The UK's International Investment Summit had a dedicated impact investment strand and there were numerous eye-catching commitments to allocate capital to theme, writes Kieron Boyle
Last week, the new Labour government held its first International Investment Summit. The summit aimed to position the UK as a stable, pro-business environment open to global trade and investment opportunities.
This isn't uncommon. Most new governments do something similar.
What was unusual was that it was the first such summit to have a dedicated impact investment strand. The government unveiled over half a billion pounds in new impact investment commitments, primarily focused on addressing the country's housing crisis.
The announced commitments are noteworthy not just for their size but for their strategic focus.
Schroders' new real estate impact fund, boosted by a £50 million allocation from Homes England, aims to deliver 5,000 homes while addressing social inequality.
Man Group's £100 million impact investment targets affordable and environmentally sustainable housing, with 90% designated as affordable homes.
Perhaps most ambitious is Resonance's plan to expand its homelessness initiative from £79 million to £250 million, with an aspirational target of £1 billion over five years.
The timing could not be more critical. The UK is facing unprecedented challenges in housing affordability, social inequality, and the urgent need for sustainable development, and traditional funding approaches alone are proving insufficient. The impact investing market, now worth £77 billion in the UK and growing at 10% annually, offers a compelling alternative that aligns private capital with public interest.
These commitments demonstrate three crucial elements that make impact investing particularly powerful in addressing public policy challenges.
First, scale. They show how significant private capital can be mobilised for public outcomes when the government creates the right enabling environment.
Second, alignment. They show how impact measurement and intentionality can ensure investments catalyse rather than compete with the government's goals.
Third, convergence. They highlight the potential for innovative financing models to address complex social challenges that neither government nor markets can solve alone.
Of course, the opportunities go well beyond housing. Last week, Darren Jones, the Chief Secretary to the Treasury, and Lisa Nandy, the Culture Secretary, made clear that impact investing is an important tool for delivering on multiple government priorities. From financing underserved, small and medium-sized enterprises to supporting clean and community energy projects to investing in preventative health, the public gains are vast.
However, realising this potential requires more than just capital. It demands a new model of active partnership, where multiple government departments and multiple levels of government create the conditions for impact investment to thrive. This includes developing appropriate risk-sharing mechanisms, upskilling officials, creating regulatory frameworks that support impact, and championing success stories that can inspire replication and scale.
"Recent announcements suggest we are at an inflexion point, where impact investing is moving into the mainstream of government thinking about economic and social policy"
The impact economy already represents 5-10% of the UK economy. With the right support and partnership approach, this could grow significantly.
Recent announcements suggest we are at an inflexion point, where impact investing is moving into the mainstream of government thinking about economic and social policy.
The challenge now is to maintain this momentum and translate these commitments into tangible outcomes. At the Impact Investing Institute, we are committed to working with government, investors, and other stakeholders to build on these foundations and create a fairer, greener, and more resilient future.
The pieces are falling into place – now is the time to accelerate this transition and demonstrate the full potential of impact investing to transform our economy.
Kieron Boyle is Chair of the Impact Investing Institute.