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Asset Managers Lead Impact Pack, GIIN Report Shows

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Stockholm (NordSIP) – The global impact investing market was worth US$502 billion in AUM at the end of 2018, according to a report by the Global Impact Investing Network (GIIN). This figure represents “the most rigorous analysis and estimate of the size of the impact investing market”, according to the GIIN.

“As the market expands, we need to be sure those making impact investments remain committed to driving intentional and measurable impact,” says Amit Bouri, Co-Founder and CEO of the GIIN. “There has been strong demand for this data, and we have leveraged our dataset and collaborated with partners to provide a rigorous, comprehensive estimate of the market size. This research is critical to understanding where we are as a market, which can lead to deeper conversations about where we may be going and how we get there.”

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The estimated volume of impact investing is based on the aggregate impact investing AUM of 1,340 organisations supplying capital allocated to impact investing. Of this total, 64% are asset managers, 21% are foundations, 4% are banks, 2% are development finance organisations (DFIs), 2% are family offices, 1% are pension funds and insurance companies, 1% are permanent investment companies, and 4% are other miscellaneous investors.

Geographically, 58% of the organisations are headquartered in North America, 21% were from Europe, 6% from Sub-Saharan Africa, 4% from Latin America and the Caribbean, 3% from South Asia, 2% from East Asia, 2% from Southeast Asia, 1% from Oceania and another 1% from Eastern Europe, Russia and central Asia.

The median investor’s AUM is US$ 29 million, and the average is US$ 452 million, implying that while most organisations are relatively small, several investors manage large impact investing portfolios. GIIN researchers estimate that their efforts might have missed up to US$ 80 billion of impact AUM, which would bring the estimated total size to US$ 582 billion.

“The market-sizing research not only establishes a fundamental understanding of the market’s current scale,” according to the press release, it “also serves as a first step in a GIIN initiative to ensure the impact investing market continues to scale with integrity.”

Impact investments are defined as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Impact investments are made in both emerging and developed markets as well as across all asset classes, including private and public markets. Impact investors also target a range of financial returns from below market to market rate, depending on their strategic goals.” Impact investing is also distinguished from philanthropy, exclusions and ESG integration due to the need for financial returns in parallel with the proactive quest for positive impact.

The report is careful to note that the data used in their calculations is self-reported, which could lead to inconsistencies. Some investors might include green bonds among their impact investments in their figures while others might not. DFIs consider much of what they do to be development finance, not impact, while other investors report all their activities to be impactful.

“Much more capital will need to be unlocked for impact investing — but there is good reason to be optimistic. One in four dollars of professionally managed assets (amounting to US$ 13 trillion) now considers sustainability principles,” concludes the report.

Picture © Shutterstock

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