Stockholm (NordSIP) – Despite the difficulties created by the COVID-19 pandemic in 2021, figures collected by Phenix Capital Group suggest that 2020 was a year of robust growth for impact investors.
“2020 has been a transformative year on many levels, for the world as well as for the impact investing industry,” says Dirk Meuleman, CEO of Phenix Capital Group. “At the time when it mattered the most, we saw the impact investment community immediately jump into action, catalyse capital towards solutions, and showcase its resilience in a downturn. Impact investing continues to deliver on its promise of yielding attractive and new opportunities for asset owners, managers, and service providers while tackling some of humanity’s greatest challenges,” he adds.
During 2020, Phenix tracked how over 622 impact asset managers allocated €331 billion to over 1,600 institutional impact funds. Of this total, €10 billion was committed to funds specifically launched in 2020. During the last twelve months, Phenix’s impact database added 135 new managers, increasing the total amount covered by €96 billion (a 39% increase from last year’s €245 billion).
Renewable energy and climate-related infrastructure remained the preferred strategies, while private markets continued to be the main source of capital. Social Infrastructure replaced Health Services in 2020 as the sector with the third greatest capital commitments. SDG 7 Affordable and Clean Energy, SDG 9 Industry, Innovation and Infrastructure, and SDG 13 Climate Action are the most targeted SDGs, raising the most capital to date.
Private equity was the largest asset class, representing 47% in 2020, followed by private debt and Infrastructure. However, public markets were also important, outperforming their own benchmarks. According to the report, one of the immediate impacts of COVID-19 was capital flight from emerging markets. As a result, developed markets were the main target of impact funds. Western Europe (42%) was dominant, followed by North America (24%).
“I also think 2020 was a year that really surfaced a lot of the systemic issues that people have been working to address for a long time,” said Amit Bouri, Co-Founder and CEO of the Global Impact Investing Network (GIIN), who was interviewed for the report. “There is now a broader recognition that if we want a truly sustainable, inclusive world and economy, we have to change the way that the world invests. (…) It is clear that allocating capital in a way that really invests in the world we all want to live in is necessary for this systemic level change, but we cannot just think about this at a conceptual level.”
Image courtesy of Phenix Capital