Impact Invest May Have An Upward Ride in Australia

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Financial experts are seeing significant growth and expected growth for the impact investing industry.

Before delving deeper into the whole picture, let us first define impact investing. It is an investment strategy that aims at the business that reflects sustainable social or environmental goals. Companies of electric cars, agriculture, or microfinance belong to this industry.

The record shows that sustainability-themed investing has doubled since 2020 from $76 to $161 billion. 

For impact investing, Morgan Stanley forecasts around 30 per cent per annum and is expected to rise from 6 to 11 per cent in the next three years. 

In a recent analysis, the International Finance Corporation assessed the impact market at US$2.3 trillion ($3.2 trillion) in 2020, splitting between measured impact (US$636 billion and intended impact (not measured) at US$1.6 billion. The Global Impact Investing Network estimates the measured impact market at US$1.2 trillion, doubling the IFC counted impact figures.

RIAA data reveals that even though the impact market is still a tiny chunk of Australia, big expectations are imposed on it. The forecasts say it will have exponential growth of around $500 billion when 2025 unfolds.

Investment Magazine first said, “Impact Investing Australia, which has advocated for a similar body in Australia for many years, wants the government to commit a minimum of $200 million to the fund to be matched initially by financial institutions. According to recent media reports, discussions with the big four banks regarding funding are progressing well.”

Prime Minister Albanese invited the task force to reconvene and update the proposals before the May 2023 budget. The primary benefit for the government in implementing the recommendations would be to leverage its financial contribution from private sector resources, all while achieving social objectives in sectors such as housing, elderly care, and early learning.

Super funds could also play their part in the wholesaler to help expedite the impact of market expansion. Australia has one of the world’s largest pension systems, with over $3 trillion in AUM that might be used to address social deprivation in areas of social impact.

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