Jim Chalmers, Federal Labor Member for Rankin, Shadow Minister for Finance in Australia, argues the need for impact investing in Australia, citing the successes of initial forays in the UK and US.
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A departmental report released by the former Labor Government in 2013 estimated the market in Australia would reach $32 billion in a decade. But that level of investment is likely still a long way off for a couple of reasons.
There’s a misconception that impact investing generates below-market returns, because sometimes lower financial returns are accepted in exchange for social outcomes. There’s also reluctance from superannuation funds and major investors to get involved given projects are generally targeted and small-scale.
Yet there is still an appetite among some businesses wanting to counter increasing scrutiny of their investments, develop their social licence, or to manage financial risks that arise from social or environmental problems. Some major corporations have turned to green bonds, to help finance renewable energy projects, as a way to complement investments in coal.
This isn’t about replacing Government investment. It’s about supplementing it.
