Global Impact Investing Network issues annual Impact Investor Survey
Majority of world’s leading investors say the performance of their impact investments is in line with or exceed both their impact and financial expectations, according to GIIN's latest annual survey
The majority of the world’s leading investors reported that the performance of their impact investments is in line with or exceed both their impact and financial expectations, according to The Global Impact Investing Network (GIIN) 9th Annual Impact Investor Survey.
Providing market trends and insights from 266 of the world’s leading impact investors that manage a total of US$239 billion in impact investing assets, the survey shows that growing commitments are being made to develop the impact investing market.
“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,” says Amit Bouri, CEO and co-founder of the GIIN.
A subset of 80 investors that participated in the annual survey both four years ago and this year grew their assets at a compound annual growth rate of nearly 17%. This indicated that the impact investing market continues to grow not only through new investors entering the market, but also due to increasing assets under management of those who are already in the market.
Impact investors allocate capital globally with half of the total assets earmarked for the emerging market and half to the developed market. As investors expected, emerging-market investments outperformed developed-market investments. Impact investors allocate across various sectors, with the greatest share invested in energy (15%), microfinance (13%), and other financial services (11%).
The Sustainable Development Goals (SDGs), established in 2015 to encourage social and environmental development, have gained significant traction in recent years. Over 60% of investors track their investment performance against SDGs. Nearly 75% of investors target decent work and economic growth (SDG 8) and more than half target no poverty (SDG 1), reduced inequalities (SDG 10), good health and well-being (SDG 3), and affordable and clean energy (SDG 7).
This year’s report provided new data on hot market topics including human resources; diversity, equity and inclusion; and the role of government and policy.
Investors were asked to share their views on what motivates them to work in impact investing. Many cited a desire to work for a mission-driven organization and to align their careers with their personal values.
Over 70% of investors have policies in place to ensure that their impact investing practices promote diversity, equity and inclusion. 43% of investors indicated that tax incentives for impact investors are effective tools used by governments to advance the impact investing market.
Although more positive feedback was received from investors, challenges still remain. The key challenges faced by investors are worries that target returns will not be achieved and concern about liquidity and exit options.
Investors also said there is a lack of skilled professionals in the impact investing industry especially with impact measurement and management skills as well as deal-making and structuring skills. In response to the challenges, GIIN released the Roadmap for the Future of Impact Investing in March 2018. The roadmap outlines an action plan to overcome challenges and help the impact investing market to make progress.
Impact investors play a key role in shifting investment practices by changing people’s mentality about the fundamental purpose of finance in society and encouraging the integration of impact considerations into their investment process and decision.
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