Impact Investing | June 8, 2020

Environmental concerns drive growth in Australia’s impact allocations

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, June 8 – Back in 2016, Impact Investing Australia found just $1.2 billion impact-aligned investments across the country. Since that inaugural report, Australian investors have increased their allocations more than 16-fold to $20 billion. The sector is expected to grow to as much as $100 billion by 2025, according to Benchmarking Impact from the Responsible Investment Association Australasia, which builds from the 2016 benchmark. Australia’s nearly $3 trillion in pension assets are the third-largest pool in the world.

Roughly 87% of Australia’s $20 billion in impact investments is environmentally-focused. The country is grappling with the impacts of climate change, from the death of coral reefs to raging wildfires (see, Dangerous climate change is here now).

“Our economy is dominated by resources—fossil fuels and natural gas—so there’s a sense of wanting to balance that ledger,” Jonathan Sheridan of fixed-income firm FIIG told ImpactAlpha amid Australia’s devastating summer wildfire season.

Social impact investing in Australia is a “fast evolving but still relatively immature market,” states RIAA’s report. The $2.5 billion in socially focused investments representing a 10-fold increase since RIAA’s last benchmark in 2018. Most of the activity is in affordable housing, indigenous communities, and social impact bonds addressing youth unemployment, homelessness and other issues.

Innovative finance

Pension fund Christian Super last year took an equity stake in Swiss impact investing firm responsAbility to expand its impact portfolio. FIIG helped VisionFund International raise an A$20 million ($13.8 million) from Australian investors in a “kangaroo bond” that will help the organization expand global microfinance services. Impact Investment Group structured an A$600,000 impact-linked loan for social impact employment startup Xceptional and launched a place-based impact fund to invest in social enterprises, community solar, social impact bonds, sustainable agriculture in Western Australia.