Rosemary Addis | AAB - Mar 06 2019
Scaling Impact: An Australian Perspective

Impact Investing is growing rapidly in Australia. Rosemary Addis, Chair of the Australian Advisory Board on Impact Investing and participant at Palladium’s upcoming “Investing and Impact at Scale” event in New York City, discusses the trends and opportunities in this unique landscape.

If Australia has a nickname it could be the lucky country. We have enjoyed nearly three decades of uninterrupted economic growth, have a wide diversity of natural resources, a rich multi-cultural society, active arts culture, dynamic social sector, and world class research capability. Our financial system weathered the global financial crisis better than institutions in many other countries and we have a significant pool of pension funds that contribute to infrastructure development as well as providing for members’ retirement.

Not everyone has shared in the good fortune. Outcomes for people experiencing homelessness, long term unemployment or intergenerational disadvantage, and for Aboriginal communities and people with disabilities have been slow to improve. We have dropped from 4th to 15th on the Social Progress Index, rank 37th on the Sustainable Development Goal index and have not moved the dial on entrenched disadvantage in three decades.

Catalysing Impact Investment

Since 2014, the Australian Advisory Board on Impact Investing (AAB) has been bringing together people, ideas, and resources to help tackle big issues affecting Australia and our region.

Developments harnessing capital markets to support community prosperity, encourage vibrant arts and culture, and contribute new solutions for issues of poverty, exclusion, and environmental sustainability can make a significant contribution to delivering that future. They illustrate a growing field of practice: impact investment.

The good news is that impact investment has developed rapidly in Australia over the last few years. There is a sense that we are starting to build a track record of investments and are moving from early stage exploration into more cohesive market building. The field is taking shape.

In September 2014, the AAB launched an ambitious, dynamic strategy for leadership, action and policy: Delivering on Impact. Four years on, impact investments in this market have grown fourfold. The picture of Australia’s impact investment landscape is one of great diversity:

  • Music lovers can delight in the 1728/29 Stradivarius financed by the Australian Chamber Orchestra Instrument Fund;
  • People with disabilities can find a caregiver who is the right fit for them on Hire Up;
  • Environmental flows of water are being returned to one of our major river systems thanks to the Murray Darling Balanced Water Fund;
  • Organisations demonstrating excellence in diversity can access finance through the National Australia Bank Social Bond Gender Equality;
  • A major pension fund, HESTA, is financing a new way of living for people with dementia in Tasmania through funds managed by Social Ventures Australia.

Scaling Impact investment

There is potential for significant growth, fuelled by demand. Eighty-one percent of the largest pension funds reported having embedded some formal commitment to responsible investment, up from seventy perent in 2016.

Australians are following global trends in demanding that financial markets play a socially constructive role in the economy. Australian governments have become more engaged and active.

The focus of our work from here are the levers to drive scale for impact investment in and from Australia. We have identified targeted strategic actions that can deliver step changes, many of which have much in common with global markets:

  • Raising awareness and education;
  • Growing demand for more impactful choices;
  • Growing and strengthening impact networks to develop capacity and leadership;
  • Widening the opportunity set of products and solutions;
  • Strengthening and deepening intermediaries who can build expertise, and advise and connect others.

Like other markets, it will be easier to participate when impact management is more developed and widely adopted, bringing accountable practice and governance to build trust and confidence, set expectations, and enable greater comparability for informed choice.

The AAB's recent blueprint, Scaling Impact, includes concerete actions that different actors in the ecosystem can take in their own organisations and collectively to drive impact investment forward. Areas of potential have already been identified for the Australian context, including aged care, directing capital to communities where people need quality jobs, and infrastructure development through our region.

The Future

Decisive, proactive leadership can drive breakthrough change.

There is concrete potential to be realised from Australia’s strong foundations. Building on what has already been achieved in impact investing will continue to attract talent and capital and drive innovation. The prize for getting it right will be substantial and the benefits will be shared by a broad range of stakeholders.

Rosemary Addis is Executive Director of Impact Strategist; she founded and Chairs the Australian Advisory Board on Impact Investing and Impact Investing Australia, is a Trustee of the Global Steering Group for Impact Investment and was recognised as one of Australia’s 100 Women of Influence for contributions to innovation (2015) and was a finalist for Women in Finance Thought Leader of the Year (2017).

Rosemary was a participant at Palladium’s recent Investing and Impact at Scale event in New York City, USA.