What is Impact Investment?
The Global Impact Investing Network (GIIN) defines impact investments as:
"Investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return."
This definition can be broken into three underlying components:
- measurable social and environmental impact
- financial return.
These three components serve to distinguish impact investments from mainstream financial investments, responsible or ethical investments, corporate social responsibility initiatives and philanthropic grants.
Impact investing and returns
Varying levels of financial return – market-rate, below market or market-beating – can be found across the spectrum of impact investment. This reflects the different levels of financial return required between investors, depending on each investor’s motives for entering the market.
Many institutional investors are challenged by the misperception that investing for impact necessitates a financial trade-off. They also grapple with how to assess and position impact investment within mainstream investment portfolios. At a more fundamental level, institutional investors seek comfort that impact investment, with its ‘soft’ and ‘non-financial’ benefits, will not compromise the investment duties with which they must comply under statute and general law.
Individual, family and philanthropic investors are exploring how they can increase the impact of their social investment by understanding these new opportunities that are emerging.
Impact investing in Australia
The Responsible Investment Association Australia (RIAA) reported that the impact investing market is rapidly expanding, having grown 249% in two years*.
The RIAA expects this growth trajectory to continue with growing investor awareness and interest among those not yet active in the market.
Evans and Partners is committed to acting as an intermediary to create opportunities for investment at scale while also facilitating thought leadership and encouraging increased understanding between parties.
Resource links: act Investments: Perspectives for Australian Charitable Trusts and Foundations
Impact Investment Perspectives for Australian Superannuation Funds
Social Enterprise Development and Investment Funds
* Based on figures from the RIAA ‘Responsible Investment Benchmark Report 2020 Australia’