What are place-based impact investments?

“Place-based impact investments are investments 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.” (Source: The Good Economy). 

Why is placed-based impact investing important?

Because places matter. 

Where we live and the areas which we travel through and between, shape our lives. The places we rest, shop, exercise, work, play and meet each other in affect our identities, determine health and educational outcomes, and define access to opportunities and networks of social and community support. 

Well designed, built and maintained places help people thrive. They can help to improve well-being and drive economic growth and prosperity and reduce entrenched inequalities.    

An economy that works for all requires an intentional approach to place.  Place-based impact investing puts the investment community at the heart of delivering creative solutions which produce measurable benefits across a wide range of social outcomes. 

With the costs to the nation of levelling up expected to exceed £1 trillion over the next 10 years (Source: The UK 2070 Commission’s ‘Go Big Go Local’ report, October 2020), it is clear public investment will need to be matched by private investment. Therefore, there is a real opportunity for responsible, patient private capital to invest directly in UK towns, cities and regions in ways that enhance local resilience as well as driving more inclusive and sustainable development.  

The sectors that represent investment opportunities include but are not limited to: affordable housing, clean energy, regeneration, small and medium-enterprise (SME) finance and infrastructure.  


Mobilising more institutional investors to engage in place-based impact investing

We want to make it easier for institutional investors, in particular local government pension schemes, to consider the opportunities presented by place-based impact investing, both with regard to financial return as well as to positive social, environmental and economic impacts in local communities across the UK. 

Together with The Good Economy and Pensions for Purpose, we have published a joint white paper – “Scaling up institutional investment for place-based impact” – which sets out the case for institutional investors to adopt a “place-based lens.” 

The report shows that there are real opportunities for investors to secure financial returns while addressing place-based inequalities and supporting more inclusive and sustainable development across the UK. 

We are now implementing the recommendations of the report, working with Local Government Pension Schemes, fund managers, pension consultants, local authorities and other key stakeholders in this space to: raise awareness of place-based impact investing; build capacity to deliver place-based impact investing; improve impact frameworks on place-based impact investing; scope out origination platforms suited to facilitating place-based impact investing; and develop financing vehicles on place.  

This element of our PBII Programme is funded by the Department for Digital, Culture, Media and Sport, and the City of London Corporation.

Innovation to deliver better financing for place-based regeneration

We are partnering with Lloyds Banking Group and place consultancies Metro Dynamics and RW Ventures on an exciting project within our place-based impact investing workstream.

This project focuses on how UK financial institutions can apply a place-based lens to their investment approach and will explore their role in promoting regional regeneration.

Across 2021 we will explore how UK banks can more actively engage with and support places in tackling important issues and investing for the future. Taking forward impact investment in a meaningful way will involve increasing the dialogue between places, businesses and people, and financial institutions. This may require new products and services from financial institutions, new forms of engagement, a focus on deliverability at the local level, and innovative solutions across the board. 

We are working closely with three ‘pathfinder’ places – Birmingham, Leeds and Liverpool – to help us build our understanding. We will be publishing a report on this project in winter 2021.

Please be in touch with shadi.brazell@impactinvest.org.uk if you have ideas or contributions you would like to make.  

Publications

Our joint white paper “Scaling up institutional investment for place-based impact” sets out the case for institutional investors to adopt a “place-based lens.” The 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.

In our first impact report for 2019-20, we are reflecting on our achievements of our first year and are looking ahead to how we can work towards our goal of improving people’s lives, as more capital contributes to addressing social and environmental challenges.

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.

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

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.

Events

The UK continues to experience significant shortages of affordable housing and yet the role of private finance in contributing answers to this…

What are the social impacts of the transition to a net-zero world? How can we mobilise private sector capital to deliver a Just Transition? Can impact investing be a key enabler in achieving the UN Sustainable Development Goals?

Join the Impact Investing Institute and International Chamber of Commerce on Wednesday, 8th September 14:00-16:00 BST, as we bring together key voices to discuss the importance of financing a global Just Transition.

New research out now

White Paper: Scaling up institutional investment for place-based impact

Our joint white paper “Scaling up institutional investment for place-based impact,” based on the collaborative “Place-Based Impact Investing Project (PBII)” by the Impact Investing Institute, The Good Economy and Pensions for Purpose, sets out the case for institutional investors to adopt a “place-based lens.”