The network will allow institutional investors and local authorities to collaborate on the development of innovative ways to boost investment in deprived areas of the UK.
A knowledge community has been launched by The Good Economy (TGE), the Impact Investing Institute (III) and the Institute for Economic Development (IED), aimed at catalysing institutional place-based impact investing investment (PBII) in the UK.
The Place-Based Impact Investing Network will foster collaboration and knowledge-sharing between UK local authorities and institutional investors to develop innovative solutions that will scale-up institutional investment in deprived and under-invested places. TGE said the grouping would also provide a voice for local government and private investors to influence market and policy developments.
Founding members include 11 local authorities and 11 investors. The investors are Abundance, AEW, Bristol and Bath Regional Capital, Cheyne Capital, Columbia Threadneedle, Foresight, Gresham House, Octopus Investments, PfP igloo, Schroders and Triple Point.
The network is building on the work of the PBII Forum (PBIIF), led by Pensions for Purpose in partnership with TGE and the III. The Forum has over 500 members, including asset owners, investment consultants, trustees and asset managers. The network’s direction is informed by the findings and PBII model laid out in a 2021 White Paper Scaling Up Institutional Investment for Place-Based Impact, developed by TGE and III, in partnership with Pensions for Purpose.
“The UK has by far the worst levels of social and spatial inequality of all OECD countries. Entrenched poverty and inequality pose systemic risks to our economy, society and democracy,” said Mark Hepworth, TGE’s research and policy director.
He said local authorities were actively seeking local investment to create better places, responding to a call from the UK government for institutional investors, including local government pension schemes, to provide financial capital to reduce geographical economic inequality.
“The PBII Network is designed to bridge the gap between these stakeholders, paving the way for private capital to understand local needs and opportunities and deliver place-based impact across the UK,” Hepworth said.
UK institutions are among the European leaders in promoting place-based investing, providing a template for a sector that is gradually taking off on the rest of the continent, as Impact investor reported in November 2022 and May 2023.
Place-based investment involves making risk-adjusted financial returns by investing in specific places to address issues such as local economic resilience, low income and unemployment, and sustainable development. Typically these investments are made in
sectors such as affordable housing, SME finance, clean energy, infrastructure and regeneration, which are seen as providing stable, attractive, long-term returns with lower volatility than many other asset classes, according to TGE.
However, investment institutions tend to either invest in one of these sectors, or invest in a number of them, but within different areas of their business. The PBII Network seeks to persuade institutions to take a more holistic approach to place-based investing, on the basis that cross-sectoral investing can yield higher impact.
TGE said the network’s inaugural programme will focus on building relationships between investors and local stakeholders in order to build trust and shared understanding. It will also work on creating norms and practical guidance to support the wider roll out of place-based impact investing across the UK. Participants will meet at three main events and smaller thematic-based events around the UK during the coming year.