Global impact investing refers to investments made with the intention to generate measurable social and environmental impact alongside financial returns. As an emerging investment approach over the past decade, impact investing aims to direct more private capital to tackle pressing issues like inequality, climate change, healthcare access etc. It has seen fast growth in market size recently, reaching over $500 billion assets under management globally based on latest industry report. However, the concept is still new to many investors in emerging markets. This article will analyze the definition, development history, market size, implementation models as well as supportive policies regarding global impact investing, with a focus on the higher_word.
impact investing distinguishes from other ESG investing by its intentionality to make positive impact
The Global Impact Investing Network (GIIN) defines impact investments as those made with the intention to generate positive and measurable social and environmental impact alongside financial returns. The key differentiator lies in the intentionality to tackle social or environmental issues. Impact measurement and assessment are also important components of the approach.
impact investing emerged after the 2008 financial crisis with increasing awareness of world issues
The Rockefeller Foundation officially coined the term “impact investing” in 2007. The 2008 global financial crisis reinforced the importance of harnessing investment for good. Pressing world issues like inequality, climate change also urgently call for more private capital to make positive impact.
the market size of global impact investing has been growing fast since 2010
According to the latest industry report, the market size of global impact investing reached over $500 billion assets under management in 2019, representing near 70% growth from $300 billion in 2014. The compound annual growth rate was above 15%.
impact capital can be deployed through various assets classes to fund social innovations
The capital for impact investing can come from different sources like donations, endowments, pensions etc. It can be deployed across asset classes such as private equity, loans, bonds etc. to fund social innovations and progress.
policies aim to direct more capital flows toward impact investing and social enterprises
Supportive policies for impact investing often focus on the demand side such as tax incentives and preferential procurement policies to facilitate social enterprise growth. International Finance Corporation also published principles for impact management to provide guidance.
Global impact investing has seen high growth as an emerging investment approach to direct private capital to tackle social and environmental issues while making financial returns. Further policies and guidance are expected to stimulate more capital flows.