Sustainable Future Drives UK Funds’ Impact Allocations  

A third of UK pension funds say their primary motive for allocating to private equity impact investments is to secure a more sustainable future which benefits their portfolio. This is followed by the pursuit of a solid risk and return profile (25%), boosting member engagement (17%), moral imperatives (17%) and lastly, to align with the UK government’s ‘levelling-up’ initiative (8%). The study conducted by investment advisor Pensions for Purpose and sponsored by asset management firm Columbia Threadneedle Investments found impact-focused pension fund allocations (67% of funds interviewed) screen the private equity fund’s impact first, when selecting managers, but their expected market-rate returns remain undiminished.  Karen Shackleton, Chair and Founder of Pensions for Purpose, said: “While our research clearly shows the majority of pension schemes – 60% – view private equity as the best vehicle for achieving impact, there’s still room for growth in understanding concepts like financial additionality. It’s important to recognise that pension schemes are primarily impact investing for financial reasons, but they are also increasingly focusing on UK impact. However, we advocate a global perspective on impact investment to meet crucial targets such as the net-zero transition. Asset managers can be pivotal here, by creating innovative strategies that make impact private equity accessible for DC schemes within their fee boundaries.” 

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