Increasingly people want their investments to be driving positive environmental and social change but that’s difficult to achieve through listed market investing, Purpose Capitol Executive Director Bill Murphy says.
Mr Murphy shared his expertise on impact investing at the recent Assembly of Investment Chairs’ event, hosted by the University of Otago.
“Impact investing enables investors to see the positive impact their capital is making in addressing the urgent environmental and social challenges our regions and country are facing,” he says.
“The environmental, social and goverance (ESG) claims of corporates are under intense, increasing scrutiny and being shown, in many cases, to be shallow at best. Investors are hungry for authenticity. Impact investing with its rigorous approach to measuring the positive change it makes can satisfy that hunger.”
Mr Murphy was part of a panel discussion with Dr Jamie Newth, the founder of Soul Capitol, and Steven Moe, the Chair of Community Finance, which was led by Dr Sebastian Gehricke, of Otago’s Department of Accountancy and Finance.
Each panellist shared their own experiences and knowledge on impact investing, though there were trends across all their sessions: More impact investing is required, collaboration is important and the impacts need to be real and tangible.
Mr Moe spoke about impact investing for social housing and how Community Finance was established to serve as a bridge between community housing providers, impact investors and unprecedented social need.
He says Community Finance addresses social housing needs by partnering with community housing providers like the Salvation Army but they need investors and, in particular, fund managers to embrace impact investing at scale.
“In two years, we’ve raised $105 million and one day I hope we get to $1 billion, but to achieve that we need to see impact investing that is local and viewed, not only as a path to making a financial return, but as making a meaningful difference, ” he says.
Dr Newth shared this sentiment, encouraging investors to take on “systems thinking” when they evaluate investment opportunities.
Systems thinking is a holistic approach to analysis that considers how each of its parts interrelate and shift over time and Dr Newth says investors need to use this as a lens when determining what to invest in.
“We need to evaluate both the positive and negative impacts these choices will make on our environment and its people. A key part of this includes trusting the lived experience of local people who are directly impacted by our investment choices. At a deeper level, we also need to consider how systemic inequity influences what we believe is ‘investable’,” he says.
“This can be challenging and hard to get it right the first time. It’s important to establish a culture of learning, so you have the flexibility to respond to what the market and our communities really need.”
