ANZ Staff Super increases its impact through Palisade

KEY TAKEAWAYS

• ANZ Staff Super is committed to achieving net zero carbon emissions from our investments by 2050.
• In June 2022 ANZ Staff Super finalised a $50M commitment in the Palisade Impact Fund.
• Palisade Impact focuses on investments that intentionally target solutions to environmental and social challenges while driving strong risk-adjusted returns.
• Palisade Impact takes a cross-sector approach to driving the race to zero by focusing on three themes: zero emissions, zero waste and zero inequality.
• ANZ Staff Super embeds sustainable investing into all its investment options. The Palisade Impact Fund joins its other socially responsible investments and managers.

Through Palisade Impact ANZ Staff Super is investing in greener, smarter, more equitable infrastructure for the future

Here ANZ Staff Super’s Paul Rosam talks with Palisade Impact’s CEO and co-founder, Steve Goss, about this new investment.

Paul: Where does Palisade Impact invest?

Steve: Think next generation infrastructure that enables the race to zero. We focus on zero emissions, zero waste and zero inequality.

With zero emissions most people think traditional renewables. While there’s nothing wrong with that, we go a step further. It’s about how to decarbonise the harder to abate sectors, how to decarbonise manufacturing, transport, the built environment.

For example, we’ve just invested in a business called ECOSAVE. It’s an energy as a service company that provides net zero emission solutions and infrastructure to all kinds of organisations, from hospitals and aged care through to schools, universities and local government agencies and municipal councils. Their business model gives their clients a guaranteed energy saving. That way the more energy their clients save, the more money ECOSAVE makes, and the more carbon emissions we avoid.

Similarly, with zero waste it’s not just about moving things out of landfill, it’s taking waste and turning it into something of value. Like taking organic waste and creating gas. Electronic waste uses an extraordinary amount of gold and minerals – as a result about 17% of the gold mined in Australia ends up in landfill. There’s a lot of potential to create value from e-waste.

When we talk about zero inequality we’re talking about creating digital equity. How to provide more Australians with affordable, digital, de-carbonised infrastructure. For example, right now I’m talking to Social Housing investors about investing in GigaComm, a service that manages a broad infrastructure network that provides ultra-fast broadband and internet access using next generation infrastructure that is cheaper to install. It’s a fraction of the cost of traditional infrastructure and therefore pays back the cost of capital in a shorter period. People are feeling the consequences of digital inequity more than ever due to COVID, so this is a big opportunity to improve digital inclusion.

Paul: What returns are you aiming for?

Steve: Let’s be clear here: we’re not about sacrificing value for values.

We’re passionate about making an impact and about driving strong risk-adjusted returns. While return targets are not guaranteed, we are aiming in the range of 13% to 15%.

With the business models we’re investing in, they inherently deliver impact which means the more they grow, the bigger they get, the bigger the positive impact and the bigger the return.

There is a huge opportunity here to make change and that creates a big investment opportunity. We estimate close to half a trillion dollars will be invested over the next 30 years in next generation infrastructure. This falls into a gap between big traditional infrastructure investments and traditional private equity. We focus on that ‘sweet spot’ in between.

Palisade Impact is there to help the businesses we invest in grow for the long term. That’s what leads to strong, long-term returns.

Paul: Who typically invests in Palisade Impact?

Steve: About 80% of our investors are institutional, mainly super funds, and of those the majority are corporate super funds. The other 20% of our investors are high net worth families.

We’ve found corporate super funds, like ANZ Staff Super, to be more nimble than very large funds. They have enough capital to be able to do things differently but not so much that they lack agility. We found ANZ Staff Super quick to ‘get’ what we do and able to move quickly.

Paul: When and why was Palisade Impact founded?

Steve: We started in October 2021. I came out of Macquarie, where I was the former head of impact investing, to join forces with co-founder Jeremy Wernet, our Chief Investment Officer and former Head of Macquarie Capital for Macquarie Group in Asia.

As well as spending time together at Macquarie, Jeremy and I share a friendship going back over 30 years. We share the same commitment to impact investing. Together we founded Palisade Impact because we saw a big opportunity to make positive change. To make that positive impact in a virtual circle of value creation. Creating value for our investors by delivering impact that creates positive change.

We finished our first round of capital raising in March 2022 and have our first two investments – EcoSave and GigaComm – complete. Now we’re into our second round of capital raising and expect to have between $300M and $400M in funds under management by the end of August.

The way we see it, the size and scale of investors will take care of itself if we do our job well. Our aim is to deploy money into five or six impactful and financially viable investments and see that fruit over the next two to three years in meaningful returns, and in meaningful impact.

We’re passionate about growth and we’re passionate about making a difference. As part of our business model, 2% of our profit as manager goes to support charities working to increase social and affordable housing as well as to Tideline the leading impact adviser to help us grow the sector. As well as being CEO of Palisade Impact, I’m also Chair of Homes Victoria and on the Board of Berry Street, while my wife, Maxine is the co-founder and CEO of a charity – You Matter - that assists women, children and families experiencing domestic violence.

Views expressed in this interview are not necessarily the views of ANZ Staff Super. Past returns are not indicative of future performance.

More about ANZ Staff Super’s approach to sustainable investing

• Read our 2021 Annual Report.
• Visit www.anzstaffsuper.com/investing-sustainably.

IMPORTANT INFORMATION

In preparing this document, the Trustee has not taken into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any person. Accordingly, before acting on the advice contained in this document, you should assess whether the advice is appropriate in light of your own financial circumstances and consider contacting your financial adviser. Interests in the ANZ Australian Staff Superannuation Scheme ABN 83 810 127 567 RSE 1000863 (“the Scheme” or “ANZ Staff Super”) are issued by ANZ Staff Superannuation (Australia) Pty Limited ABN 92 006 680 664 AFSL 238268 RSEL L0000543 (the “Trustee” of the Scheme). You should consider the relevant Product Disclosure Statement at anzstaffsuper.com before making a decision in relation to your superannuation.

August  2022.