Impact Investors Commit More in 2015
6 May 2015 at 9:15 am
Impact Investors plan to commit 16 per cent more finance to impact investment in 2015, according to a major global benchmarking survey.
Eyes on the Horizon, the 2015 edition of the annual impact investor survey run by the Not for Profit Global Impact Investment Network and investment bank J.P. Morgan, reveals a growing global market, with impact investments being made across all geographies and a range of sectors.
The survey gathered the views of 146 of the world’s largest impact investors, including fund managers, banks, development finance institutions, foundations, and pension funds, who report having committed $10.6 billion to impact investments in 2014, with plans to commit 16 per cent more in 2015.
Respondents, who collectively manage over $60 billion in impact investment assets, indicated satisfaction with both financial returns and social/environmental impact performance, compared to expectations.
Eyes on the Horizon is the fifth in a series of reports, started in 2010, that present perceptions of the impact investment market as well as portfolio performance from a sample of impact investors.
“Having surveyed the market for the past five years, we certainly are inspired by the growth in investments as well as the sample of exits we captured. Over time, the universe of investors and their approaches to the market have continued to expand, most recently with increased engagement from the corporate sector,” Report co-author and Director of Research for J.P. Morgan Social Finance Yasemin Saltuk said.
“In the face of increasing competition, we hope this research serves the market in developing a pipeline of high quality deals going forward.”
Amit Bouri, CEO at the GIIN and co-author of the report said the GIIN was encouraged to see continued investor confidence in the market and that investments are delivering results.
“The most comprehensive study of impact investing activities and investor experiences, this research continues to underscore an increasingly more sophisticated and growing market that includes a diversity of investors and investment opportunities,” he said.
Impact investments are investments that are made into companies, organisations, and funds with the intention to generate social and environmental impact alongside a financial return.
They can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending upon the circumstances.
Among the key findings:
Asset allocations
• Collectively, respondents manage $60 billion in impact investments
• The regions to which the largest number of investors plan to increase their allocations are sub-Saharan Africa, followed by East and Southeast Asia, and Latin America & the Caribbean
• The sectors to which the largest number of respondents plan to increase their allocations are Energy, Food & Agriculture, and Healthcare
Performance
• Survey participants reported that their portfolios are performing mostly in line with both their impact expectations and financial return expectations
• 98 per cent of respondents reported social and/or environmental impact outperforming or in line with their expectations
• 89 per cent of respondents reported no significant risk events in 2014
Respondent perspectives on the last five years
• The majority agree that impact measurement practice has improved (77 per cent)
• Governments are playing a more active role (67 per cent)
• The quality of entrepreneurs/investment opportunities has improved (64 per cent)
Impact measurement
• 99 per cent of respondents measure the social/environmental performance of their investments, with the majority aligning with IRIS, the online catalog of generally accepted performance metrics that leading impact investors use to measure social, environmental, and financial performance
• The business value of impact performance measurement for improving financial performance of portfolio companies and informing future investments is ‘very important’ to 65 per cent of respondents
