The country’s second-largest super fund, Australian Retirement Trust (ART), has confirmed a $2 billion commitment to impact investments by 2030, kicking off its strategy with a $1 billion investment in the Macquarie Green Energy and Climate Opportunities Fund (MGECO). 

The move, as reported by Investment Magazine in April, sees ART joins other asset owner investors in MGECO, including the $140 billion UniSuper, which in April last year became a cornerstone investor in the fund when it committed US$400 million (then $624 million). 

It is understood that UniSuper has not made additional investments in the fund since then, but head of private markets Sandra Lee confirms to Investment Magazine that it is “pleased with the performance and direction of the fund since our commitment”. 

In April 2024 MGECO acquired a portfolio of investments in six assets from Macquarie Group that had been developed by Macquarie Asset Management Green Investments over the prior six years: Galehead Development, Treaty Oak Clean Energy, Aula Energy, Blueleaf Energy, Outer Dowsing and Forliance.  

Collectively these projects account for about 17 gigawatts of green energy generation. 

Lee told the Investment Magazine Fiduciary Investors Symposium in November last year it is attractive to asset owners to co-invest with an entity prepared to use its own balance sheet as a foundation investor. 

ART’s commitment to impact investing is understood to be separate to an existing commitment to have four per cent of its funds invested in climate-related assets. At its current size, that commitment will reach at least $14 billion. 

Nicole Bradford, ART general manager of sustainable investment and planning, said in a statement that the fund’s commitment to impact investing “goes beyond just climate change, and may include assets in the health, social housing and aged care sectors, among others”. 

Bradford said ART believed that it could invest to serve the dual purposes of delivering financial returns and “seeking to make a positive difference”. 

Michael Weaver, the fund’s general manager of mid-risk assets and UK,  said MGECO will initially invest in solar and onshore and offshore wind generation, and batteries inOECD countries including Australia. It may also target other technologies such as hydro and geothermal, bioenergy and energy storage, or natural climate solutions. 

In April last year Investment Magazine reported that while definitions vary, the impact investing sector has been estimated at $US1.571 trillion globally, based on Global Impact Investing Network (GIIN) numbers.  

However, the local sector has struggled to gain mainstream acceptance among large institutional investors, with a government-appointed social impact investing taskforce calling it a “cottage industry in need of support to scale up”. 

A key challenge has been gaining the buy-in of each individual asset class team. A top-down implementation approach has often hit hurdles with teams already incentivised with their own performance targets. 

In May last year Macquarie Group chief executive Shemara Wikramanayake said at the company’s full-year results announcement that the six foundation assets of MGECO had been transferred to the fund at “pretty close to the investment we’ve made in them”. 

Wikramanayake said it was in the interests of Macquarie shareholders to transfer the assets at that cost and “put them into a fiduciary strategy” because the volume of capital being invested in green energy opportunities was “well beyond the capacity of our shareholders’ balance sheet that we want to put to work”; because the assets themselves were “still at a point where they’re attractive for the risk of a long-term holder”; and because “the counterparties we’re dealing with were starting to express some dissatisfaction with us [being] seen as a ‘buy and flip’ partner in these projects”.