Our goal

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]

Pension Scheme Adopters

Investment Consultant and Fiduciary Manager Adopters

Supporters

Case studies

Clwyd Pension Fund is one of the 89 local funds that form the Local Government Pension Scheme in England and Wales. Representing 52 employers, they have a total of 48,800 members and manage assets of £2.3 billion.

The Greater Manchester Property Venture Fund (GMPVF) was created by the Greater Manchester Pension Fund in 1990. It is a specialised vehicle for the LGPF to invest in property developments in Greater Manchester and across the wider North West area which generate a commercially viable rate of return.

South Yorkshire Pensions Authority is responsible for administering the Local Government Pension Scheme in South Yorkshire. With over 166,000 members, they represent 533 employers and manage assets of £9.9 billion. Alongside adopting the Impact Investing Principles for Pensions, they are aiming for a 5% allocation to impact investments and to achieve net zero by 2030.

Publications

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.

In October 2021, the Department for Work and Pensions launched their consultation “Climate and investment reporting: setting expectations and empowering savers.” We welcome this timely consultation which introduces important and valuable new ways for pension schemes to invest lawfully, responsibly and with impact. We believe, however, that further steps can be taken by the Department to remove existing barriers to impact investing and ensure that the transition to Net Zero benefits the communities most affected by it.

In partnership with Property Funds Research and supported by Homes England and Investment Property Forum, we have published a ground-breaking and comprehensive report detailing the investment case for UK social housing.

Learning Hub modules

Private capital, including pension money, can address place-based inequalities across the UK and secure financial returns at the same time. This module explores how.

Place-based impact investments are made with the intention to yield appropriate risk-adjusted financial returns as well as positive local impact, with a focus on addressing the needs of specific places to enhance local economic resilience, prosperity and sustainable development.

Local government pension funds have a legacy and interest in local investing. If 5% of LGPS funds were allocated to local investment this would unlock £16 billion for place-based impact investing, more than matching public investment in levelling up.

News & Views

All war, wherever in the world it takes place, imposes huge costs and suffering, particularly on civilians. At this time, the Impact Investing Institute shares the world’s horror at the events unfolding in Ukraine and the suffering the invasion by Russia’s armed forces has brought to everybody in Ukraine.

The Impact Investing Institute welcomes the publication of the landmark Levelling Up White Paper and the ambitious, new approach it sets out, designed to re-focus Government spending on tackling place-based inequalities.

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.

Events

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

Held in partnership with the University of Glasgow, this event will feature two panel discussions focusing on issues which are central to the ongoing development of sustainable finance in the UK: green bonds, and fiduciary duty and sustainable investment.