Investing in the right place

I am very pleased to hear about a new project designed to get pension schemes investing in the right place. You can read about it here

It’s an initiative that impacts us all, we all pay council tax or at least benefit from those that do and a lot of our council tax goes to fund the pensions of those in Local Government Pension Schemes. It makes absolute sense that the investment of these pension schemes protects the council tax-payer from nasty surprises. The obvious nasty is the failure of an investment which is why strict rules apply to how funds invest and why investments are made by expert.

But there’s another kind of “nasty”, which happens when we find that our money is invested in the wrong place. Investing in the right place is a good definition of what “Environmental Social and Governance” investment sets out to do.


A new initiative that “replaces” investment

Reading about the aims of the Good Economy’s initiative I get quite excited

The UK is a country of extreme and entrenched place-based inequalities. The geography of socio-economic deprivation in England and Wales as well as Scotland has hardly changed over the last three decades.

The North-South Divide, with its roots in the Great Depression and 1980s deindustrialisation, threatens to become an enduring feature of Britain’s
economic development landscape.

Brexit revealed the economic, political and investment risks that these place-based
inequalities can bring.

For decades, UK governments have introduced place-based policies as a strategic approach to tackling place-based inequalities. This approach is continuing with the City Growth Deals and Towns Fund. As of now, the overarching goal of UK place-based policies is to bring about inclusive growth and sustainable development everywhere – to ‘level up’opportunities for people and communities to flourish across the entire country.
The Covid-19 crisis has deepened and increased public awareness of the country’s place-based inequalities. It has made the challenge of ’levelling up’ very much greater and uncertain.

The costs to the nation of rebuilding economies and communities – with an ambition to ‘build back better’ – are considerable and unprecedented. There is an undoubted
need to leverage private capital alongside public sector funding – and to link new investments to place-based policies.

Thus, the Covid-19 crisis has inadvertently moved place-based impact investing (PBII) to the centre of the policy stage.

This coincides with a rising tide of interest in impact investing from institutional investors, including pension funds, who are increasingly seeking to create positive impact alongside a financial return.

Can we exploit this timely market interest to develop a local dimension to global impact investing that can support place-based policies in the UK?

I don’t know about you but I don’t think the financial interests of the council tax payer are compromised by seeing tax paid towards the development of local projects that benefit the communities in which the tax-payers live.

Even if this means a redistribution of investment from down south to up north.


A sense of place and a sense of purpose

Behind the idea of place based impact investing  is  a sense of purpose. People relate firstly to purpose , if they can see the purpose of an investment , then they can understand its value.

My friend John Godfrey said he wanted every investment Legal & General made to feature on Google Maps so as he got around the country he and his colleagues and his customers could be reminded of the purpose of Legal and General investment management. I have written about this many times on this blog , referring back to a presentation delivered by Nigel Wilson some five years ago.

It seems to me that the time to deliver this is now and the place to deliver it is in the Local Government Pension Funds and the people to deliver it are the organisations behind this collaboration.

 

 

This is about making my money matter and though I am not a member of LGPS, I do help pay the pensions!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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