Over half (60 per cent) of institutional investors and managers think the UK government is “on track” to meet its goal of reducing emissions by 68 per cent by 2030, analysis from Pensions for Purpose found.

The survey also revealed strong industry confidence that impact investing would see “significant” growth in the next decade, which currently accounts for 1 per cent of total assets under management (AUM) in the UK.

Indeed, 45 per cent of respondents predicted it would account for 3-5 per cent of AUM by 2030, while 35 per cent believed there would be a larger increase in impact investing with it rising to 5-10 per cent of AUM.

Meanwhile, 1 in 5 (20 per cent) participants believed growth could be as high as 10-15 per cent.

Increased interest in place-based investment, focused on addressing local economic and social challenges, was another trend to emerge from the survey with investors indicating a strong shift toward this approach.

Under a third (30 per cent) of participants said they were considering place-based investments in the next year, while 25 per cent reported they had already allocated funds to such opportunities.

Furthermore, 20 per cent said their organisations currently offer place-based investment solutions.

Pensions for Purpose said this growing momentum reflected a “broader" industry trend toward investments that generate financial returns while delivering measurable impact at the community level.

When asked about the most attractive sectors for place-based investments, 35 per cent of respondents said infrastructure, reflecting the importance of infrastructure in community development while offering long-term impact and “stable” financial returns.

Nature-based solutions were also popular, with 30 per cent of respondents choosing this option, suggesting an increased interest in investments that promote biodiversity and combat climate change.

A quarter (25 per cent) of respondents stated that real estate was an area of interest, particularly in sustainable and affordable housing.

Pensions for Purpose suggested that these preferences demonstrated the industry’s "holistic approach" to community development, with investors seeking to address social challenges like housing while also focusing on environmental issues such as reforestation and ecosystem restoration.

Pensions for Purpose chief executive officer, Charlotte O’Leary, said it was “clear” industry leaders believed in the “potential for real progress, but said there was still “significant” work to be done to overcome challenges like economic pressures and implementation hurdles.

O’Leary added: “Collaboration between investors, businesses and policymakers will be needed to ensure we meet these targets and also drive the broader transformation toward sustainable finance.

“The growing interest in impact investing and place-based opportunities highlights the industry's commitment to creating financial returns and meaningful, lasting positive impact.”

She also suggested that the “widespread” belief that impact investing would move from “niche to mainstream” reflected “increasing demand” for investments that align with environmental and social goals.

“The diversity of opinions also highlights the dynamic nature of the sector, with different regions and sectors likely to experience varying levels of adoption and integration,” she said.

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