Impact investing is a subset of ethical investing, and some estimates suggest the global industry could be worth $1 trillion by 2020. Impact investments generate positive social and/or environmental outcomes, along with beneficial financial returns for investors. Vulnerable parties such as women and children can be the beneficiaries of impact investments, and Christian Super has made investments in profitable and ethical products in these areas.
Understanding impact investing
Impact investing isn’t confined to emerging markets. In developed markets like Australia, impact investing can address social issues such as child neglect. By diverting investor capital toward funding social projects, impact investing can effect positive outcomes and address pressing needs or disadvantages, while delivering high returns for investors.
Common sectors include renewable energy, conservation, sustainable farming, and microfinance. While profitability and share value is often the only concern for mainstream investments, impact investing works to performance indicators. Outcomes are measured according to specific performance metrics
Impact investing in Australia
Impact investing in Australia has grown in recent years, in part driven by mainstream interest in its possibilities. Establishing a track record in the Australian space is likely to also be behind the growth, giving institutional investors a basis for confidence in making their impactful investments. With large-scale investments being made by superannuation funds, impact investing has shifted to a growth stage. Today, institutional investors are more likely to view impact investing as a viable option to achieve high returns while driving social change.
Social and affordable housing, social procurement, and social impact bonds are some of the key areas to watch for in Australia. Christian Super has already made investments in social impact bonds.
Christian Super’s commitment to impact investing
Christian Super is recognised as a leader in impact investing. Christian Super is committed to impact investing in several ways: both in research and its impact investment product, Brightlight.
First, the Christian Super fund has contributed to the Impact Investor Survey to explore opportunities for positive social and environmental investments. By contributing both learnings and experience, the fund has helped drive the whole ethical investing industry, and has enhanced the understanding of barriers and motivations of investors. As CIO Tim Macready stated, industry research facilitates an understanding of what’s working in impacting investing.
Brightlight: impact investment product
Christian Super has also demonstrated its commitment to impact investment by establishing the first impact investment portfolio product in Australia, Brightlight, for asset owners. These investments have been made specifically to achieve social outcomes. Brightlight encompasses two arms: an investment advisory service and an investment management business. Christian Super retains 80 per cent equity ownership, while the Brightlight Foundation has 20 per cent. The product is open to institutional investors, with CIO Tim Macready having highlighted the strong demand for impact investment products.
The Brightlight portfolio will account for up to 10 per cent of Christian Super’s portfolio. Investments include sectors such as clean technology, sustainable agriculture, micro insurance, and social benefit bonds. For women and children, investments in microfinance, social infrastructure, and community finance are some of the sectors that can drive better outcomes. While social benefits are targeted, Christian Super is also focused on the returns.
Two investments of interest from Christian Super are the Newpin Foundation and Grama Vidiyal.
1. The Newpin Foundation
Christian Super’s investment in the Uniting Newpin program through the Newpin Social Benefit Bond is testament to Christian Super’s commitment to driving ethical and responsible change in the finance industry. The Uniting Newpin is a program established in 2009 to prevent childhood neglect by assisting families with creating safe, loving environments. Generally this includes preventing children entering care or helping children return to their families, from out-of-home care.
The Benefits Bond is a reflection of our commitment to driving social outcomes for children. The bond, funding the Newpin program, is a collaboration by the New South Wales Government, Uniting Care, and Social Ventures Australia. Social impact bonds such as the Newpin Social Benefits Bond mean the government pays services providers (Uniting) based on the social outcome achieved.
2. Grama Vidiyal
Grama Vidiyal is a microfinance institution based in Tamil Nadu, South India. It’s one of the largest microinsurance providers in the country, and for nearly 15 years, the organisation has been making microloans to women who are unable to access formal credit. Generally eligible women earn less than US$2 a day. By 2012, it had more than two million clients and had loans outstanding valued at US$400 million.
Using finance to promote social benefits for all
Newpin and Grama Vidiyal are two of Christian Super’s impact-investing investments, and they’ve delivered positive social outcomes for women and children, as well as high returns for investors. These investments demonstrate the power of ethical investing to effect change while allowing investors to build wealth.
Christian Super is committed to changing the world through 100% ethical investing. To find out more about our impact investing segment, contact us for more information.