Our goal

Our goal is to champion impact investing that drives positive outcomes in underinvested places around the UK.  

We want to see more financial institutions adopt a place-based impact investing approach and make more investments “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).  

This is because we believe that 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.  

The opportunities presented by place-based impact investing are mutually reinforcing: financial institutions can create new markets for commercially viable investment that generates social and environmental benefits, while places can gain access to previously untapped capital to fund transformational local growth without over-reliance on grants.   

What we are doing to achieve it 

There is no set roadmap for addressing regional inequality and rebalancing access to opportunity between and within places, but an economy that works for all requires an intentional approach to place. Places become ‘underperforming’, ‘left behind’ and ‘underinvested’ as a result of a complex combination of factors which culminate in market failure and vicious cycles of asset depreciation. 

By working together, places and financial institutions, supported by an encouraging policy and regulatory context set by Government, can start to break those cycles. 

While, of course, the worlds of finance and regeneration have intersected for a long time, place-based impact investing seeks to frame the involvement of private finance in regeneration and community wealth creation in the UK in a new way, building on the lessons of the past and carving a new niche for responsible mainstream financial institutions in addressing the challenges we face. 

This started with “Scaling up institutional investment for place-based impact”, published in May 2021 and delivered by the Impact Investing Institute in partnership with The Good Economy and Pensions for Purpose, which sets out the case for institutional investors, focusing on local government pension schemes, to adopt a place-based approach. The paper has since been cited in several Government reports, including the “Levelling Up the United Kingdom” White Paper 

That report identified five key barriers to place-based impact investing by institutional investors. These are: 

  1. Lack of awareness of place-based impact investing 
  1. Lack of appropriate financing vehicles through which to invest 
  1. Lack of impact measurement frameworks 
  1. Issues around origination of investable projects 
  1. Lack of capacity and capability across these issues within many key organisations, including local authorities, financial institutions and government. 

The Institute has therefore been working to address these barriers, undertaking projects on financing vehicles, investment origination, impact measurement, management and reporting, consistently seeking to increase awareness of place-based impact investing across the financial ecosystem, and working with places to increase their capacity to work with investors to address the challenges they face.  

Financing structures for place-based impact investing – what works?

Our report, “Financing structures for place-based impact investing – what works?”, sets out the key characteristics successful place-based impacting investing vehicles must possess, showcases a number of structures they can adopt and outlines a set of case studies which demonstrate these principles in practice.The report’s four case studiesBristol & Bath Regional Capital,Schroder BSC Social Impact Trust plc,English Cities FundandSocial Investment Business Recovery Loan Fund 2 offer a blueprint for investment products which deliver for investors, communities and places. We know that there is a growing demand from investors for investable entities which deliver positive social and/or environmental benefits in particular regions or localities and we hope these examples can serve as inspiration for the development of new structures.

Read the report here

Originating place-based impact investments

The origination of place-based impact investment opportunities is highly complex and can make it difficult to connect institutional investors seeking to adopt place-based strategies with the fund managers and enterpriseswho meet their needs. Our report, “Originating place-based impact investments”, tests the hypothesis that this issue can be addressed through a ‘platform’ solution.  

We conclude based on our analysis that while there exists a gap in information intermediation in place-based impact investing, a web-based origination platform alone is unlikely to mobilise private capital into this area. 

Instead of focusing on a single, web-based solution, this report makes other recommendations on how better to support the place-based impact investing market. 

Read the report here

Impact measurement, management and reporting

Along with The Good Economy, the Institute has been working to develop an approach to impact reporting for place-based impact investments. The framework continues to be iterated in conjunction with an expert working group, which seeks to define those metrics which it would be both practical and useful to collect data on for the purposes of monitoring an investment’s impact. 

Learn more here

Our project with Lloyds Banking Group

We partnered with Lloyds Banking Group andplace consultancies Metro Dynamics and RW Ventureson a project which focused on the role for mainstream UK financial institutions in regional regeneration.    

The report,“Building Strong Places: a new, impactful role for financial institutions”recognises the urgent need for transformational investment that improves people’s lives while futureproofing the UK economy, particularly given the importance of a socially-just climate transition and the economic crisis caused by Covid-19.   

Drawing on lessons from the US, and our work in three ‘pathfinder’ places – Birmingham, Leeds and Liverpool – the report establishes thatplaces and financial institutions can work together to create and deliver projectswhich both improve people’s lives, contribute to local economic resilience and generate an appropriate risk-adjusted financial return. 

The Institute and Metro Dynamics also created a place-based impact investing Toolkit following this project, designed to support both places and financial institutions looking to develop their place-based impact investing approaches.  

You can find out more about this project in the video below.   

Read the report here

The Future 

Going forward, the Institute’s Place Programme will focus on four workstreams:  

  1. Communicating with investors to encourage more and new private capital to be invested through a place-based impact approach. 
  1. Building mixed investors and community coalitions in place, bringing together the key stakeholders in the market in particular areas to create opportunities and facilitate mutual learning.  
  1. Supporting the Community Development Finance Institution (CDFI) sector to reach its full potential in creating social impact through investing in underserved communities in the UK. The Institute will be scoping the development of a financing structure which would enable and encourage mainstream financial institutions to invest in CDFIs as well as working closely with CDFIs to improve and communicate their investment readiness. 
  1. Continue to engage with policymakers, Government agencies and regulators to raise general awareness of the opportunities presented by place-based impact investment and to offer expert advice.  

Programme Funder

Project Partners

Please be in touch if you have ideas or contributions you would like to make.  

Shadi Brazell

Programme Manager, Place-Based Impact Investing

Case studies

The London Fund was launched in January 2020 as a collaboration between two LGPS investment pools – the London Collective Investment Vehicle (LCIV) and Local Pension Partnership Investments (LPPI) – to enable London LGPS funds to access investment opportunities in three of the PBII pillars – housing infrastructure and SME finance – across the Greater London area and surrounds.

South Yorkshire Pension Fund is the eighth largest LGPS fund in the UK as of 2020. SYPA has a longstanding commitment to investing within the South Yorkshire region with the aim of generating a commercial return and positive local impacts. SYPA has made investments across all the key PBII sectors including SME finance, affordable housing and renewable energy.

There has been a rapid rise in institutional investment in social and affordable housing over the last few years bringing equity into the sector. Recent research commissioned by the Impact Investing Institute found that the social housing sector provides attractive risk-adjusted opportunities for both equity and debt investors.

Publications

In May 2022, BEIS, DEFRA and HMT published a call for evidence ahead of the UK government’s update to its Green Finance Strategy, expected later…

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 May 2021, our white paper “Scaling up institutional investment for place-based impact” identified a barrier which could prevent institutional investors from adopting a place-based approach: the lack of appropriate financing vehicles through which to invest. Our new report tackles this barrier head on, setting out the key characteristics viable vehicles must possess, a variety of structures they can adopt and a set of case studies which demonstrate these principles in practice.

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

This blog, written by Shadi Brazell, our programme manager for place-based impact investing, first appeared in the March edition of the National Housing Federation’s newsletter and focuses on the role of private capital in financing the delivery of social housing in the UK.

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

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.

On Wednesday 23rd February 2022, in partnership with Pensions for Purpose, the Impact Investing Institute hosted an event exploring the role of asset managers in place-based impact investing.