More than half of UK pension funds hold some form of impact investing

Just over 50% of UK pension funds hold some form of impact investing, a survey by Pensions for Purpose has found.

The survey, sponsored by Big Society Capital, showed UK pension funds are increasingly considering impact investing, with 90% of respondents looking to make impact investments in the UK.

Social infrastructure, such as hospitals and schools, and social and affordable housing were the most popular social impact investments with investors, with 78% and 44% investing in these areas, respectively.

When asked which UN Sustainable Development Goals the funds were targeting, those related to the environment were most frequently cited, with 100% intent to target climate action.

Greater awareness of product and environmental issues were cited as the main reasons why more funds are directed towards environmental impact investments rather than social investments, as 58% cited greater awareness of climate problems than social problems and 42% reported a lack of adequate investments. social impact investment products.

Greater education has been welcomed by plan managers and trustees to improve their awareness of social issues and appropriate impact investment products that help provide solutions to these issues.

Charlotte O’Leary, CEO of Pensions for Purpose, said: “UK pension funds are worth £2.2bn in assets (according to the ONS 2019 survey) and that will only increase with registration. automatique.

“This represents a significant pool of capital that can be allocated not only to mitigate the risks associated with climate change and social inequality, but also to invest in the solutions to these systemic risks.

“While other pension fund markets around the world have reallocated capital to increase private investment, the UK is lagging behind. Impact investing offers the perfect opportunity to review allocations to markets private sector, recognizing that impact investing opportunities exist and are being created by pension funds across the UK.

“This report highlights the perceived and real challenges and solutions in social impact investing with very powerful case studies, but there is no doubt that more education and transparency is needed on the market.”

Katie Fulford-Smith, director of investor relations at Big Society Capital, added: “It’s right that pension funds aim to mitigate the impact of climate change, but support communities and tackle some of our the most pressing social problems goes hand in hand with success. net zero.

“When people’s primary focus is shelter and food, greener living is not a consideration.
“Our investments need to help society get up to speed to enable the green transition – and with pension funds worth a total of £2.2 billion, they have tremendous power to deliver this.

“Fortunately, the social impact investment market is experiencing tremendous growth, having grown nearly eightfold from £833m in 2011 to £6.4bn in 2020.

“To meet this demand, we are working to increase the number of social impact investing options and improve understanding of the broad benefits to investor and investor.”