Big time impact investing hits Billions

Written by Lisa Stanley Mann on 6th Jun 2018

If you’ve ever watched an episode of Billions, the hedge fund-based dirty money drama starring Damian Lewis, you could be forgiven for wondering how it could ever feature in a headline about impact investment.

Although the show’s protagonist, Bobby Alexrod, wrote off impact investment pretty vehemently in a recent episode, his firm’s super finance whiz, on-the-money non-binary character Taylor Mason has decided firmly that impact investment is where it’s at.

And, so it seems, is the money of more and more investors. A report released today from the Global Impact Investing Network (GIIN) reveals the industry is growing. The report surveyed representatives from 229 of the world’s leading impact investors, who collectively manage more than USD 228 billion in impact investment assets.

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More than half of the representatives interviewed for the research made their first impact investment in the last 10 years, showing that there have been many new entrants to the market. In 2017, respondents invested more than USD 35 billion into over 11,000 deals, and indicated plans to increase capital invested by 8 per cent in 2018.

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.

Amit Bouri, CEO and co-founder of the GIIN

The report also shows the diversity of the impact investment sector, with capital allocated across sectors as broad as financial services, energy and microfinance. And growth has been particularly strong in segments that historically accounted for a smaller share of investments – such as education and food & agriculture, Oceania and East & Southeast Asia, indicating expansion in investor interests.

Performance isn’t too shoddy either. A majority of respondents indicated that their investments have met or exceeded their expectations for impact (97%) and financial (91%) performance.

However, there are challenges. The most commonly cited ones 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.”

Amit Bouri, CEO and co-founder of the GIIN, said, “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.” He added: “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.”

Abhilash Mudaliar, Director of Research at the GIIN added: “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. 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 findings are based on survey responses from fund managers, banks, foundations, development finance institutions, pension funds, insurance companies, and family offices.

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