The impact investing market continues to grow and mature, according to the Global Impact Investing Network’s ninth annual investor study.
The 266 investors that participated in the study collectively manage $239 billion in impact investing assets, which they allocate across geographies, sectors and instruments. GIIN said this figure represents nearly half the total impact investing market as measured by assets under management.
A subset of 80 investors that responded to the survey both four years ago and this year saw their assets grew from $37 billion to about $69 billion, a compound annual growth rate of nearly 17%.
GIIN said this indicated that the market was growing not only through new investors entering the market, but also because of increasing assets under management from those already in the market.
Respondents forecasted strong future growth. Last year, they invested some $33 billion into more than 13,000 impact investments. In 2019, these organizations planned to invest at least $37 billion into more than 15,000 investments, a 13% projected growth in the volume of capital invested and 14% growth in their number of investments.
Two in three survey participants identified as fund managers; other investors were foundations, banks, development finance institutions, family offices and pension funds. A majority of investors are headquartered in developed markets.
In terms of investment focus, two-thirds of respondents said they made only impact investments, with the remaining third also making conventional ones.
Sixty-six percent of participants principally target market-rate returns, while 19% target returns closer to market rate and 15% returns closer to capital preservation.
Fifty-six percent said they focused on both social and environmental impact objectives. Thirty-six percent target only social objectives, and 7% only environmental aims.
Amit Bouri, GIIN’s chief executive and co-founder, said in a statement that impact investors are stepping up to address global challenges, such as entrenched inequality and climate change. “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.”
Bouri said the research showed that client demand had largely fueled the growth of impact investing.
Ninety-eight percent of impact investors in the survey said their investments had met or exceeded their expectations for impact, while 91% said the same about financial performance.
Respondents also reported their average gross realized returns since inception. GIIN said the distribution of returns data suggests that fund and investment selection is key.
Investors in the survey nearly universally reported that they measured and managed their impact, typically by using a mix of qualitative information, proprietary metrics and metrics aligned standard frameworks such as IRIS.
Three in five investors said they tracked their investment performance to the United Nations’ Sustainable Development Goals, driven by a desire to integrate into a global development agenda.
The survey found that impact investors generally recognized their role in contributing to broader field-building efforts and industry development. Sixty-one percent said they contributed to progress in sharing best practices for impact measurement and management, 52% to supporting the development of businesses focused on impact and 43% to training finance professionals.
Respondents further viewed the impact investing industry as having a key role to play in driving broader shifts in investment practice, most notably by changing mindsets about the fundamental purpose of finance in society and driving all investing to integrate impact considerations as the “new normal.”
Survey participants also shared the belief that impact investors should implement policies and practices that advance representation in the investment process of a range of stakeholders in addition to shareholders.
Seventy-two percent of respondents said they had such policies in place, including policies to guide their own internal operations and governance, inform their selection of and engagement with investees and target a wide range of stakeholders.