Focussed on authentic impact strategies
Global Investment Insights
with Mary Delahunty, Founder and Managing Director, Seven Advisory
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Mary founded Seven Advisory in January 2022, having spent the past nine years with HESTA, an industry superannuation fund with more than 900,000 members, investing $68 billion in retirement savings on their behalf, having held the position as the Head of Impact the last four years.
Seven Advisory’s broad remit encompasses all aspects of purpose and impact.
“I’m focussed on authentic impact strategies, starting with a theory of change and working from that point through a corporate strategy into tactics and measurement.
I have been fortunate to learn my craft within the institutional investor environment. Now I can bring the rigour that is applied within that environment into other sectors. For example, I am working with the family office and private wealth sector to set holistic impact strategies, I am working with a number of small start-up businesses to strategise their impact journey and build their measurements, and I continue to advise a large institutional investor on areas of impact.
I am also spending time researching social risks to build a more complete picture of ESG as it applies to the forgotten middle - the social risk”, Mary explained.
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Blockchain technology builds transparency, certainty and therefore allows asset owners to calculate and mitigate risk with greater accuracy.
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Mary highlighted the increasing use of blockchain technology as particularly exciting with respect to driving transparency and the ease with which impact can be measured in investing.
If embraced by the investment sector, distributed ledger technology, or synchronised digital data, has the power to give investors certainty of aspects of their investment portfolio, Mary believes.
Take a very simple example like the risk of exposure to modern slavery in supply chains. Currently this risk is opaque because the data is so difficult to have confidence in and so removed from the asset owner. Blockchain technology builds transparency, certainty and therefore allows asset owners to calculate and mitigate the risk with greater accuracy.
Similarly, the potential use of smart contracts in traditional impact investing products like social bonds where tripartite agreements are common, can make the arrangements easier, more accessible and more transparent. The more that emergent technology can remove management costs, the more scalable these opportunities become.
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Larger institutional investors can afford to lean into the purchase of assets that may not have a future in a green economy with a view to transitioning those assets faster than the current plans suggest.
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From an investment perspective, there is no doubt that renewable energy from both traditional and innovative sources offers great opportunity for institutional investors and for smaller impact players. However, Mary believes these opportunities may play out differently for both sets.
“Larger institutional investors can afford to, and I think should be, considering how they lean into the purchase of assets that may not have a future in a green economy with a view to transitioning those assets faster than the current plans suggest.
While smaller investors will not want to be exposed to potentially stranded assets, large institutional investors may be able to offset this exposure with other investments in their portfolio.
As large universal owners, they will gain overall from the economy transitioning faster and smoother, than risk a potentially disruptive energy transition from policy change.
For smaller impact investors, the investment case for renewables has been made, we should see more opportunities in developed and developing markets that include either community owned or fractionalised renewable assets.
Attention will then need to turn to moving large amounts of capital to achieve the aims of adjacent SDGS in biodiversity, clean water and others”, Mary highlighted.
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Investors are wise to consider the role of “S” and “G” factors in emerging markets.
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From a risk perspective, institutional investors face enormous stomach-churning challenges with the outbreak of war in Europe and inflation pressures, all while still trying to read the data on the COVID recovery.
There are many scenarios’ investors will be contemplating, one of these is the increasingly complex implementation of an ESG strategy and, particularly, understanding the relationship between written policies and international sanctions.
Everyday superannuants increasingly expect that pension funds will limit their exposure to social and governance risk as well as the well-defined environmental risk. With the invasion of Ukraine, they now have a more profound understanding of what these risks look like. Over the last few weeks we have seen many institutional investors having to liquidate assets that are exposed to the Russian conflict, or halt any further exposure. “Investors are wise to consider the role of “S” and “G” factors in emerging markets or in economies where the governing power may be profiting from the harm of another sovereign nation”, Mary advised.
Mary left us with some of her firmly held beliefs about the crucial role the market and financial system have to play in delivering genuine social change, and warned that we cannot and must not do it absent of government policy and we should not do it in a way that entrenches our privileged position.
“My concern with the now maturing world of investing with impact is that it is a subset of value creation in the activities of the finance sector and not the one true driving force.
Inauthentic attempts by the finance sector to impact social change or to prove a purpose beyond the pursuit of profit are concerning for two reasons. Firstly, they do not enact the change required to bring about a better life for the next generation. Secondly, they build on the cynicism those outside of our sector rightly have towards our true motivation”, Mary concluded.
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My concern with the now maturing world of investing with impact is that it is a subset of value creation in the activities of the finance sector and not the one true driving force.
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Mary Delahunty, Founder and Managing Director, Seven Advisory
Mary’s establishment of Seven Advisory comes from an experienced background in corporate and government roles. As former Head of Impact for HESTA since early 2013, Mary has been instrumental in campaigning for change where it’s needed, and has been vocal about many areas of big business that need urgent attention and accountability, including Rio Tinto’s destruction of the Juukan Gorge and the dangers of tokenism.
As well as being a mother of three, Mary has held senior roles in financial services organisations for over 15 years and is passionate about progressing responsible investment practices. A Graduate of the Australian Institute of Company Directors and a 2015 Churchill Fellow, Mary currently serves as a Board Member of 000, Emergency Services Telecommunications Authority. She was previously Chair of the Women’s Ministerial Advisory Council in Victoria, Chair of Reclink Australia, and former Mayor of the City of Glen Eira.
Disclaimer
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