Impact investors not scared off by Covid-19 – GIIN global survey

If you feared that the global pandemic might dent the confidence of impact investors then this week brought some good news.

More than half (57%) of those responding to a survey by the Global Impact Investing Network (GIIN) said that they were unlikely to decrease the volume of capital they had planned to commit to impact investments this year.

Another 15% are ‘likely’ to commit more capital than planned, while just 20% are at least ‘somewhat likely’ to commit less capital.

One critical driver of market confidence and growth was the industry’s performance – in both impact and financial terms – over many years, the survey revealed.

Some 88% of respondents reported meeting or exceeding their financial expectations. In terms of impact performance, it was almost a perfect score – with 99% of respondents saying they had met or exceeded expectations.

Some 88% of respondents reported meeting or exceeding their financial expectations

This year’s report is the 10th edition of GIIN’s Annual Impact Investor Survey and provides data and insights from the largest number of respondents ever: 294 of the world’s leading impact investors, who collectively manage $404bn of impact investing assets. Of these 294 respondents, 122 offered specific perspectives on how Covid-19 might change their allocations and risk assessments going forward.

Size of global market now estimated at $715bn

Although the survey only describes the assets of 294 investors – and therefore does not represent the full market size – this year’s report does include an update to the market sizing figure provided in its report of April 2019.

At that point the GIIN estimated the current size of the global impact investing market to be $502bn – whereas it has now updated that figure to $715bn.

“This year’s updated estimate of $715bn improves upon the rigorous methodology of its previous figure with a strengthened database that includes over 1,700 impact investors,” said Dean Hand, GIIN’s director of research.

I believe we’ll see even greater possibilities for what impact investing can achieve, in this moment, as well as in the years ahead

Other key findings this year included:

• Almost half of respondents expect impact performance in line with their expectations, and 18% expect portfolios to outperform on impact. Sixteen percent expect underperformance on impact while 46% expect underperformance against financial expectations.
• “Sophistication of impact measurement and management practice” is cited as one of the greatest areas of progress over the past decade. “At the cornerstone of impact investing is the ability to translate intention into impact results,” says the GIIN. “Impact measurement and management (IMM) practices enable impact investors to demonstrate real results and ensures accountability against impact washing. IMM practices now reflect greater sophistication and strategic use of tools. Despite this, as the market matures, opportunity still exists for greater depth and refinement, especially for impact performance comparison and verification of results.”
• Interest in key sectors and geographies (excluding outliers): Top sectors to which respondents allocated capital were energy (16%), followed by financial services (excluding microfinance), with 12% of sample assets under management (AUM). The majority of capital is allocated to developed markets (55%), with the top region of investment being US & Canada (30%). Top asset classes are private debt, comprising 21% of the sample AUM, while public equity accounts for 19%.
• Growth marked by 17% compound annual growth rate (CAGR) among repeat respondents: Among repeat respondents to the GIIN’s 2016 annual survey (2015 year-end data) and this year’s survey, aggregate AUM grew from USD $52bn to $98bn.

Amit Bouri, co-founder and CEO of the GIIN, commented: “As we launch the 10th edition of our flagship report, we find ourselves at a time where the world is once again facing unprecedented challenges. 

“Over the past decade, we have seen incredible growth and increased sophistication in impact investing. Despite challenges or perhaps because of them, many investors have, and will continue to turn to impact investing to contribute to social and environmental solutions. Investment capital has an important role to play in driving positive impact for our communities and planet, and I believe we’ll see even greater possibilities for what impact investing can achieve, in this moment, as well as in the years ahead.”

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