- The number and total size of impact investment products from Australia quadrupled over 2.5 years.
- At June 2015, it was $1.2b. At December 2017 it was $5.8b.
- Green bonds contributed most of the growth.
- Excluding green bonds, the growth was $300m (June 2015) to almost $1b (December 2017)
- There are now 51 impact investment products domiciled in Australia
- Impact Investment Group had 14 of the 51 products in the market (although most of these are closed to new investors), which is more than double any other Australian manager.
Aggregate Impacts Highlights:
NB: See the ‘themes’ section below: impact definition and measurement is complex, so meaningful aggregation is difficult.
- 2 million tonnes of avoided or abated carbon emissions;
- $115 million in government savings (due to things like reduced hospital stays, criminal justice system impacts, and social programs support);
- 950 ML environmental water delivered to wetlands, creeks and ecosystems.
Financial Performance, in aggregate:
In aggregate, assets are largely performing in line with investor expectations.
- Private Debt Assets gross returns: 8% pa, since inception (compares to investor expectations of between 2.7% per annum for impact-led investors and 7.0% per annum for ﬁnance-led investors, according to GIIN’s global survey).
There are subtleties though; the assets that make up this aggregate performance figure have quite varied returns and varied characteristics. The sample included secured and unsecured loans to social enterprises and purpose-driven organisations as well as mezzanine debt.
Additionally, these underlying assets have a range of different impact strategies: Social housing targeted stable livelihoods and well-being for highly vulnerable people, whereas other assets were targeting environmental upgrades in buildings.
- Real Assets gross returns: 5.8% p.a., since inception.
Once again, there are subtleties: This category has multiple types of assets, such as water rights, musical instruments, renewable energy infrastructure and property.
- Fixed Income gross returns: 6.8% p.a., since inception
But these returns have a downward trajectory in aggregate as more green bonds enter the market and typically offer a 3-4% coupon.
- Social Impact Bonds gross return: 4.6% p.a., since inception (aka SIBs, or Social Benefit Bonds).
These are currently lower than investor expectations but are considered on track. This is because many of the SIBs have not yet met their outcomes targets or commenced making payments; however, there is relative consensus from market participants that the SIBs in the data-set are tracking toward achieving social outcomes and should begin commencing payments on schedule.
- This year’s report also shows greater environmental outcomes than two and a half years ago, largely to the growth of environmentally-focused investments in the data-set as well as the maturity of some assets in the report, now being able to deliver environmental benefits.
- There was a broad range of impact measurement approaches and metrics reported, from the provision of affordable housing and water savings to fewer children entering out-of-home care. This makes meaningful aggregation difficult.
- There are also a number of emerging trends around impact management and measurement that are emerging, including adoption of the United Nations Sustainable Development Goals (SDGs).
Download and more information
The Australian Impact Investment Benchmark Report 2018
Published by The Responsible Investment Association of Australasia.
The report was led by Impact Investment Group’s new Chief Impact Officer, Dr Erin Castellas in her previous role as research fellow at the Centre for Social Impact, Swinburne University and co-authored by Suzanne Findlay of Sacred Heart Mission. Erin and Suzanne had previously worked together to co-author the first pilot study ‘Benchmarking Impact 2016’ alongside Rosemary Addis at Impact Investing Australia.
This latest study, Benchmarking Impact 2018, was sponsored by Impact Investment Group and provides an update on how the Australian impact investing market has grown over the past few years and begins to build an evidence base of how impact investments are performing over time, both from a financial and impact perspective.