Global warming is doing more in Australia than sparking a health crisis. It’s changing the way some investors think about where to place their money.
Labeled an “irreversible” health crisis by the Australian Medical Association this month, climate change is boosting infectious diseases and raising depression, anxiety and suicide risks, doctors say.
Kylie Charlton, a veteran of the Australian ethical investing industry, sees more investors weighing the impact of their financial decisions with respect to climate change.
“The private investor is saying how do we start to shift capital so we move and transition the economy to renewables,” Charlton told Karma. “As Australians, we see the impact of climate change every day.”
Charlton is chief investment officer at Australian Impact Investments in Chatswood, which she said has about 100 family offices, charitable trusts, foundations and wealth management funds since a “standing start” in 2014. Climate change has made impact investing “very topical,” she said, boosting demand for asset consulting firm’s services.
Australia is experiencing a surge in impact investing. According to the Responsible Investment Association of Australia, the country’s investments in companies with social or environmental impact goals surged 73% last year, to $13.8 billion last year from $8 billion in 2017.
In its 2019 report, the RIAA said market growth was driven largely by the issuance of domestic green bonds, which function like corporate or government bonds, except that the issuer must use the investment to back a development that has an environmental benefit.
The RIAA also highlighted an increase in other types of impact investment products like sustainable property and infrastructure funds.
Charlton said venture firms also have a growing appetite for start-ups focused on curbing climate change Down Under and its devastating health effects.
When Australia’s doctors declared climate change a health emergency, they warned of droughts and bushfires, higher rates of water-borne gastroenteritis, and greater food insecurity from declining farm outputs as effects of the climate warming by about 1°C since 1910.
Start-ups Tackling Climate Change
Charlton mentioned carbon neutral courier service Sendle, sustainable fashion rental business Glam Corner and food and organics waste management company Goterra as exciting early-stage Aussie companies aiming to cool the planet.
Australian Impact Investments has invested in Sendle and Glam Corner via Australian impact fund manager Impact Investment Group and its Giant Leap VC fund — the country’s first venture capital fund with a 100% impact mandate.
Charlton urged impact investors to back Australian start-ups that tackled water scarcity. Large swathes of the country have been experiencing the worst drought on record.
“From an Australian perspective, looking at water usage is also really important because we live in a desert in many places,” she said.
Aquacell, a Sydney-based water recycling company, has been working on technology that might cut water waste by up to 90% in commercial and industrial buildings, spokesman Hugh Fisher told Karma. The company’s systems were smaller and more energy efficient than conventional water recycling systems.
The company has installed blackwater, greywater, rainwater and stormwater systems in about 50 buildings across Australia, he said, noting that its products started with a price tag of about $271,000.
Like many small Aussie firms trying to combat climate change, the company, part of the University of Western Sydney’s Launch Pad incubator, has self-funded operations but is open to investment, Fisher said.
Fisher said growth at the company has been rapid, citing recent expansion to the U.S. Aquacell has a joint venture with Louisville, Kentucky-based Phoenix Process Equipment Co. and most of its work is from California, he said.
More investment needed
Peter Holt of Australian energy consultancy Energetics said there was still an urgent need for more funding of innovative start-ups, especially in agricultural.
Holt, who advises some of Australia’s largest businesses including the Commonwealth Bank of Australia to help them manage climate change risk, said venture capital was particularly needed for farmers to develop new grains that could survive drier, harsher conditions.
“There are different cultivars and different planting techniques that can be used and there can be different ag-tech like precision planting, moisture control, and increased rainwater harvesting, but the big thing is going to have to be genetically modified organisms,” he said.
He said funding could also help reverse a growing scourge of mental health problems afflicting those in the outback.
But Holt said that large investors would embrace impact investing only after they saw a record of success and an overall maturing of the market. He said Australian financial services giant Macquarie Group’s announcement that it would allocate $116 billion climate change-related investments was a “step in the right direction.”
