Annual GIIN survey reveals dynamic and diverse impact investing market
The Global Impact Investing Network (GIIN) has published the eighth edition of its Annual Impact Investor Survey, which reveals that the impact investing industry is growing steadily.
The investors surveyed, who represent USD228 billion in impact investing assets, invested over USD35 billion into over 11,000 deals in 2017, and are planning to increase capital invested by 8 per cent in 2018.
Amit Bouri (pictured), CEO and co-founder of the GIIN, says: “To realise the GIIN’s vision for the future of financial markets, where impact is integrated into all investment decisions, impact investing must continue to grow and build on its success of the past decade.”
“The Annual Survey demonstrates there is significant momentum in the market and provides data and insights for investors to maximise their impact and ultimately tackle critical global issues such as access to education and healthcare, gender inequality, poverty, climate change, and more.”
The survey also highlights the diversity of the impact investing market. Top sectors to which respondents have allocated capital are financial services, energy, and microfinance. While allocations have grown across all sectors and geographies over the past five years (at a robust rate of 13 per cent per annum overall), growth has been particularly strong in segments that historically accounted for a smaller share of investments – such as education and food & agriculture in terms of sectors and Oceania and East & Southeast Asia in terms of geographies – thus indicating expansion in investor interests.
Overwhelmingly, impact investors report performance in line with both financial and impact expectations. A majority of respondents indicated that their investments have met or exceeded their expectations for impact (97 per cent) and financial (91 per cent) performance.
Impact investors demonstrate a strong commitment to measuring and managing impact. Nearly all respondents measure the social and/or environmental performance of their impact investments. They use a mix of proprietary metrics, qualitative information, the GIIN’s IRIS-aligned metrics, and other tools and frameworks. The majority of respondents (76 per cent) set impact targets for some or all of their investments to track progress toward their social/environmental goals.
Investors are committed to the United Nations Sustainable Development Goals (SDGs). Many investors are recognising the power of their capital to help achieve the SDGs. Some 76 per cent of impact investors track their investment performance to the SDGs or plan to do so in the future.
Impact investors note that there are remaining challenges that need to be addressed as the industry continues to grow. The most commonly cited challenges facing the growth of the impact investing industry are: the ‘lack of appropriate capital across the risk/return spectrum’ and the ‘lack of common understanding of the definitions and segments of the market.’
“In order to address many of the world’s most pressing social and environmental challenges, we need more investors entering the market and more capital flowing into impact deals,” says Abhilash Mudaliar, Director of Research at the GIIN. He added, “It is invigorating to present evidence through this year’s Annual Impact Investor Survey that demonstrates that not only is this growth happening but also that investors are reporting strong results on both financial and impact performance.”
The report’s findings are based on survey responses from fund managers, banks, foundations, development finance institutions, pension funds, insurance companies, and family offices.