By Lynda Kiernan
Allianz Global Investors (AllianzGI) announced a first close for its Allianz Impact Investment Fund (AIIF) having successfully onboarded its first institutional investors from Germany, Scandinavia, and Austria. With a funding goal of Euro 200 million, and a hard cap in place of Euro 300 million, investors have subscribed nearly one-third the capital toward the fund’s maximum.
Launched only six months ago in September 2019 to leverage the significant growth being seen in the $502 billion global impact investing space, the AIIF is AllianzGI’s first multi asset private market impact fund, focusing on sectors that generate quantifiable environmental or social impacts, such as sustainable agriculture and land use, and energy efficiency, mostly in Europe.
“Impact investments are one of the most relevant forms of investment that generate both sustainable and attractive financial returns and have a positive impact on the environment and society,” said Beatrix Anton-Grönemeyer, chief sustainability officer. “Our experienced teams can take advantage of the full range of opportunities and implement new trends professionally and at an early stage.”
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.
“The first close of this fund in under six months reaffirms that clients are looking to allocate capital with the intention of achieving a defined and measurable result rather than just a financial one – contributing to the development of the Sustainable Development Goals,” said Martin Ewald, lead portfolio manager, impact investments.
“The fund, which combines both equity and debt, underlines AllianzGI’s commitment as an active manager, providing the type of innovative financing solutions needed to unlock new sources of stable cash flows for our clients.”
This investment framework 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.
In order to guarantee that these goals are being achieved, progress and relevant benchmarks are regularly presented to an independent Impact Council including select investors, which reports its findings to all investors for the 10-year term of the fund. Through quarterly reports, the impacts achieved will be compared to initial objectives for each project, which will then be transparently communicated to investors.
“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.”
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.