While Border to Coast has £4.5bn invested in UK equities, Mr Lyon said it would be “difficult” to see the FTSE 100 “returning to [its] former glory”.
In an interview with The Telegraph, Ms Elwell said the risks extended well beyond big energy projects.
“More generally we have underinvested in our capabilities to be able to process planning,” she said.
“If things get caught in planning for several years, then you’ve got that construction risk and planning risk.”
Mark Lyon, deputy chief investment officer, added: “When you have a lack of visibility on when your returns are going to be generated, you effectively have to think about that in the return. You want to be able to compensate for that additional risk.”
Border to Coast has just launched a UK opportunities fund worth half a billion pounds.
While this represents a bet on Britain with investments planned in housing, transport and renewable energy that will benefit local communities, Ms Elwell warned that long planning delays were acting as a barrier to investment. “We’re building a portfolio that has a certain level of risk in it. And so if you are able to reduce that element of risk, we could do more.”