Wednesday, 13 April 2022

Impact Areas



It was wonderful if a bit surreal to spend two days with like-minded people in person discussing impact investment! The Impact Investment Summit was ten days ago in Sydney and it was a great coming together of people, ideas and investment opportunities. What important opportunities and challenges lie ahead?

The critical question is how to speed up the wide adoption of impact investment by foundations and other institutional and private investors who want to invest for impact and for financial return across various asset classes. There were some interesting ideas about this which I will come to.

So, some big questions to ponder:

  • How to encourage angel investors into impact investment so that the pipeline of opportunities is ready to meet the demand that now exists?

  • How to move capital as fast as possible into well-constructed investments that support our transition to a zero-carbon future?

  • How to remain vigilant about gender lens investment so that women and girls benefit as much as men and boys, and so diversity is embedded in investment decision making at the fund, company and investor level?

CEO Dr Catherine Brown OAM paricipates in a session at the Impact Investment Summit.

Where are the impact angel investors?
A number of presenters lamented the lack of early-stage investors willing to enable a fund or company to demonstrate its model and build a pipeline of investments or customers. Understandably, many institutional and foundation investors are waiting for a fund to demonstrate a track record and an ability to generate a suitable return. However, some of these investors are also wanting more investible opportunities. So, there is a gap in our market.

Tom Dawkins from Lend4Good contrasted this with the success of not-for-profit social enterprises in Australia, where the early-stage support is often provided by philanthropy. Here I could give a shout out to our Lord Mayor’s Charitable Foundation and our colleagues at the Paul Ramsay Foundation, Westpac Foundation, The English Foundation, the Snow Foundation, Ian Potter Foundation and others. Charitable grants can’t be made to for profit organisations (enterprises or funds) for legal reasons, so a new model is needed to address this. Maybe some impact investors can allocate a percentage of their impact investment allocation to this higher risk, early-stage work. This is an area where government support would also assist, and some collaboration would be excellent.

CFO Nick Iliomanis at the Impact Investment Summit.

Taking action on climate
We all know that the very recently released IPCC report Mitigation of Climate Change has raised the bar in terms of the urgency of reducing carbon emissions so as to prevent catastrophic climate change. It is heartening to see investment moving into this area all around the world and a number of new and emerging funds were presented or discussed at breaks.

The just transition depends on climate finance. It depends on pace and collaboration (Kristina Tora). Opportunities to invest in the blue economy were canvassed by Paul Holthus of the World Ocean Council. Australia has the third biggest ocean economic zone. Australia could offset carbon via seagrass, kelp, mangroves while increasing biodiversity and protecting coasts. Decarbonising shipping and off shore wind are also major areas of focus.

It was also important to hear from the Clean Energy Finance Corporation (Ian Learmonth), the Sentient Group (Lane Crockett), Climate Tech -Investible (Tom Kline) and Amanda Cahill from The Next Economy. A very inspiring session and lots more to do at pace.

Taking action on affordable housing
The lack of affordable housing in Australia remains a critical challenge. Evan Thornley analysed the economics of the Australian housing market and put his support especially behind Shared Equity and Tenant Centric Housing REIT models. He recommends the creation of funds for Mum and Dad investors that can invest in these models at scale. He compared Australia’s population where 52% of us live in three urban centres compared with the UK where 40% of the population live in 12 urban centres. I am looking forward to exploring this further as lack of affordable housing is a problem we just have to solve with so many related and lifelong consequences.

Taking action on gender
It was a positive surprise (well done to the organisers) that Gender was a theme throughout the Summit, covered in both plenaries and in breakout discussions. For those of us with an interest in this area, this was great to see. Impact Investing Australia with its team of impact investment thought leaders and Capitol Human has produced the Gender Lens Investment Roadmap.

Measuring impact
For readers with an interest in Impact measurement there were a number of important new tools covered at the Summit. One that looks very practical was presented by Prof Cathy Clark from CASE centre at Duke University. It is appealing to CEOs as well as researchers and is called Impact Measurement & Management for the SDGs. The key is that this is including management not just measurement and is a course that can be accessed online:

From the website: How can businesses and investors help fill the multi-trillion-dollar gap needed for sustainable development? Simply put: by incorporating sustainability and social impact factors on people and planet into management decisions. Through this course, anyone can learn to improve their organization's practice of impact measurement and management and align their ESG or impact activities and reporting with emerging global standards. Impact Measurement and Management for the SDGs is a collaboration between UNDP SDG Impact and the award-winning team at CASE at Duke University.
The impact Investment Summit began with a beautiful Welcome to Country by Uncle Ray Minniecon, Kabikabi and Gurang-Gurang man, elder and statesman. Uncle Ray explained that the “kookaburra sings the day into existence”. We need some kookaburra investors to support impact investing in Australia. Now is the time.

Dr Catherine Brown OAM

Photos from the 2022 Impact Investment Summit Asia Pacific are courtesy of OnImpact.

Impact Areas