Whilst most UK pension schemes are receiving impact reports, very few are reading them closely or using them to guide investment decisions, research from Pensions for Purpose has revealed.

The report, commissioned by Impact Frontiers, revealed that although the UK’s impact investing market is growing fast, expanding over 10 per cent annually between 2021 and 2023, many institutional investors remain unsure how to use impact data meaningfully.

According to the report, whilst most pension funds assess whether their managers produce impact reports, few engage deeply with the content or use it to inform investment decisions.

Pensions for Purpose said that this limited use reflects a broader challenge, as many asset owners describe their own impact literacy as ‘average’, with varying levels of understanding even among more advanced funds.

The group said that trustees, in particular, often lack the confidence to evaluate whether reports are relevant, accurate or decision-useful, making it difficult to distinguish between high-quality reporting and selective storytelling.

Pensions for Purpose research manager, Bruna Bauer, said: “Impact reports are too often treated as a box-ticking exercise. The reality is many pension funds aren’t reading the reports they receive and even fewer are challenging what’s in them.

"That’s a missed opportunity, for better investments and for protecting against greenwashing.”

However, the group admitted that asset managers are also facing challenges in producing high-quality reports, as its research found that data is often difficult to collect, inconsistent across investments and hard to compare, especially at the underlying investee level.

While some managers are developing thoughtful approaches, the report suggested that others focus more on polished storytelling, which could risk reports becoming marketing tools, rather than serious inputs for decision-making.

Instead, Pensions for Purpose found that pension funds want concise, financially relevant reports, which focus on material outcomes, not long documents filled with generic claims.

To help bridge this gap, the report outlined two frameworks: the Impact Performance Reporting Norms, which offer clear guidance on how to assess the quality and usefulness of impact reports, and the Operating Principles for Impact Management, which outline how to embed impact throughout the investment lifecycle, from setting objectives to managing exits.

In light of the findings, Pensions for Purpose and Impact Frontiers have also announced plans to launch a community interest group for pension funds and advisers in August 2025.

The group is intended provide a space to test practical tools and share approaches to environmental and social impacts investment decisions.

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