Advice industry needs “agents of change” to shift the impact needle

How advisors choose to wield their influence will help determine how fast impact investing becomes a meaningful tool for solving some of society’s major issues, says the head of multi-asset impact fund Soul Capital.

Wednesday, December 18th 2024, 5:43AM

by Kim Savage

Investment in private assets, such as infrastructure, renewable energy and housing is set to become easier for managers of KiwiSaver funds, with Commerce Minister Andrew Bayly last week announcing reforms to loosen the reins on the use of investors’ funds.

Soul Capital is a multi-asset fund which specialises in investing for impact. Its chief executive Jamie Newth says New Zealand won’t find the necessary capital to solve problems with an ESG lens only, institutional investors will need to invest in real assets like those identified by the government.

“There's two sides to that: there is them being open to finding those investment opportunities and not putting up excuses, and to the likes of us creating the products for them to invest in, goes kind of hand in hand.”

But for impact investing to really gather pace capital needs to flow in the direction of early stage businesses as well. Advisors have a key role to play, says Newth, by refusing to be limited by what their clients ask of them.

“When advisors and advisory firms only do what clients pay them to do, they're a mirror of the status quo.

“They're not helping, they're not agents of change or progress.

“If you're advising a person as to what they want to achieve with their capital, that invariably will be more than just risk, return, liquidity.”

The growth of impact funds in New Zealand is apparent in the latest benchmark report from the Responsible Investment Association of Australasia, which shows a big jump year on year in impact funds’ assets under management from $1 billion to $5 billion.

Impact funds though still remain a small slice of the RI pie, the report finds. Newth says it is time the market adapted.

“Instead of adjusting market practices, we're just like ‘let's generate more surpluses to try and solve up with philanthropy.’

“And it's been a failure of government policy as well.

“We need to mature past that and realise the tools of the private sector are probably the most powerful things we've ever had as a species.

“Let's put them to better work,” says Newth.

Tags: Advisers