Global Impact Investment on the Rise
1 June 2016 at 9:50 am
Impact investment is set to rise by 16 per cent in 2016 topping $24 billion, according to the Global Impact Investing Network (GIIN).
In its sixth annual survey the Not for Profit organisation found that investors committed USD$15.2 billion (A$20.9 billion) to 7,551 impact investing deals in 2015 and planned to increase capital by a further 16 per cent to USD$17.7 billion (A$24.4 billion) in 2016.
The number of deals is also expected to rise by 55 per cent to 11,722.
GIIN CEO Amit Bouri said a key takeaway from the data was that it showed impact investing is no longer a nascent market.
“Investors around the world have been hard at work to grow and improve this market – demonstrating that investments can and should be directed toward addressing some of the most pressing social and environmental challenges,” Bouri said.
“And with momentous levels of importance being placed on the COP21 climate agreement and the United Nation’s Sustainable Development Goals, impact investing’s coming of age is particularly timely given the clear role impact investors can play in advancing such global efforts.”
GIIN’s survey, which was conducted between December 2015 and February 2016, included responses from 158 impact investment organisations, including fund managers, foundations, banks, development finance institutions, family offices, pension funds and insurance companies.
The respondents, who had each committed US$10 million (A$13.8 million) in impact investments since its inception and/or had closed at least five impact investing transactions, noted continued improvements in the sophistication of the impact investing industry.
Bouri said while signs of growth were important and encouraging, they wanted to “celebrate more than growth alone”.
“I am particularly excited by this survey’s important data about gains in market sophistication,” Bouri said.
Areas in which respondents indicated the greatest progress included “professionals with relevant skillsets”, “research and data on products and performance”, and “sophistication of impact measurement practice”, where more than 85 per cent indicated either “some progress or significant progress”.
Respondents also reported a variety of reasons for allocating capital to impact investments, the top three motivations being a commitment to responsible investment, a desire to meet impact goals and response to client demand.
At least half of investors in the poll said they targeted access to finance, employment generation and health improvement, education and income growth/livelihoods support.
Renewable energy, energy efficiency and clean technology were the top environmental impact themes.
At year-end, investors managed some $77 billion in impact assets.
Fund managers, which comprised 57 per cent of survey respondents, managed 58 per cent of assets, according to GIIN.
In 2015, they raised $6.7 billion for impact investing, and said they planned to raise $12.4 billion in 2016.
Nearly three-quarters of investors said their investments performed as expected in 2015 in terms of financial performance, with 19 per cent reporting outperformance versus expectations.
Just 11 per cent said their impact investments underperformed last year.
Meanwhile, 99 per cent reported the impact performance of their investments was in line with or better than expectations.
“As impact measurement is a core component of impact investing, we at the GIIN are especially encouraged to note that 99 per cent of respondents report that they measure impact,” Bouri said.