Financial services urged to prioritise growing the impact investment sector

According to the Global Impact Investing Network (GIIN), the global impact investment sector has grown by an annual compound growth rate of 21 per cent since 2019, now valued at $2.45 trillion in total funds under management (FUM).

Comparatively, the Responsible Investment Benchmark Report 2024, produced by the Responsible Investment Association Australasia (RIAA), found that the sector grew just 8 per cent in Australia last year, reaching a value of $78 billion, including green bonds.

Impact Investing Australia chief executive David Hetherington suggested that work is needed to maximise Australia’s potential in the sector.

“Over the past few years in Australia we’ve seen growing demand from foundations for impact funds and interest from financial advisers and wealth managers in exploring the investments, but Australia’s financial services industry is still behind its global peers in this area,” Hetherington said.

“The intent and goodwill are there, but we need to work together to identify the challenges and opportunities to further expand the sector here in Australia.”

Ben Thornley, co-founder of impact investment consulting firm Tideline and impact research firm BlueMark, explained that the global rise of interest in impact investing has provided Australia with a roadmap with which to build a regional market that is “truly institutional in scale”.

“Work remains to bridge the gap between Australia’s major institutional investors and the charitable, individual, strategic and public sector investors that have so far anchored the market, but we are seeing progress and believe Australia has a tremendous opportunity to become a global leader,” Thornley said.

Positive Impact Media director Kerry Series noted the mounting interest in this area locally and globally as a chance for Australia to pursue growth in the sector.

“It’s clear that the breadth and scale of interest in impact investing globally has moved to another level. Major global financial services firms have entered the space and this provides a huge opportunity for Australia to capitalise on that interest,” Series said.

He added: “There is huge appetite for investors to share knowledge and insights on impact investing here in Australia.”

The Impact Investment Summit in March is set to include an Endowments for Impact Challenge, which will give financial advisers and wealth managers an opportunity to pitch their services to a number of charitable endowments to help guide them as they seek to deploy capital.