Impact investments intentionally seek out a social or environmental impact, as well as generate a financial return. The market is still emerging in Australia, but we do have multiple world-leading deals underway. It is estimated that impact investments in the country will reach around A$32 billion within a decade. Globally, investments are expected to reach between US$500 billion and US$1 trillion. In their latest annual survey of major impact investors across the globe, J.P. Morgan and the Global Impact Investing Network (2015) noted a 7% growth in capital commitments and a 13% growth in the number of impact investment deals, on the previous year.
In June 2013, UK Prime Minister David Cameron established an International Task Force on Social Impact Investing, sponsored by the G8. In September 2014, the Task Force released its global report, The Invisible Heart of Markets. In addition, each country participating in the Task Force released its own country report, available on the Task Force website. Australia’s report, Delivering on Impact, outlines the steps necessary to establish a thriving market here in Australia. The following explainer video was developed by the International Impact Investment Task Force:
Social Impact Funds
There are now over 250 impact funds globally. In Australia, a number have also been established in recent years, including those by Social Enterprise Finance Australia, Social Ventures Australia, Foresters Community Finance, Social Traders, Donkey Wheel Foundation, Small Giants and Impact Investment Group. These all seek to provide impact investments to Australian enterprises which use business models to create positive social and environmental impact. In addition, in September 2014, QBE announced the establishment of $100 million fund for social impact bonds. In February 2015, Impact Investing Australia and NAB launched a A$1 million Impact Investment Readiness Fund.
Investment is also increasing to support access to capital in developing countries. For instance, USAID established a $6.5 million fund in 2012, in collaboration with Rockefeller Foundation and the Omidyar Network, who are all key players in enabling this work globally.
A growing number of green bonds have now been issued around the world, including three here in Australia. Since their first issue in 2008, the World Bank has mobilized over $5.3 billion through 75 green bond transactions in 17 currencies, and the IFC has issued $3.4 billion in green bonds, including two $1 billion issuances in 2013.
Private Placement Platforms
Fiduciary Duty for Investors
A key question raised by potential investors is whether investments are compliant with their fiduciary duty. Two helpful reports were published on this topic in late 2013 and early 2014, for superannuation funds and trusts and foundations. A working group of the G8 Task Force has also produced a useful report for investors on Asset Allocation.
Key Players in Australia
The team at Social Outcomes brings decades of experience specialising in the design and implementation of impact investment programs. If you would like to speak with us further about this, please contact us at firstname.lastname@example.org.