Pockets and buckets: How LPs carve out allocations for impact

Universities Superannuation Scheme is the latest in a series of LPs to create separate impact and climate investing allocations across private markets.

Pension funds, charities, endowments and family offices are creating specific impact and climate investing allocations across private markets, say market participants.

Universities Superannuation Scheme, one of the UK’s largest pension funds with assets worth £80.6 billion ($107 billion; €95 billion), has created a separate allocation for climate impact investing across the private equity, private credit and infrastructure asset classes.

“We will try to help issues across the climate spectrum, especially investments in sustainable infrastructure – solar or windmills – or growth investments into new technologies like electric vehicles,” said Teia Merring, USS’s investment director for private equity, at PEI Media’s Women in Private Markets Summit. Merring did not disclose the size of USS’s impact allocation.

Sunaina Sinha, global head of private capital advisory at Raymond James, is seeing “many LPs” with an impact allocation “outside of their main fund investing programme”. “It’s starting with state pension plans, corporate pension plans, endowments and certain foundations – LPs who are fiduciaries of money for populations,” Sinha tells affiliate title New Private Markets.

“These are mostly private equity allocations, and then some LPs are being more creative and doing real asset or infrastructure impact,” Sinha says. “We have raised a number of funds in the food and ag space that have been very positive on impact. [One food and agriculture fund] has gone into the impact bucket of dozens of LPs.”

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