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  • Writer's pictureImpact Investing Network

Mainstreaming Impact: Major fund providers interested in investing in positive impact, constraints hold them back.

Most New Zealanders are interested in the potential to use their investment money to do good.

With KiwiSaver funds now totalling around $100 billion, even a partial allocation of funding can make a huge difference, especially if it is applied to meeting urgent social and environmental challenges. Already, mainstream KiwiSaver and managed investment funds are being invested in companies developing solar and wind power, building the circular economy or providing social housing.

The challenge is to ramp up this funding.

Mindful Money’s report ‘Mainstreaming Impact Investment’ shows that major fund providers are interested in investing more in companies that have a positive impact, but there are constraints. The report analyses these constraints and how they can be overcome.

The aim of 'Mainstreaming Impact Investment' is to

  • deepen understanding of the opportunities for impact investment within mainstream funds;

  • seek opportunities for collaboration;

  • catalyse a programme of action to accelerate positive impact investing.

Barry Coates, CEO of Mindful Money commented: “Last year, a large majority of New Zealanders said they are interested in investments with a positive impact. However, until recently, there have been few funds available, especially to retail investors."

Constraints on investing in unlisted companies is also discussed. A key barrier being a lack of liquidity, when investments include growth companies and long term assets that are not regularly traded. Investment in unlisted companies (such as private companies, SMEs or early stage companies) is crucial, since many of them have the most direct connection to generating positive social and environmental impacts.

Currently, most KiwiSaver and managed investment funds invest very little in unlisted companies, well below the level of many other OECD countries. The UK government has worked with the major pension funds on an initiative to allocate a higher level of investment in private assets, citing the likelihood of higher returns after fees for investors.

Barry Coates added: “The experience of the UK and many institutional investors shows there is not necessarily a trade-off between positive impact and returns. There is evidence of good returns from investments in companies with positive impact and strong sustainability policies, operating in rapidly growing sectors.”

Barry concluded: “There is strong support for accelerating investment in positive impact and progress is being made by fund providers. However, there are constraints in legislation, regulation, capability and current practices of fund providers. This report is a contribution to overcoming these constraints and mobilising far more KiwiSaver and other investment for the public good.”

Read the report below.

Responsible Investment Benchmark Report 2023

Thanks to the team at Mindful Money for their research and collaboration within the ecosystem to encourage the acceleration of investment into assets and enterprises that have a positive impact.


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