Global impact investment market rises to US$502 billion

Global market estimated at over half a trillion dollars, more than double the figure from 2018, based on data collected from over 1,340 institutional investors by GIIN

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The global impact investment market is currently worth at least US$502 billion, according to the Global Impact Investing Network (GIIN) in its “Sizing the Impact Investment Market” report. Launched on April 1, this landmark report, which GIIN claims is the most comprehensive study on impact investment to date, analyzes the size and make-up of the impact investing market.

Impact investments seek to use capital to contribute to improvements in people’s lives and the environment while generating financial returns.

The report was based on the collection of assets under management (AUM) data on over 1,340 impact investors around the world. These include asset managers, which at over 60% make up the largest group; foundations; banks; family offices; pension funds; and insurance companies. Only organizations were counted, not individual investors. In terms of AUM, asset managers made up 51% while development finance institutes (DFIs) made up 27%.

The US$502 billion figure is more than double the US$228 billion stated by GIIN last year in its 2018 Annual Impact Investor Survey which compiled data from 229 organizations.

“As the market expands, we need to be sure those making impact investments remain committed to driving intentional and measurable impact. For this reason, our team at the GIIN will focus our efforts on a key theme for our industry-building work in the next three years: scale with integrity,” says GIIN CEO and co-founder Amit Bouri

The majority of impact investors are based in developed markets such as the US and Canada (58%) and Western, Northern and Southern Europe (21%), according to the report. Just 2% of investors are based in East Asia, while another 2% are in Southeast Asia and 3% are in South Asia.

The average size of investor AUM is US$452 million, which indicates that while most organizations are small, some investors manage very large impact investing portfolios.

As all the data in the report was self-reported, this meant that some investment activity might have been underreported as investors might not have identified it as impact investing, GIIN states in the report. However, some allocations may also have been overreported as some investors counted environmental, social and governance (ESG) as impact investing.

While the impact investing market has grown rapidly over the past decade, there is still a need for trillions of dollars to address critical social and environmental challenges in the world, such as those presented in the UN Sustainable Development Goals. As such, there is room for more growth in impact investment as well as potential for investors, according to GIIN.

This market sizing report is the first of several major papers on impact investment that GIIN is releasing this year. GIIN launched the Core Characteristics of Impact Investing on April 3, which sets out four principles for impact investing centred on intentionality, the use of evidence and data, impact management and contribution to industry growth. GIIN also plans to launch in late spring IRIS+, a metrics-based system for impact measurement and management that enables data comparisons across an impact investing portfolio.

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Date

8 Apr 2019

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