20 January 2025: Better Society Capital (BSC) and the Impact Investing Institute (The Institute) have responded to the Government’s Local Government Pensions Scheme consultation, “Fit For The Future”. The response can be read in full here.
Responses draw on the two organisations’ experiences of making local investments and building effective local partnerships, which are highly relevant to the LGPS community. Key points include:
- Place-based impact investing is a powerful tool for driving positive change in communities across the UK and can provide a compelling investment opportunity for pension funds that can be embraced by LGPS pools.
- There are growing opportunities to invest in areas such as social housing, SME finance and renewable energy as well as emerging areas including social infrastructure, natural capital and preventative health, with projects that match LGPS risk and return objectives.
- Local investment does not always preclude scale. In BSC’s experience, investing in social and affordable housing, for example, can have a transformative effect on the people in a local area. Attracting substantial private capital here will be essential to driving local growth and improving community wellbeing.
- A collaborative approach with local authorities and other stakeholders is important, so they are able to shape investment solutions that are right for them. The Institute’s ‘place pilots’ and BSC’s investments in Community Development Finance Institutions, for example, have demonstrated how effective partnerships lead to successful investments.
- Administering Authorities should consider the benefits of a multi-asset approach to deliver their local investment objectives, for example exploring options in social and affordable housing, private credit for social enterprises and charities, venture capital and social outcomes contracts.
- Officials within local authorities and/or LGPS may need to be upskilled on local impact investment practices and business models, particularly where they may lack clarity and confidence to bring forward investible propositions.
BSC’s latest Market Sizing exercise found that 21% of the UK’s social investment market in 2023 was from pension funds, indicating the positive momentum of the sector and reflecting these investments’ ability to improve people’s lives while also generating a fair risk-adjusted return.
Anna Shiel, Chief Investment Officer at Better Society Capital commented:
“The Mansion House reforms present a significant opportunity to boost local investment and reduce place-based inequality in the UK. It’s crucial that they are implemented in a way that makes the most of this opportunity, while considering current barriers and opportunities in the market. We champion place-based impact investment strategies for their combination of financial returns and quality impact on the ground, and want to support LGPS pools to execute on meaningful investments as effectively as possible.”
Impact Investing Institute Co-CEO Bella Landymore said:
"Local Government Pension Scheme funds have demonstrated that place-based impact investing can deliver both strong financial returns and positive benefits for communities across the UK. The Mansion House reforms create a unique opportunity to amplify this approach, enabling pension funds and institutional investors to direct significant capital into key sectors such as local infrastructure, housing, and clean energy projects. The Impact Investing Institute is dedicated to helping LGPS pools increase their place-based investments while bringing together stakeholders to remove barriers and unlock the full potential of local impact investing."
ENDS
About Better Society Capital
Better Society Capital is the UK’s leading social impact investor. Our mission is to grow the amount of money invested in tackling social issues and inequalities in the UK. We do this by investing our own capital and helping others invest for impact too.
Since 2012, we have helped build a market that has directed more than £10 billion into social purpose organisations tackling issues from homelessness and mental health to childhood obesity and fuel poverty, a twelve-fold increase in 12 years.