The advance of impact investment in recent years has led to a greater emphasis on metrics, transparency and reporting standards. But there is another side to impact investment that needs more emphasis which is about the actual approaches fund managers use to make a positive difference through their investment strategies.
A Total Impact Approach
At PfP Capital we apply what we call a ‘total impact approach’ to our business. This means looking at everything we do and aiming to make a positive social, economic and environmental impact through our assets, supply chain, people and financial resources. This approach goes well beyond negative screening and the standard ESG factors.
A common thread that runs through all our funds is an emphasis on creating social impact, improving health and wellbeing, protecting the environment and developing sustainable communities. These themes have a strong alignment with the 17 UN Sustainable Development Goals and we are committed to tracking our performance against them over time.
Additional Routes to Impact
There are practical actions that real estate fund managers can take to create impact in addition to providing homes which can often be overlooked. For example, social, economic and environmental outcomes can be achieved by building them into the procurement process for construction or building management contracts. This helps to create a dual benefit so impact is achieved in both the delivery of projects but also in the ultimate outputs by providing more homes. Supply chain contractors can offer additional impact activities such as providing financial or in kind support to local community groups, helping unemployed people back into work or inspiring school students to become the workforce of tomorrow.
Another area which can often be overlooked is pop up or ‘meanwhile’ uses for development sites to create impact for local areas. This can help support the local economy but also generate a pipeline of businesses who may progress to take on any permanent commercial space developed on sites.
A Circular Approach to Impact
PfP Capital is part of Places for People which is a group of 20 businesses that owns or manages 200,000 homes, has £4 billion of assets and operates in market sectors including affordable housing, leisure, property management, development and supported living. The Group has a strong focus on social impact and last year alone it helped 5,300 people who were homeless or at risk of being homeless, involved 77,000 people in neighbourhood activities and taught 80,000 children to swim every week.
The business model at PfP Capital is unique and genuinely holistic as unlike other mainstream fund managers, the dividends that we pay to Places for People are used to create more homes and places that work for everyone. Our funds can purchase stock from Places for People’s development pipeline on an off-take basis which means that investors get a day one return but also the secondary capital can be reinvested into providing more homes to address the housing crisis in the UK. In addition, we use the Group’s property lettings and management companies in our supply chain which means that a portion of their dividends are paid back to the Group and can be reinvested in creating more homes and thriving communities.
Rising to the Challenge
We believe that our impact approach demonstrates how fund managers in the real estate sector can use commercial methods to creatively respond to the social, economic and environmental challenges facing our world today. The challenge now for all of us to continue to find ways to innovate to make a positive difference for people, places and planet.