More than $35 billion was spent in over 11,000 impact investments last year and investors plan to commit 8% more capital in impact deals in 2018.
The Annual Impact Investor Survey of 229 global impact investors, released by the Global Impact Investing Network (GIIN) this week, reported that almost all respondents said their investments have “met or exceeded their expectations” for impact (97%) and financial (91%) performance.
GIIN said impact investors demonstrated a “strong commitment” to measuring and managing impact. Nearly all respondents measured the social and/or environmental performance of their impact investments.
“They use a mix of proprietary metrics, qualitative information, the GIIN’s IRIS-aligned metrics, and other tools and frameworks,” GIIN said in a statement.
The majority of respondents (76%) set impact targets for some or all of their investments to track progress toward their social/environmental goals.
Investors were committed to the United Nations Sustainable Development Goals (SDGs).
“Many investors are recognising the power of their capital to help achieve the SDGs,” GIIN said.
A total of “76% of impact investors track their investment performance to the SDGs or plan to do so in the future.”
However, the impact investors surveyed said there were challenges which needed to be addressed as the industry continued to grow. The most commonly cited issues facing growth were the “lack of appropriate capital across the risk/return spectrum” and the “lack of common understanding of the definitions and segments of the market.”
Abhilash Mudaliar, director of research at GIIN, said more investors were needed to enter the market and more capital to flow into impact deals to address many of the world’s pressing social and environmental challenges.
“It is invigorating to present evidence through this year’s Annual Impact Investor Survey that demonstrates that not only is this growth happening, but also that investors are reporting strong results on both financial and impact performance,” Mudaliar said.
The Global Family Office Report 2017, by Campden Research with UBS, found more than a quarter of family offices (28%) were engaged in impact investing. Two-fifths planned to increase their allocations in 2018, driven mainly by ethically-minded millennials taking on increasing responsibility and influence.
Last year Campden Research, with OppenheimerFunds, revealed on average, ultra-high net worth millennial respondents allocated 14% of their personal portfolio to impact investments. Coming of Age: The Investment Behaviours of Ultra-High Net Worth Millennials in North America expected the allocation to increase, despite 58% of millennials considering the asset class to be of moderate-to-high risk.
A second-generation respondent in his mid-30s from the US West Coast told Campden Research his personal goal for his family’s portfolio had always been impact investing.
“We’re never going to be 100% impact-oriented—that is not realistic. But my goal is to get us more aligned with our family values and mission,” he said.