23 May 2025

A new chapter for impact-led private capital in partnership with government

Ahead of the Excellence in Impact Awards, judge Sarah Teacher, Impact Investing Institute, shares her insights on how commitments from the Government and the private capital industry are making the UK a leader in sustainable and impact finance.

The UK is experiencing a surge in momentum around impact investing, leading the way in exploring how impact capital can help tackle the interconnected challenges major economies are facing. Driven by an engaged and motivated government, asset owners that are eager to allocate capital, and managers that can design innovative products, these efforts are supporting the journey to achieve net zero targets, address regional inequalities and support public health systems.

Impact investing already contributes significant financial, social and economic value. However, but the scale of the opportunity to align impact capital – capital which is inherently aligned to major policy objectives – with government priorities, remains to a large degree untapped.

Government action

The government’s recently launched Social Impact Investment Advisory Group is a pivotal step towards aligning public policy and private capital to address critical societal challenges. It will advise on effective ways for government to use funds to mobilise social impact capital, and provide views on how to develop existing work on impact capital across government over the long-term.

Meanwhile, the UK's local government pension landscape will undergo significant changes, which will likely bring with it an increased focus on how pension funds can support local development and sustainable initiatives, alongside generating financial returns.

An opportunity for impact-led private capital in the UK

Policy momentum on the public side is being mirrored by changing investor attitudes on the private side. While financial returns remain paramount, there's growing recognition that environmental and social factors are crucial for understanding risk, identifying value creation opportunities and driving sustainable economic growth.

With sustainable finance facing challenges on the world stage, most notably in the US, positive developments in forward-looking markets such as the UK are particularly significant. The UK has a vital opportunity to solidify and build on its position as a global leader in impact investing, expanding the opportunities for policymakers and investors alike. This leading position is a crucial lever for both government and investors to pursue meaningful, inclusive economic growth.

The transformation underway in the UK's investment landscape is about more than just a shift in capital allocation – it could represent a step change in reimagining how financial markets can serve society.

With commitment from the Government, the City of London and the asset owner community to making the UK a leader in sustainable and impact finance – we believe that the UK is the best place in the world to be an impact investor.

We look forward to seeing this in evidence in submissions to the BVCA Excellence in Impact Awards.