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What is “Place-based impact investing” and does it benefit local communities?

Amidst the noise of Yimbys and Nimbys fighting it out on housing and wind farms, the government deciding on what levelling up means, and everyone wanting to see reforms in the planning system, there is a group of people and organisations promoting and practicing something called “Place-based Impact Investing”. It’s a language of the investment industry – pension funds, portfolio managers, property investors – and hasn’t seemed to permeate the discourse between those on the receiving end of this investment approach, ie the local authorities, community groups and residents in said “places”. Why not? should it? Is this something that community groups should get behind? Is it for real?

According to Big Society Capital, place-based impact investment refers to impact investments made into a variety of social enterprises and charities tackling different social issues within a specific geographic location.

“Whilst this broad definition is not intended to be definitive, there are a few key points that are at the heart of what it means to us. Place-based social investing is all about connecting our investment into the context of each place. Front and centre are:

  • The strengths of each place, its networks, its organisations, and its communities

  • The needs of the place and especially of the people who live there

  • An alignment of resources from partners to do more together than we can apart

  • An aim to increase appropriate capital for the business models which create impact alongside and for their communities; and

  • The creation of long-term, dedicated capacity (that builds local ownership to take their future success into their own hands)”

That sounds promising. So where and how does this happen?

A recent collaboration between the Good Economy, the Impact Investing Institute, and Pensions for Purpose is seeking to channel this type of investment into UK projects through its Place-Based Impact Investing Project , introduced as follows:

“The UK is a country of entrenched place-based inequalities which have persisted for A PLACE-BASED APPROACH TO IMPACT INVESTING generations and are more extreme in the UK than most OECD countries. The Covid-19 pandemic and Brexit have combined to move these place-based inequalities to centre stage in public debate – alongside a search for effective and sustainable ways of tackling them. The need for more public investment is undeniable and the political will appears to be in place. There is now a golden opportunity for responsible, patient private capital to step in, match public investment and deliver positive environmental and social impact in places and communities across the country”

One of the project partners, the Impact Investing Institute, describes its place-based impact investment approach based on “Five Pillars”:

· affordable housing

· SME finance

· Clean energy

· Infrastructure

· Regeneration

Each of these “must bear the weight of investor risk-return expectations while meeting the inclusive-sustainable development expectations of local authorities. Successful delivery of PBII should and can be a win-win game.”

Sounds good. And even better, they should also be driven by stakeholder engagement:

“Effective stakeholder engagement is a core trait of PBII. We regard PBII as aligning with and supporting locally-defined development objectives and priorities. It is the role of local and combined authorities to determine strategic development plans and these bodies should be regarded as key stakeholders at a strategic and project planning level. For individual projects or investments, stakeholder engagement should be widened to include all relevant local stakeholders in the project planning and design and how an investment can maximise local benefits, and mitigate any negative risks. Particular care should be taken to solicit the views and ideas of underrepresented groups and racial minorities.”

This is sounding like just what local communities need. So how do they get a piece of it?

How can local communities engage with these impact investors to define, structure and guide the projects aimed at delivering impact?

I struggled in my research to answer these questions, but I did find an event next month that could help to provide some answers and potentially give community groups an opportunity to explore how they might work with and benefit from place-based impact investors. “Beyond social housing, what do real estate investments look like in the context of place-based impact investing?’” is an online workshop run by the Place-Based Impact Investing Forum.

When I tried to register, I learned that it’s only open to “asset owners such as pension fund trustees and executives, investment consultants, and independent trustees or advisers.”

Oh well then.

My question about how PBII can benefit local communities and how local community groups can engage with these investors remains open. Can anyone help?

Clare Delmar

Listen to Locals

20 April 2022


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