Impact investing has gained increasing attention in recent years as a new approach to generate positive social and environmental impact alongside financial returns. Major developments have occurred in the impact investing landscape, with more capital flowing into the sector and more diverse types of organizations entering the field. This article will focus on synthesizing key information and conclusions regarding the growth of impact investing companies and funds worldwide.
The number and assets of impact investing funds have increased substantially
According to survey data from the Global Impact Investing Network (GIIN), the number of impact investing funds has grown from just over 100 in 2012 to well over 300 in 2020. Total assets under management also increased dramatically from $46 billion in 2013 to $715 billion in 2020. Much of this growth came from private equity/venture capital funds, while other fund types like debt, real assets, and fund-of-funds also expanded significantly. The data reflects the rising participation of mainstream financial institutions and investors in the impact investing industry.
Impact investing companies are pursuing diverse social and environmental objectives
Impact investing funds target a wide range of impact objectives, including renewable energy, sustainable agriculture, financial inclusion, affordable housing, healthcare, education and more. For example, KL Felicitas Foundation focuses on empowering girls and women, while Capricorn’s Sustainable Impact Fund invests in companies providing solutions for issues like climate change and healthcare access. LeapFrog Investments and responsAbility invest in financial services for the underserved. This demonstrates that impact investing companies can tailor their strategies to create positive impact on distinct social or environmental problems.
Traditional asset managers have launched dedicated impact investing units
Many mainstream asset management giants like BlackRock, Goldman Sachs, JP Morgan, and Morgan Stanley have established impact investing platforms. Goldman Sachs’ Launch With GS initiative commits $650 million to companies addressing social issues. BlackRock’s Impact Opportunities fund raised over $250 million for sustainable investments. Major wealth managers like UBS and Credit Suisse now offer impact investing products as well. The participation of traditional financial institutions represents the accelerating mainstream adoption of impact investing strategies.
Impact measurement and assessment frameworks are improving
The impact investing industry has worked to develop standardized metrics and methodologies to measure social and environmental performance. The IRIS catalog of impact metrics, GIIRS impact ratings, B Analytics assessment tools, and the Impact-Weighted Accounts Initiative provide ways to evaluate impact consistent with financial accounting. Stronger impact measurement practices enable better assessment of impact alpha and financial performance. This supports more efficient capital allocation and credibility of impact investing overall.
In summary, the growth of impact investing companies and funds reflects rising asset allocations to the sector as it matures. Investors are targeting a diverse range of social and environmental objectives through customized impact investing strategies. Mainstream adoption continues with large traditional asset managers launching dedicated impact investing units. Measurement frameworks have also improved to better evaluate financial and impact returns.