The global impact investing market continues to mature, with most investors reporting their investments had met or outperformed expectations, a report from the Global Impact Investing Network finds.
Based on data and insights from two hundred and sixty-six impact investors managing $239 billion in impact investing assets — or nearly half the total market as measured by assets under management — the 2019 Annual Impact Investor Survey (76 pages, PDF) found that 98 percent of respondents said their investments had met (82 percent) or exceeded (16 percent) expectations for impact, while 91 percent said their investments had met (77 percent) or exceeded (14 percent) expectations for financial performance. A subset of eighty respondents who also participated in the survey four years ago reported that their impact assets grew at a compound annual rate of nearly 17 percent.
According to the report, the global impact investing market continues to grow, with respondents reporting a total of thirteen thousand deals in 2018 and plans to invest in another fifteen thousand deals in 2019. The top sectors by capital allocation were energy (15 percent of assets under management); microfinance (13 percent); financial services excluding microfinance (11 percent); food and agriculture (10 percent); housing (7 percent); water, sanitation, and hygiene (7 percent); and health care (6 percent). About half of the global respondents said they plan to increase their allocations to food and agriculture (50 percent) and energy (48 percent) in 2019, with growing interest in increasing allocations to housing (43 percent), health care (40 percent), and education (37 percent), while 6 percent of respondents plan to scale back allocations to financial services, microfinance, or manufacturing.
Funded by USAID, the survey also found that about two-thirds of respondents only make impact investments while the rest said they make conventional investments as well; that 66 percent of respondents mainly target market-rate returns; and that 56 percent of respondents target both social and environmental impact objectives, while 36 percent and 7 percent focus exclusively on social and environmental objectives. Nearly all respondents (98 percent) reported measuring and managing impact using a mix of qualitative information, proprietary metrics, and metrics aligned to GIIN's IRIS catalog of performance metrics or other standard frameworks, while 62 percent said they specifically track their investment performance to the UN Sustainable Development Goals (SDGs).
In addition, the report found that survey respondents were committed to further development of the impact investing industry, with more than four in five making some contribution toward the various actions recommended in GIIN's 2018 Roadmap for the Future of Impact Investing — including sharing best practices for impact measurement and management (61 percent), supporting the development of businesses focused on impact (52 percent), and training finance professionals (43 percent).
"Global challenges like entrenched inequality and climate change require large-scale, urgent action, and impact investors are stepping up to help fuel positive progress," said GIIN chief executive Amit Bouri. "They are accounting for considerations that have long been ignored in the financial sector — the impact of investments and businesses on people and the planet. Our research shows that the growth of impact investing has largely been fueled by client demand, which demonstrates the powerful potential for people to influence positive change in the financial system."