Impact Investing on the Rise, Survey Says

Market expansion hampered by paucity of appropriate capital, opportunity

Impact investments in 2012 continued to gain traction among philanthropists and investors, who see them as a way to promote positive social and environmental change, according to a survey released Monday.

J.P. Morgan and the Global Impact Investing Network issued their third annual investor impact survey intended to capture and represent a sample of participants’ perspectives on the state of the market and their portfolios’ performance.

Ninety-nine organizations took part in the 2012 study, each managing at least $10 million of impact investment capital. The researchers in a statement said the participants, though diversified across regions and sectors, were not necessarily representative of the market.

The main findings of the survey:

  • Respondents reported commitments of $8 billion to impact investments in 2012, and said they planned to commit $9 billion in 2013.
  • 84% of respondents reported that their portfolios’ impact performance was in line with their expectations, with 14% reporting outperformance, and 68% said financial performance was in line, with 21% reporting outperformance.
  • 96% measured their social and/or environmental impact, with most using third-party standards, such as the Impact Reporting and Investment Standards metrics, which are offered as a free public good by the GIIN.
  • 80% of fund managers stressed the importance of impact measurement for raising capital and general industry development.

Respondents reported that business model execution and management were the top risks to their portfolios. They said the market continued to face challenges from a lack of appropriate capital across the risk/return spectrum and a shortage of quality investment opportunities.

Still, they saw progress last year across these and other indicators of market growth.

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