offer a good governance framework that accompanies the investment process at every stage in the investment chain. It explains elements such as: how pension schemes can put in place objectives and establish an implementation framework; how to hold investment consultants and managers to account; as well as how to report on what is being achieved through a balanced measurement framework.
Who can use the Principles?
The Principles are designed to be used by trustees, local government pension scheme (LGPS) committee members, advisers and in-house investment teams across the full spectrum of pension schemes.
They are also a useful tool for investment consultants, fiduciary managers and asset managers working with clients.
How can you take action? Become an adopter.
Join our Adopters Forum. The Forum is run by Pensions for Purpose in partnership with the Impact Investing Institute to advance the Principles, share best practice and encourage more pension funds to invest with a positive social and environmental impact.
Members of the forum benefit from:
- A unique peer network where members can share experiences in pursuing impact investing
- Being at the forefront of a growing area of investment opportunities
- A quarterly newsletter
- Invitations to quarterly events
- Case study and research material
- An invitation to Pensions for Purpose’s Annual Awards Event which will feature an Impact Investing Adopters Award for Pension Funds
Become a supporter or share your experience
You can become a supporter of the Principles if you are an industry body or an organisation working with pensions and support our Principles. But even if you are not ready to become a supporter, we want to hear from you. Do you have any successes or challenges around impact investing which you would like to share with us? Could your experience be a case study? Get in touch with us at [email protected]