Building the market: Playing the long game

Both internationally and in the UK pension funds are starting to think about allocating capital to impact but based on money actually commited, the UK is lagging behind its European counterparts. At the first Gathering in Dartington in 2017, investors and advisers came up with an idea to promote impact investment to pension funds. At this year’s Gathering, delegates heard about what progress had been made.

When social investors working in the pensions sector met at the first Gathering two years ago, they discussed the concept of a collaborative platform focused on social and environmental impact investment and decided to take it forward. 

Two years on Pensions for Purpose is up and running, and successfully showcasing thought leadership in the sector: Playing the Long Game brought together investment managers, intermediaries and others to consider the next steps. 

Opening the session, Pensions for Purpose director Karen Shackleton talked about the development of the platform following the initial discussions at Dartington. She said: “From a standing start, I’m proud of what we’ve managed to achieve.” 

The platform now has over 40 paying members, ‘Influencers’, who are investment managers, lawyers and consultants using the platform to disseminate ‘thought leadership’ in the form of research, blogs and case studies about impact investment. Members include “mainstream” fund managers such as Aberdeen Standard and Baillie Gifford as well as “social impact fund managers” such as Bridges Fund Management and Resonance. 

There are also over 60 ‘Affiliate’ members, these are asset owners, independent investment advisers and government representatives – who sign up to access exclusive content via the site.  They also receive a monthly e-mail highlighted three featured articles that have been loaded onto the platform in the previous month.

Pensions for Purpose is a not-for-profit initiative but needs to cover its costs through membership; so, while most content is public, some of it is restricted to members. 

As well as creating the platform, Pensions for Purpose has been spreading the word about impact investing, with examples of investment opportunities from across the impact investing spectrum, through conferences aimed at pension funds. The Investing with Impact conference run with DG Publishing in November 2018 attracted over 120 people.

The discussion referenced recent surveys of pension funds which demonstrated growing interest in impact investing, particularly from local government pension schemes; however, there are challenges in terms of turning these good intentions into money allocated beyond ESG and into impact, particularly opportunities impacting individuals. Challenges include scale of available opportunities, risk/return of impact investment opportunities and comfort with unknown investment managers who are often most focused on impact. 

Key actions:

More work is needed to offer the kind of products that would meet asset owners’ fiduciary and scale requirements 

Fund managers from the social sector need opportunity to showcase their USP in impact investing at mainstream pensions conferences not just specialist ones.

Pensions for Purpose to consider how to engage Defined Contribution pension scheme as well as Defined Benefit