Australia shifts its focus to impact investing

A new impact investment body is shining a spotlight on the many virtues of impact investment for Australia.

This week, leaders from across Australia’s finance, corporate and community sectors have met in Canberra to urge the Government to lend its support to this form of investing.

Impact investing – which aims to boost increasing amounts of private investment for the public good – is said to have the potential to be able to transform Australia, with Government help. The investment type works to deliver a social or environmental impact, as well as the all-important financial return. In this case, as well as bringing positivity for Australia as a whole, it could also assist the country’s Government with its budget challenges and shortfalls.

Led by the Australian Advisory Board on Impact Investing, the delegation of leaders met with senior officials and Government ministers to try to arrange a new partnership, called Impact Capital Australia. This proposed organisation would see organisations with capital connected, as well as boosting wider innovation and participation in investments that deliver social impact to Australia.

Australian Advisory Board Chair, Rosemary Addis, said to 9 News: “This institution will change the game. Impact Capital Australia will drive growth, diversity and innovation.

“To be successful, it needs the mandate that will come from Government’s involvement. A strong partnership with the private and community sectors will ensure a multiplier effect for that government contribution, in both capital and societal impact,” Ms Addis went on to say.

Ms Addis called for innovative approaches to be put forward to find a solution to old problems, as well as taking greater accountability for the outcomes achieved. “Impact investing is already operating here and around the world in areas as diverse as education, aged care, employment, health, social housing and clean energy.

“We stand at an inflexion point in the market’s development. To scale up these opportunities will require leadership across society. We recognise that creating prosperous future for Australia is a responsibility to be shared by all sectors.”

Other experts at the meeting agreed with her, with David Crosbie, the CEO of the Community Council for Australia, saying: “Impact Capital Australia will bring together the best minds in the finance sector with innovative community organisations to make a real difference to the kind of society we live in.”

Others went on to reaffirm the importance of ploughing investment into this sort of strategic infrastructure to reap the rewards of the social and financial innovation that could result.

All the delegates agreed that creating a positive and prosperous future for Australia was a shared responsibility, with all sectors needing to put in the effort.

“Government has a critical role to play, although can’t be expected to have all the answers or all the capital. We are here with an offer of a constructive partnership,” Ms Addis went on to say.

In its work so far, The Australian Advisory Board on Impact Investing has been working alongside its equivalent organisations in 13 countries to help build the market. However, for now, Australia still lacks the necessary infrastructure needed to achieve the goals it would like to from impact investing. As such, the investment class will fall short of its potential unless this is changed. A positive is an increasing interest in impact investing from both individual and institutional investors. Last week’s release of the Impact Investing Australia 2016 Investor Report, which was carried out in conjunction with the University of Melbourne, revealed that investors intend to become more active in the sector over the coming five years.

The report, which questioned 123 investors with control over around $333 billion of Australia’s funds under management, also found that those already investing aim to more than triple their assets in this class. Impact investing was also tipped to become “more significant” by the vast majority – two-thirds – of the investors questioned for the report.

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