Investing for Good Cheerleader Sees Interest Rising Down Under

Thomson Reuters Foundation, 3 May 2018:

Investments that produce social and environmental benefits, as well as a profit, are proving popular worldwide

Despite the pristine landscapes brought to mind by successive Lord of the Rings films, New Zealand's environmental problems are driving interest in impact investing, according to a leading advocate for the growing ethical finance trend.

It could cost up to NZ$36 billion to fulfil New Zealand's obligations by 2030 under the Paris climate change agreement, which seeks to limit global temperature rises, said David Woods of a new board to develop impact investing.

"If you had to fund that out of the tax base it would be pretty substantial," said Wood, deputy head of the National Advisory Board (NAB) on impact investing, which was set up last month to steer strategy and governance of the emerging market.

"If you look at the infrastructure problems, the environmental problems and the social problems that New Zealand needs to fund in the next 20 years or so, philanthropy and government can't do it on their own."

Investments that produce social and environmental benefits, as well as a profit, are proving popular worldwide. The $114 billion market is growing by about 18 percent a year, according to the Global Impact Investing Network, a U.S.-based non profit.

"I'm one of the people that believes that, by 2020, impact investing will be the normal way, that investors will expect a social or environmental outcome with their money, as well as a financial one," said Woods, who started out as a banker.

His previous role was as head of Oikocredit, a social investor that funds microfinance and fair trade organisations.

"Impact investment deals on environment and climate change will attract international private sector institutional investors, to help to share the burden facing the New Zealand taxpayer," he told the Thomson Reuters Foundation.

Woods gave the example of the consulting agency Envirostrat, which is exploring whether investors could help to clean up the Waikato, New Zealand's longest river, which has been polluted by run off from nearby dairy farms.

Envirostrat believes that investors will see an opportunity if clean water becomes more valuable because of scarcity.

With Woods on board, the NAB will join the 15-member Global Impact Investment Steering Group, an independent organisation set up in 2015 to catalyse the sector, which brings together the worlds of finance, business and philanthropy.

It aims to make measurable impact "a deliberate driver in every investment and business decision affecting people and the planet", it said on its website.

Aside from the environment, Woods reeled off a list of other social challenges he believes impact investing could address: affordable housing, child poverty, health issues and education for minorities, in particular in Maori communities.

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