Today, the Australian Advisory Board on Impact Investing (AAB) publicly launched a field scan that reveals what has changed in the impact investing market over the last three years, what is happening now and what is needed for the future to create better outcomes for people and the planet.
Views from the impact investing playing field in Australia on what’s happening and what’s needed next combines the findings from interviews with 45 key players in the impact investing market, a survey that attracted over 40 respondents and research on local and international trends and case studies.
Rosemary Addis, Chair of the AAB, commented that “the AAB hopes this material will help others tell the story of the growing impact investing ecosystem in Australia. The findings from this field study will also be shared with the Global Steering Group on Impact Investing (GSG) to contribute to global market development”.
Ms Addis continued: “There is a shared understanding that impact investing has strong potential, and people want to see it realised. Many participants see the past estimates of a $32 billion market size by 2023 as conservative, especially if larger institutional investors engage. At the same time, some significant challenges and gaps need to be overcome to achieve this goal.”
The report sets out that the key drivers of scale for impact investing include both a stronger investment pipeline with investment deals that are attractive to large scale investors and an increased reach of impact and activity. It notes that there is an understanding that Governments and philanthropy need to act as providers for catalytic capital who can go first, offer funding on flexible terms and may take a reduction in financial returns. Its findings also highlighted that a broader, more knowledgeable specialist intermediary market is required to connect innovative responses to challenging issues with investment.
The field scan participants recognised the increased interest and activity of the Australian governments. They also highlighted that more needs to be done, including more support for investments in impact areas that clearly support policy interest, broader application of outcomes based contracting and addressing regulatory barriers and constraints.
The report called out that the availability of data to baseline, benchmark and monitor impact is an ongoing challenge. According to field scan participants, such challenges could make or break an investment opportunity. This was also seen as an opportunity for governments to support the market by providing data relevant to understanding the societal challenges. Impact washing was mentioned as a concern and potential risk if measurement systems are not strengthened, potentially undermining the credibility of the market.
On behalf of the AAB, Ms Addis said: “We look forward to the next wave of strategy development in 2018 and meaningful collaboration with players across the ecosystem in convening and designing solutions that create breakthroughs within and outside of Australia.”
Interested supporters can contact the Australian Advisory Board on Impact Investing via nextwave@australianadvisory