There is a need for greater transparency and education for advisers on the difference between ESG, sustainable and impact investing, according to Zurich Financial Services Australia.
"It's fundamental that ESG has to be integrated into the investing process," said Matthew Drennan, head of savings and investments at Zurich Financial Services Australia. "If you haven't integrated it into the ESG process, you're becoming a dinosaur."
Drennan notes that Zurich has been a signatory to the PRI since 2012, and that the organisation offers a range of educational resources for financial advisers in addition to its fund offerings.
"If you take the sustainable investment process, fundamentally, it's about meeting present needs without compromising future generations in terms of what you're investing in," he said. "That's an important starting option, and one that by and large advisers understand at a very high level.
"Sustainable investment is partly about the environmental impact, but you're also progressing that to what are you doing socially, what are you doing from a governance perspective."
Zurich talks with advisers about these concepts, but demand is being driven by investors who are questioning their investments and how their advisers are thinking about issues like sustainability and impact.
"That's important, and to me, the next stage and one that we're moving into more is the impact investing space, and it's very different," Drennan said. "Rather than being neutral from the perspective of doing no harm, it's about having an intention of investing with a specific idea in mind about generating a positive social and environmental impact."
To that end, Zurich has launched the Healthcare Impact Fund, which is managed by global fund manager American Century Investments.
The American Century Health Care Impact Equity fund, managed by Michael Li, seeks quality stocks by incorporating acceleration, relative strength, and valuation, and currently has US$1.66 billion as of June 2020.
The Zurich Investments Healthcare Impact Fund is designed for the Australian market, and Zurich has seeded the fund with an initial $20 million.
"It has some great qualities to it that make it pretty unique," Drennan said. "If you think about the way that it's structured and what its' trying to achieve in terms of making real progress in terms of delivering medical care to people more quickly and efficiently."
The American Century Health Care Impact Equity fund has four thematics - innovation in treating diseases, improving access to healthcare, lowering costs of access to healthcare, and investing in efficient equipment, software and services.
The fund is linked to Sustainable Development Goal 3 - Good Health and Wellbeing.
Funds like the Healthcare Impact Fund represent the future of where the investment market is moving, Drennan said.
"It's looking for things that are more targeted, a good and easy story that an adviser can express to a client, and clients can then decide that that's something they can understand and invest in."
The Healthcare Impact Fund is Zurich's "first foray" into impact investing, Drennan said.
"The ESG stuff to me is becoming mainstream," he said. "To me, that's sort of a given. A ticket to the game. Impact investing is the one that we're moving forward on."