Impact investing reaches new levels of maturity and sophistication
18 January 2021 at 6:30 pm
70 per cent of impact investors said their impact investments are financially attractive relative to other investment opportunities
Impact investors are using complex approaches to their decision-making, new research finds, pointing to a maturing industry.
The latest report from the Global Impact Investing Network (GIIN) found that experienced impact investors consider impact objectives and impact risk alongside traditional factors such as financial returns, financial risk, liquidity constraints and resource capacity, to drive impact and financial performance.
And this is working in their favour. The report found that 70 per cent of impact investors said their impact investments were financially attractive relative to other investment opportunities, while 90 per cent said their portfolios were either meeting or exceeding their financial performance expectations.
The report uses case studies of five leading investors – Anthos Fund & Asset Management, IDP Foundation, Inc., Incofin Investment Management, UBS Global Wealth Management, UBS Optimus Foundation, and Vox Capital – providing an inside look at how various facets influence their decisions on capital allocation and performance management.
It also confirms earlier findings from the GIIN’s research around financial performance of private debt, private equity, and real assets, which represent the most common asset classes for impact investments.
Dean Hand, GIIN’s director of research, said that impact investors were now looking to more complex ways of achieving maximum impact and financial return.
“To understand what success looks like, impact investors are looking at how they can most efficiently achieve the best impact and financial performance – the most optimal performance point – for the least amount of capital deployed,” Hand said.
Other findings included that private debt impact funds generated stable financial returns on a risk-adjusted basis, and financial returns across private debt investments tended to align with investor expectations.
A full copy of the report can be found here.