Big Society Capital “is a bellwether of what is possible and what needs to happen here,” he told a recent event hosted by the Australia-Israel Chamber of Commerce.
“We think that is a really important thing to look at. We think there is an appetite for that to both happen and make a transformational difference in mobilising bigger pools of capital.”
The rise of sustainable and ethical investment will be a key topic of discussion at the Australian Financial Review ESG Summit on Wednesday.
Prime Minster and Cabinet (PMC) established the taskforce in September 2019, which consulted more than 140 organisations and delivered a final report at end of 2020. It is understood the taskforce called for an early-stage foundation to be set up to encourage entrepreneurs, and an office of social impacting investing within the federal bureaucracy to provide holistic leadership.
The taskforce also suggested more social services funding be based on outcomes, as the sector works on developing more reliable data and metrics to measure social impact – the lack of which creates a major obstacle for many investors.
Danny Gilbert of Gilbert + Tobin says social impacting investing is currently a cottage industry in Australia. Wolter Peeters
Big Society Capital has unlocked more than $3 billion in of capital for impact investing in the UK since it was established a decade ago, helping to bring 50,000 people into employment and 26,000 people into suitable housing; delivering 6700 children access to childcare; and providing 255,000 people with online support for mental health. Similar social impact wholesalers have been created in Japan, South Korea and Canada.
Mr Traill told the event, held the week after the federal election, that Big Society Capital had created “a very powerful precedent”, where public funding was matched three-to-one with private capital, delivering investors, including UK banks, a 3.5 per cent to 4 per cent annual return. A local version “would liberate things to be done ethically in the long term that drives returns that sit comfortably on the financial risk reward spectrum,” he said.
Megan Flynn, a partner at Pollination, said family offices and high net worth investors are getting engaged with social impact investing but for institutional capital, “one of the fundamental issues is data and how you create a common set of metrics”.
She said reliable, precise data will be crucial to help super funds avoid criticism around greenwashing, as social investing faces similar pressure to the environmental part of ESG.
“One of the fundamental issues with attracting institutional capital for this sector is how you measure impact, and how you create a value on that measurement that can be aggregated in a way institutional investors are practiced in applying,” she said. “This is the intellectual challenge we have in this space.”
Danny Gilbert, the managing partner of law firm Gilbert + Tobin, also a member of the taskforce, said social impacting investing is a cottage industry in Australia and government can help to co-ordinate expertise and investment. “We do not have an abundance of expert advisors, we do not have the necessary number of expert intermediaries pulling it all [together], and we don’t have enough talent coming into the space,” he told the AICC panel.
”Government cannot do it on its own. Large corporations have a profound influence on the social and economic life of the country … We have to build a much larger ecosystem of knowledge and activity in this space, so that the impact market has the size, the capabilities, the expertise and the promise of interesting futures and careers for people to really make something of substance.”
One of the leading governments has been NSW’s, which was the first to issue a social impact bond in 2013 and set up an office of social impacting investing in 2015 that co-ordinates nine programs. It has just closed a market sounding after last year’s state budget allocated $30 million to a Social Impact Outcomes Fund, which will focus on vulnerable women and education for indigenous youth.
