In our latest Impact Chat, Social Invest Director, Luke Cross, spoke to Pete Gladwell, Group Social Impact and Investment Director at L&G Capital.

Pete is responsible for working alongside public sector partners to establish investments with positive social outcomes. These investment also aim to produce returns for the pensions schemes controlled by L&G.

Below are some key takeaways from the discussion.

Investors need to be honest about limitations

Pete says impact investing, when done right, is a good thing. But he warned of the need to be “honest” about the total impact of a project.

He uses the example of developing affordable housing, which has an obvious and vital social outcome but also, due to the nature of construction, there is a serious environmental impact to be considered.

Partnership working is vital to L&G

Pete set out the ways L&G works with its partners to produce social outcomes. He explains that L&G has the resources but without local knowledge this can’t be as effective as possible.

He says working with local authorities, combined authorities and community organisations is a really important part of the process due to their proximity to the groups that are due to benefit from investment.

ESG scrutiny is beginning to change the way things are done

Asked about the effectiveness of the ESG agenda, Pete said “the broad direction is really positive”.

He notes the changing attitudes since he first started working in the sector 15 years ago.

“People are moving on from the 1980s ‘Porsche 911’ capitalism. Even if a lot of it is marketing spiel, it does put large organisations under pressure.”

Producing social impact requires a holistic approach

Pete says at L&G he has worked to ensure that social impact is something that is at the heart of all their decision making.

Often, he says, large investors might have one or two green funds, but that this is a small portion of their total investment and therefore doesn’t reflect a true commitment to social impact. “It’s really important that their approach is holistic,” he says.

Every investor is an impact investor

He explains that whether you identify as an impact investor or not, it doesn’t matter.

“Everyone is an impact investor – you’re either having a positive impact or a negative one,” he says.

The difference is that there is greater scrutiny around investments today so investors need to consider how their actions will be perceived.

Click here to watch the Impact Chat in full.