Momentum for impact investing is growing rapidly in Australia. Fueling this growing momentum is an increasing recognition that government alone cannot afford to meet all the demands for services, and that philanthropy is insufficient to fill in the gaps.
Impact investing is already occurring across Australia in diverse forms, delivering solutions in sectors spanning education, aged care, employment, health, social housing, clean energy and child welfare. Estimates suggest the domestic market could reach A$32 billion within a decade, with tremendous opportunity for value creation and delivering positive economic, social, cultural and environmental outcomes across Australian society.
Australia has a strong foundation upon which to build a thriving impact investment market. A mature, strong and resilient financial sector and a culture of egalitarianism means there is great desire and capacity among Australians to deliver innovative solutions to societal challenges.
Investor appetite for impact investments is also growing. The Impact Investing Australia 2016 Investor Report showed that the vast majority of Australian investors – institutions, trusts and foundations, not for profit organisations and individual investors – believe the field will grow. Active investors aim to triple the size of their impact investment portfolios over the next 5 years and those currently not active in impact investing expect to consider social and environmental impact in investment decision making over the next 5 years.
Australian initiatives such as Leapfrog Investments, Goodstart Early Learning and the NSW Social Benefit Bonds are turning potential into meaningful action, and serving as flagships for the Australian impact investing market both domestically and abroad.
The challenge is to build on this foundation of leadership and innovation, and to further accelerate growth in the field. The Australian market is currently at an inflection point, and without scale, take-up of impact investing will remain fragmented and progress incremental and niche.
Achieving the strategy outlined in the Australian Advisory Board on Impact Investing’s Delivering on Impact will be crucial in tapping the growing momentum, developing a coordinated market at scale and maximising the social and economic outcomes that impact investing could deliver Australia and the Australian community.