Social Impact Investing: The Global Giant That is Australia’s Best Kept Secret

09.04.24 Investing By Toby Dawson
Social Impact Investing: The Global Giant That is Australia’s Best Kept Secret

It is profitable investing in both your own future, and the planet’s too. Traditional approaches to investing capital are now integrated with modern approaches to delivering positive social impact.

A few quick decisions for you to make, before you get to the detail of this new market opportunity:

  1. Is your goal financial return, social impact, or are you interested in a mixture of both?
  2. If you are keen on a mixture of both financial and social outcomes, what is the balance you would like? 90% financial? 10% financial? Or somewhere in between?
  3. Understand your risk appetite, your exposure level and the ownership type you want for your investments.
  4. Talk these through with your financial adviser.

Social impact investments are like other investment decisions you are already making. They are driven by what you, as the investor, want to achieve. They can incorporate:

Don’t be alarmed if you’re not sure what social impact investment is or why it’s relevant to your investment portfolio. Whilst this may sound new, the Dow Jones Sustainability Indices have been around since 1999 with the Johannesburg Stock Exchange requiring sustainability reporting since 2002. Neither financial markets have broken by taking an active, intentional focus on social impact-related opportunities. They continue to grow and support the flow of capital in concert with delivering impact outcomes. In Australia, the marketplace is still forming, despite its global maturity.

Why is social impact investing worth learning about?

A recent article in the Sydney Morning Herald identified almost 80 per cent of survey respondents said they would be inclined to invest in the social impact investment market. The key barrier was understanding the intricacies and being able to access independent expertise.

So what is this market, and why is it worth learning more about?

A brief history of the social impact investment marketplace

2013 was a pivotal year in the development of the social impact marketplace. David Cameron became Prime Minister in the UK on a policy of “big society, little government” – meaning a contraction of government investment into social service provision that would be offset by other entities (both private and not-for-profit) delivering those services.

One of the key deliverables of the big society little government policy play was the creation of the Social Impact Investment Taskforce (SIIT).

SIIT was made-up of the (then) G7 nations, and Australia was invited to be involved as an audience member (allowed to participate, but not vote on resolutions). Rosemary Addis was Australia’s ambassador to SIIT and remains to this day an international leader in all things social impact.

SIIT’s main role was to catalyse a global market for impact investment by identifying what can be done to grow the market and report findings. They focused on the actors (industry, organisation and entity types), asset classes and market mechanics that would deliver commercial and impact outcomes simultaneously.

Globally, and because of SIIT, the growth of the social impact market over the last decade has been significant and it now stands as a mature marketplace. In Australia however, the marketplace is forming and yet to reach maturity. Australia currently holds an insignificant market share as part of the Oceania region (image 2), but that is expected to grow as our impact marketplace matures.

Oceania, at 5% market share of AUM, holds approximately at $58.2M of the global market.

The key considerations to discuss with your investment manager

Before jumping into impact investment, it is important to remember the 90’s advertising slogan that oils ain’t oils (pardon the pun AND the irony). A key element of social impact is that correlation doesn’t mean causation. It is important that you analyse and assess your investment options so that they stack up with why you are investing and that they deliver on your objectives. As Lynch said, “know what you own, and why you own it.”


Delivering a positive social impact isn’t achieved by serendipity. It is the direct result of an intention to deliver change.

If you are interested in social impact investment, think about what are the causes or issues that are important to you. If you were seeking change in addition to financial returns, what issue would be your motivation? Current issues getting the most interest from investors are housing, education, agriculture, healthcare, and energy.

Understand what your intention is in terms of capital returns vs social outcomes. The two can co-exist in an extremely healthy relationship, but is your intention to prioritise financial returns or social impact?

There is no right or wrong answer to this question. It could be 70% financial and 30% impact, or vice versa. Both are good. Any action to improve our society is better than no action at all.

Know how your intention and aid your investment manager to identify the right investment vehicles for you.

Relevance & Adjacency

A key part of your investment journey is understanding your risk appetite and what your exposure comfort is. Whilst stepping into investing to deliver a positive social impact might be new territory, make sure that you’re not stepping into the complete unknown.

Your social impact investments should be relevant to you and your understanding of investing. It should have adjacency to your existing portfolio. If you are comfortable with stocks, bonds, or futures – stay where your comfort level is and seek out investments that deliver impact through those asset classes. You don’t need to completely re-invent your approach to investing to deliver a positive social impact.

Investments also need to relate to what you are trying to do. Are you trying to avoid doing bad, ensure you are doing good, or deliver an impact against an issue? These all co-exist in impact investing, and it is important you know whether you are a responsible, ethical, or social impact investor. Each has their own path to improve your financial position and the broader society (image 3).

Materiality & Rigor

Your social impact investment should have transparency and accountability about how it is progressing in delivering on its intended impact outcome.

It needs to be material, and the way that the material outcomes are measured needs to be rigorous. Impact is not aspirational or mere claims, it is a demonstrated cause and effect relationship. An impact investment is set apart because it delivers material outcomes measured by a framework that instills confidence, whilst also delivering sound financial returns.

The corporate regulator, ASIC, recently succeeded in its first greenwashing claim against investment giant Vanguard. Vanguard made misleading claims about its impact credentials in product disclosure statements, media releases, and online communications. ASIC successfully proved Vanguard could not validate these claims because they lacked a rigorous approach and the claims made were immaterial.

What to remember about social impact investing

Making money and delivering impact aren’t mutually exclusive. Impact investing is activating capital to tackle the significant issues we are facing as a society. And through tackling these issues, you will still make financial returns.

What those returns are, how much and when you receive them, need to be dictated by you. Just like any investment, you need to define your expected returns and understand your exit strategy.

Make sure you’re not being misled by great marketing. Make sure you know what you own, and why you own it. Make sure your investments give you what you want.

Speak to the team at Cloudbreak Wealth about how you can include social impact investments into your portfolio.


Toby Dawson, Principal of Tomorrow Together

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