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Australian Impact Investments set out a decade ago with a bold vision to transform the paradigm for wealth creation – aligning capital with purpose to drive meaningful outcomes for people and planet while meeting the financial objectives of our clients. Formed by founding shareholder Ethinvest, the organization became Australia’s first dedicated impact asset consultant.
Over the last 10 years, we have witnessed this vision come to life, bridging the gap between investors and investees and mobilizing capital to empower meaningful social and environmental outcomes.
We are proud of the $338 million in capital we have mobilized for 75 impact investments (after analyzing over 800 opportunities) over the past ten years. Every impact investment we have made has been a step towards a better tomorrow, advancing us toward a fairer, more sustainable future.
Aii is committed to proving that financial objectives can coexist with social and environmental goals, transforming how capital is allocated to benefit people and the planet.
We have concrete evidence from investments across multiple asset classes, which show that it’s possible to invest for impact and generate risk-adjusted, market-rate returns.
Aii facilitated nearly $20 million of investment from a range of clients into Infradebt’s Ethical Investment Fund, which supports renewable energy and social infrastructure projects. This fund from the specialist infrastructure debt manager has returned 6.4% since inception, with a 1-year return to October 2024 of 8.2% (these returns are net of fees). Separately, a $4.8 million loan to help set up Ngutu College in Adelaide, which aims to enroll 50% First Nations Students, is delivering up to 10% per annum interest on repayments to investors.
Aii is also helping investors execute an investing approach known as Total Impact Portfolio. This approach incorporates impact objectives alongside financial objectives for investments across every asset class in an investment portfolio. For instance, Aii has worked with the Wyatt Trust, a 138-year-old South Australian based charitable trust, and The Tony Foundation, the foundation of Alberts, to align their investment assets with their mission and purpose.
Greater mobilization
A range of unique opportunities coordinated by Aii have delivered investors returns upward of 10% while enabling outcomes ranging from quality education for children living with autism, seamless integration of Aboriginal knowledge alongside the National curriculum, installation of solar on the Sydney International Convention Centre, and restoring children in out-of-home care to their families.
However, despite growing interest, particularly among younger generations, there is relatively still little capital flowing to impact investments from Australia asset owners. The total capital raised by the 75 investments approved by Aii represents less than 0.1% of the total assets under advice across all wealth advisers in Australia.
We have observed three core challenges that are hindering greater capital mobilization for impact.
Addressing greenwashing and impact washing. As demand grows for investments that deliver social and environmental outcomes, the risk of companies and managed funds overstating their positive impact increases. Robust impact measurement and monitoring practices and standards need to be implemented to enable investors to distinguish between genuine impact and superficial claims. Measurement is key to informing better investment decisions and enabling capital to be directed to where it can make the most difference.
Diversification across asset classes. While venture capital plays a crucial role in supporting early-stage impact businesses, a broader mix of alternative investment forms are needed. Diversification across such instruments as private debt, impact bonds and blended finance structures will enable impact capital to drive deeper, systemic change and contribute more effectively to solving issues like climate change, poverty, and inequality, while providing investment choice to investors.
Wealth advisors and institutional investors need to embrace impact investing. Many advisors and institutional investors hesitate to embrace impact investing, citing concerns about performance and complexity. Data from our recommended investments – both realised and unrealised – provides evidence that impact investments can meet the return expectations of investors.
The intergenerational wealth transfer, already underway and expected to accelerate over the next two decades, necessitates the onboarding and upskilling of advisers to meet this new wave of capital that will increasingly flow to impact-driven strategies.
Asset owners, such as superannuation funds and endowments, hold immense potential to catalyse and scale impact investing and play a pivotal role in mobilizing capital towards sustainable solutions by adopting flexibility in the path to engagement with impact investments.
The way forward
The time is ripe for investors of all sizes and types who want to see their investments serve a positive purpose – superannuation fund members, wholesale investors, foundations and family offices to name a few – to push the conversation forward.
Investors can explicitly express their interest in impact investments to their wealth advisors and superannuation funds. Advisors respond when clients make their preferences clear, even if the investments aren’t yet on their platform or are considered too small or nascent for the portfolio. Proactive engagement is key to scaling impact and tackling the world’s biggest challenges.
The next decade presents a critical opportunity to accelerate the growth of impact investing in Australia. To seize this moment, we must address the challenges head-on, innovate our approaches, and foster collaboration across the industry. By doing so, we can create a more sustainable and equitable future for generations to come.
Kylie Charlton is managing director of Australian Impact Investments.
