LGPS funds back Pensions for Purpose mission

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An LGPS pool, together with four individual funds, have backed a new venture aimed at promoting investment with social benefits, according to one of its founders.

Pensions for Purpose is a new initiative aimed at sharing knowledge about the benefits of “impact investment”, which results in positive social or environmental outcomes.

It has been co-created by Karen Shackleton, deputy chair of the Strategic Investment Board for the Ministry of Justice and non-executive director of social impact investment company Resonance Ltd, and investment professional Stephanie Windsor.

Shackleton told Room151 that the unnamed pool, three London borough pension funds along with one from the North of England are backing the Pensions for Purpose venture.

She said: “The dialogues that council officers and members have is all around risk and return. Hopefully we can bring out some other characteristics that can enter their considerations. Many social impact investments are very good diversifiers of equity market risk.”

A website will act as a home for sharing news stories, blogs, case studies, academic research and thought leadership papers.

Michele Giddens, a co-founder and partner at Bridges Fund Management, said: “For investors, the impact economy presents an opportunity to invest in line with their values, while also tapping into a huge growth opportunity.

“Evidence shows that incorporating environmental, social and governance factors into investment decisions is a positive driver of risk-adjusted financial returns; it also allows pension funds to invest behind significant macro trends, such as the transition to a more sustainable economy.”

Matt Christensen, head of responsible investment for AXA Investment Managers, another supporter of the venture, said that impact was an investment approach rather than a specific asset class.

“In time,” he said, “we believe that the culture of impact measurement will become embedded across the financial industry.”

He said that Pensions for Purpose could help pension funds get over the specific challenges of impact investing.

He said: “The ‘double bottom line’ also implies a ‘double risk’ of not achieving either the financial return targets or the impact return targets, or even failing at both.

“There are other challenges such as dealing with typically small start-up projects, managing scalability of investments, lack of well-established track record, and minimising ‘mission drift’.

“We believe that initiatives such as Pensions for Purpose can help provide investors with the insight they need to properly address this growing market.”