ImpactAlpha, Oct. 16 – Just 1% of New Zealand’s private assets under management, or $889 million, is in impact investments, according to the first in-depth study of the country’s impact investing market. Last year, an Impact Enterprise Fund in the country fell short of its fundraising target.
Still, “There’s high interest and demand for impact investments from all investor groups, spanning diverse asset classes and areas of impact,” said Simon O’Connor of the Responsible Investment Association Australasia.
RIAA and the University of Auckland surveyed 100 investors representing $83.5 billion in assets under management. Respondents said they planned to allocate $5.9 billion to impact investing over the next five or so years, with $3.4 billion coming from active impact investors and $2.5 billion from newcomers to impact.
The biggest barriers to growth: a lack of investable deals and the need for more evidence of social and financial performance.
New Zealand’s $42 billion Super Fund, a sovereign wealth fund, was separated from the data to avoid distorting results. The fund has $3 billion, or 7% of its AUM, in sustainable and impact investments in sectors including sustainable forestry, clean energy, affordable housing and health, and asset classes including pay for performance instruments, private debt and equity, and infrastructure.
Maori community principles such as kaitiakitanga, or guardianship and sustainability, have a natural affinity with impact investing. Maori investors are expected to invest up $2 billion per year over the next ten years. “There is an opportunity and indeed increasing momentum for Maori notions of impact to become a fundamental part of New Zealand’s national impact investment identity,” write the authors.
One example: TAHITO, an ethical investment fund slated to launch by year-end, will apply Maori values to its public equities selection.