Impact investments generate a financial return but also have a positive social or environmental impact. For many LGPS funds, discussion around impact investment is part of their wider ESG journey and larger schemes are already beginning to allocate to these investments.
There remains, however, confusion over what an impact investment actually means; must financial return or other variables, such as liquidity or fund size, be traded off in order to achieve impact and how is impact measured? For many, impact investment is associated with concessionary capital such as philanthropy, which would not be suitable for a local authority pension fund that has a fiduciary responsibility to target the best risk adjusted returns, taking the liabilities into account. Yet the impact space has been evolving in recent years, with innovative and impactful strategies now being brought to the market that offer a financial return as well as having a positive societal or environmental impact.
With this in mind, in October, a new platform called Pensions for Purpose was launched. The aim of this collaborative, web-based initiative is to promote pension funds’ understanding of impact investment by collectively sharing news stories, blogs, case studies, academic research and thought leadership papers on impact topics. The idea was the brain-child of a discussion at The Gathering, an event in February 2017 which brought together 130 of the UK’s most active participants in social investment to discuss the most pressing issues in this sector.
Influencers are investment managers involved in impact investment, either for part or all of their business; trade bodies; consultants; and others involved in impact investment who wish to post content on the Pensions for Purpose website.
Influencer members can share thought leadership, case studies, blogs or event details that discuss issues surrounding impact investment. Articles from different firms may offer a different perspective, but it is hoped that this will help LGPS officers, committee members and their advisers gain a more holistic view of the issues surrounding impact investment. With the Markets in Financial Instruments Directive II coming into force in January 2018, committees will need to demonstrate strong knowledge and understanding of their investments, and accessing different articles about impact investing, from one central site, should make this task easier. Pensions for Purpose has a very strict policy that no funds can be promoted on the website, so that it remains a genuine knowledge-sharing platform.