Impact investing is all about making an investment that delivers positive social benefits, as well as a nice financial return. It's the concept that harnessing the private sector for social good can not only be a game changer, but it can also be used to tackle big issues like education, childcare and clean energy.
In March the Paul Ramsay Foundation invested $600,000 in its first social enterprise: the Vanguard Laundry in Toowoomba. Created by serial social entrepreneur Luke Terry, the commercial laundry business will employ up to 100 people with mental health problems over its first five years, providing a supportive workplace and a pathway to mainstream employment.
He may have been on the back foot over shark deterrents on NSW beaches and the cruel world of greyhound racing, but last week the NSW premier, Mike Baird, was able to stand proud before the Australian investment community on a much more important subject.
He told the annual Impact Investment Summit Asia Pacific in Sydney: “Of all the things we do in government, this is at the cutting edge… We are able to change the future. The real power in this is not just about putting more money into it, but more importantly, it’s about a shift in the government and non-government sectors to work furiously on outcomes for people.”
What is making impact investing a discrete asset class is the gradual development of robust data and analyses. Like the ESG factors which have become ingrained in the management of big super funds, impact investing is establishing itself as a legitimate investment sub-set… with some difficulty.
Impact investing is the new black of the finance world. Essentially, it means investing with the intention of achieving social or environmental goals as well as financial returns. And although this is still only a small market in Australia, it's growing fast – along with the level of interest in developing products and projects to expand it.
Impact investing already ranges from green bonds issued by banks to making loans to small businesses in disadvantaged areas to social impact bonds from state governments to try to target particular social problems.
Demand for social impact investment is higher than supply, with only $1.2 billion committed in capital in the last five years and an estimated $18 billion gap expected in the next five years, a new report says.
Impact investments are not only positively impacting the lives of tens of thousands of people but are also delivering strong returns to investors, according to a new report from Impact Investing Australia.
The first data-set of Australian impact investments was released in the "Benchmarking Impact: Australian Impact Investment Activity and Performance Report 2016" launched at the Impact Investment Summit Asia Pacific.
A $6.7 million allocation to social and community housing in Queensland looks like small beer for HESTA, but the $35 billion industry fund hopes it will be a stepping stone to figuring out how it might form a bigger part of both its debt and equity portfolios in the future.
Communications guru, Ranya Alkadamani has had a varied career, from advising Kevin Rudd during his time as Foreign Minister, to working alongside one of Australia’s leading philanthropists, Andrew Forrest. She tells Industry Moves about her latest work for the upcoming Impact Investment Summit and says that the five headlining speakers "jumped at the chance" to be a part of the event.
By Rich Gilmore, Country Director of The Nature Conservancy Australia.
Impact investing might be a new buzz phrase, but it’s here to stay. Estimates of the amounts that will be directed towards impact investing over the next decade run as high as $32 billion in Australia and US$1 trillion globally. This article looks at an example of an impact investment. READ MORE