To understand the role that social infrastructure plays in long-term asset allocations and further break down the key obstacles in making such investments, mallowstreet, in partnership with Octopus Capital, surveyed 27 UK Local Government Pension Schemes (LGPS) in April 2024, gathering perspectives on more than £230bn in assets under management.
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Key highlights:
1. Social Infrastructure is seen as a key driver of returns: LGPS schemes invest in social infrastructure to get higher returns, lower climate risks and achieve better diversification. Return expectations vary between 4% and 10%, but depend on the type of asset and portfolio bucket the investment would sit in.
2. Affordable housing as the top social impact priority: A significant 63% of LGPS schemes prioritise affordable housing as the most critical area for social impact.
3. The impetus for impact falls on asset managers: LGPS investors have high expectations for impact reporting with 70% seeking information on assets under management tied to impact goals. Larger schemes, in particular, are focused on understanding the regional impact of their investments, likely reflecting a desire to create – and see – a real impact on local communities.
