By Lynda Kiernan

Allianz Global Investors (AllianzGI) has announced the launch of the Allianz Impact Investment Fund (AIIF), its first multi-asset private equity and debt impact fund. 

Formed to leverage the significant growth being seen in the $502 billion global impact investing space, the AIIF will focus on sectors that generate quantifiable environmental or social impacts, such as sustainable agriculture and land use, and energy efficiency.

Impact and socially responsible investing has gained serious traction in recent years, however, the UN estimated that there remains a $2.5 trillion (with a “t”) funding gap per year between current impact investing levels and what is needed to achieve the UN’s Sustainable Development Goals (SDGs) in emerging countries alone.

“Environmental, Social and Governance” issues are coming to the fore for many fund managers, with vast amounts of ESG and Ethical Investing research being conducted,” said Chipo Muwowo, head of content at Savvy Investor, in his article, Rapid Urbanization and Growing PE Investing: African Agriculture Set to Rise, which was featured in the GAI Gazette, Volume 6, Issue 3 that was distributed in conjunction with the annual Global AgInvesting Asia event held in Tokyo on 12-13 September 2019.

“The Allianz Impact Investment Fund will only carry out investments that create a measurable ecological and societal impact that help contribute towards the UN’s Sustainable Development Goals,” noted Beatrix Anton-Grönemeyer, chief sustainability officer, AllianzGI.

 AlianzGI, which manages approximately EUR6 billion (US$6.5 billion) in impact investments, has a 20-plus year history in the space, and this new fund will join its existing impact fund portfolio which includes the Allianz Renewable Energy Fund.

“As more investors look to allocate capital with the intention of achieving a defined and measurable results rather than just a financial one, the impact sector looks set to experience continued growth,” said Martin Ewald, lead portfolio manager, impact investments. “The launch of this fund, which combines both equity and debt, underlines AllianzGI’s commitment as an active manager to providing the type of innovative financing solutions needed to unlock new sources of stable cash flows for our clients.”

The impact investment market offers not only an overarching benefit to society and the environment, but the potential for healthy returns as well, The Global Impact Investor Network (GIIN) concluded that between 2016 and 2018, impact AUM saw a 400 percent increase, climbing from US$120 billion to US$500 billion over the two-year period.

This growth is being driven by two factors – one a bottom-up, and the second a top-down – according to AllianzGI. The bottom-up driver being how 87 percent of private international CEOs are working to overhaul their strategies toward more sustainable business models to address client and environmental demands; and the second top-down driver being new international agreements such as the UN Sustainable Development Goals generating greater oversight and more stringent frameworks geared toward achieving sustainability benchmarks. 

Key to the AIIF is the measurement and quantification of its portfolio investments.

“Given the continuous risk of “impact washing”, transparency and accountability regarding the generated impact are of utmost importance when carrying out impact investments, Allianz states on its site. “Thus, the key feature of impact investments is an investor’s obligation to continuously measure and review the social and environmental performance of the underlying assets to ensure transparency and accountability.”

“The strategy documentation, the investment process and an independent committee ensure that the sustainability goals are taken seriously and are tracked consistently,” said Allainz CSO Anton-Grönemeyer. “The impact achieved will be compared with initial objectives for each project in quarterly reports and communicated transparently to the investors.”

 

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.