Size of the global impact investing market revealed

The global impact investing market is now worth $502 billion, according to new research that advocates say highlights the need for future growth across the responsible investing landscape.    

The Global Impact Investing Network’s latest report provides an in-depth analysis of the current size and composition of the impact investing market, based on data from more than 1,300 impact investors.

The report said at a time when an accurate estimate of the impact investing market size was in high demand, this research provided the most rigorous estimate of market size to date.

GIIN CEO and co-founder Amit Bouri said as the impact investing industry developed, it was critical investors developed a greater understanding of the contours of the market such as size and scope.

“This research gives us insight into the current state of the market, and it will also lead to deeper conversations about the market’s future potential,” Bouri said.

The GIIN is thrilled to announce Sizing the Impact Investing Market, an in-depth analysis of the current size and composition of the #impinv market. The report estimates the current market size to be $502 billion. Learn more: https://t.co/iTq9Av7aM7 pic.twitter.com/9SR2qvmvF4

— GIIN (@theGIIN) April 1, 2019

From the impact investors identified in the research, more than 60 per cent were asset managers. About one in five were foundations, while banks, Development Finance Institutions (DFIs), family offices and institutional asset owners were also included.

The majority were based in the US and Canada (58 per cent) while many were based in western, northern and southern Europe (21 per cent). Only one per cent came from Australia.

Rosemary Addis, chair of the Australian Advisory Board on Impact Investing (AABII), told Pro Bono News the market dominance in assets under management from North America and western Europe relative to Australia and Asia was striking.

She said advocates could take the Australian market to scale using the AABII’s blueprint for collective action, which sets out what this will take and the roles for different actors.

“What’s notable is the significant volume of assets under management with Development Finance Institutions,” Addis said.

“While Australia doesn’t yet have such an institution, the proposed infrastructure finance facilities for the Pacific, from both sides of politics, are a major step and there are significant opportunities to orient this initiative more to impact.”

Impact investing advocates said the industry also needed to be sure those making impact investments remain committed to driving intentional and measurable impact.

Addis agreed that impact integrity was a real focus for the sector.

“Impact integrity goes to the heart of what benefit and solutions are being delivered for people and the planet and is critical to building trust and data that will encourage greater participation,” she said.

This need has led GIIN to focus its efforts over the next three years on a key theme: scale with integrity.

Determining the size of the market was the first step, now GIIN will turn to outlining the elements that define impact investing to distinguish it from other investment approaches.

This will be done through the launch of GIIN’s Core Characteristics of Impact Investing, which the organisation hopes will push impact investing into the mainstream.

The GIIN has just launched the Core Characteristics of Impact Investing, which define baseline expectations of the essential practices of #impinv & provide clarity for #investors as the market scales. Check them out here: https://t.co/wPpQe6sQgP pic.twitter.com/Gcq34s5VNn

— GIIN (@theGIIN) April 3, 2019

“The results of this study underscore the momentum of impact investing, but also the need for continued growth across the responsible investing landscape if we are to address global challenges like those outlined in the Sustainable Development Goals,” Bouri said.

“But it must be scale with integrity, to ensure we are achieving impact at scale, not just capital at scale. The core characteristics provide the greatest clarity to date on the elements that define impact investing, so investors entering the market will know exactly what to strive towards.”

These characteristics include intentionality, evidence-based investment design, impact management and contribution to industry growth.  

Mark Grier, the vice chairman at Prudential Financial, said the ultimate goal of the GIIN was to change mindsets about the role of finance in society, and the ability of investments to create a positive social impact.

“Characteristics offers an easy-to-follow roadmap for making and managing impact investments – the kind of infrastructure the market needs to safeguard the integrity of the field as it grows,” Grier said.