An increasing number of people want to invest in companies that are ‘doing good’ for people and for the planet. The solution can be found via impact investing, which recognises that measurable positive social and environmental impact can be achieved alongside financial return.
While still an emerging space, impact investing is still dominated by institutional investors, foundations, high net worth individuals and family offices so isn’t as easily accessible to retail investors.
One solution for retail investors who want to invest for positive change is to invest in impact funds - where a fund manager selects and manages a portfolio of investments that they believe will deliver positive financial and environmental or social outcomes.
There are also a limited number of financial advisers that specialise in impact investments and as more investors push for societal or environmental impact to be prioritised alongside financial returns, it’s likely that more will incorporate impact considerations in their investment recommendations.
Alternatively, investors wishing to have more control over individual investments can build their own portfolios of impact investments.
Northstar Impact Funds
Some ASX-listed companies that fit the bill can be found by looking at the portfolios of Impact Investment funds. Northstar Impact Funds is one such fund that only invests in companies with solutions to social and environmental challenges.
NorthStar states: “We focus only on companies that can deliver positive social and environmental impacts.
“Impact investing is different from ESG investing. We do not view the social and environmental impacts of a company as risks to be avoided or managed, rather we consider them to be fundamental to a company’s strategy.
“Impact is incorporated into our investment decisions. We only invest in companies where their core business has a positive impact on society and/or the environment. We engage and support those companies to scale their impact. Finally, we measure and report on the positive impacts achieved. This is our approach to impact investing.”
Retail investors can invest a minimum of $10,000 in NorthStar’s funds, or for those wishing to manage their own portfolio, there are a number of ASX companies that meet the definition of an impact investment that can be bought directly.
The list below includes some examples of NorthStar Impact’s portfolio holdings, as at June 30, that are available to retail investors on the ASX.
The companies fall into a number of categories including affordable housing, care and support, education, financial and other inclusion; healthy living, land and resource management, renewable energy, wellbeing: healthcare services, wellbeing: medical devices, and wellbeing: pharmaceuticals.
Some ASX-listing impact investments
The Environmental Group Limited comprises four business units, Total Air Pollution Control, Baltec IES, EGL Water and Tomlinson Energy Service. All units are committed to the protection of the environment by improving air quality, reducing carbon emissions, enhancing waste-to-energy production and lifting water quality.
Proteomics International Laboratories Ltd (ASX:PIQ) is a pioneering medical technology company operating at the forefront of predictive diagnostics and bio-analytical services. The Company specialises in developing simple diagnostic tests for common diseases and discovering new therapeutic drugs.
Mercury NZ Ltd generates electricity from 100% renewable sources – hydro, geothermal and wind. They’re committed to a more sustainable future, with their 100% renewable generation complemented by their moves to convert their fleet to electric or plug-in hybrid vehicles.
Close the Loop Ltd (ASX:CLG) operates in all areas of the circular economy, providing best-in-class sustainability solutions to help companies enhance corporate social responsibility programs.
Arena REIT invests in social infrastructure properties in growing sectors that are supported by favourable demographic and economic trends. Their portfolio of more than 250 social infrastructure properties is leased to a diversified tenant base in the growing childcare and healthcare sectors.
Envirosuite Ltd (ASX:EVS) technology represents more than 30 years of research and consulting experience across diverse environmental issues. Their simple-to-use products are focused on delivering practical, easily understood information to help companies manage their environmental impacts such as noise and air pollution, waste and wastewater treatment.
Wide Open Agriculture Ltd (ASX:WOA) is a leading regenerative food and agriculture company that is reinventing the way the world grows, thinks about, and buys food to create a better future for people and the planet. Their products include DirtyCleanFood oat milk and Buntine Protein, a novel lupin protein.
Genex Power Ltd (ASX:GNX) is focused on delivering its portfolio of renewable energy generation and storage projects. By 2025, their portfolio of renewable power projects will provide clean energy to over 350,000 homes offsetting almost 2 megatonnes of CO2 per annum.
Eureka Group Holdings (ASX:EGH) Ltd focuses on providing quality and affordable rental accommodation for independent seniors and disability pensioners within a comfortable community environment.
NextEd Group Ltd (ASX:NXD) is one of Australia’s largest private tertiary education organisations, delivering industry-relevant courses and programs to both domestic and international students. Expanding into all major Australian states and territories, they are set to broaden their global international student recruitment networks.
ResMed Inc is a global leader in sleep technology with a mission to provide global leadership in sleep medicine and non-invasive ventilation based on innovative technology advancing the diagnosis, treatment, and management of sleep-disordered breathing.
Probiotec Limited manufactures, packs and distributes a range of prescription and over-the-counter pharmaceuticals, complementary medicines and consumer health products, and fast-moving consumer goods.