The global impact investing market is growing and becoming more diverse, with both impact and financial returns in line with investors' expectations, a report from the Global Impact Investing Network finds.
Based on responses from two hundred and twenty-nine impact investors with assets under management of more than $228 billion, the eighth edition of GIIN's Annual Impact Investor Survey (76 pages, PDF) found that the top sectors for impact investments by capital allocation were financial services (19 percent of assets under management), energy (14 percent), and microfinance (9 percent), while food and agriculture was the most popular, with 57 percent of respondents collectively allocating 6 percent of their assets to that sector. Survey respondents also said they expected to increase the number of investments and the amount of capital invested by 5 percent and 8 percent, respectively, in 2018.
According to the report, assets under management for the eighty-two respondents who participated in the 2013 survey saw a compound annual growth rate of 13 percent over five years, with particularly strong growth in segments that accounted for a smaller share of investments, including education and food and agriculture (in terms of sectors) and Oceania and East and Southeast Asia (in terms of regions). In addition, among respondents who also make conventional investments, 72 percent said that, compared to three years ago, there was greater buy-in from internal stakeholders to have an impact investing arm; 70 percent said the impact investing conversation had moved from "why" to "how"; and 53 percent said it is now easier to persuade others in their organizations to make impact investments.
Indeed, a large majority of respondents reported that their investments had met or outperformed their expectations for both impact (82 percent and 15 percent) and financial return (76 percent and 15 percent). The survey also found that impact investors are deeply committed to measuring and managing the impact of their investments, with 76 percent setting impact targets for their investments and tracking progress against those targets. Most respondents also reported using a mix of tools to measure their investments' social and environmental performance, including proprietary metrics and/or frameworks (69 percent), qualitative information (66 percent), or metrics aligned with GIIN's IRIS catalog of performance metrics (59 percent). In addition, 55 percent said they tracked the performance of at least some of their investments against the United Nations' Sustainable Development Goals, with 21 percent saying they planned to do so in the future.
"To realize 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," said GIIN co-founder and chief executive Amit Bouri. "The Annual Survey demonstrates there is significant momentum in the market and provides data and insights for investors to maximize their impact and ultimately tackle critical global issues such as access to education and health care, gender inequality, poverty, climate change, and more."