Investors seeking environmental and social performance alongside financial returns intend to increase their commitments in the market, according to a new report by J.P. Morgan and the Global Impact Investing Network (GIIN).
Perspectives on Progress details the experiences, expectations, and perceptions of 99 impact investors in 2012, as well as their plans for 2013. The survey indicates a growing market, with respondents planning to commit $9 billion to impact investing in 2013, up from a total commitment of $8 billion in 2012.
Additionally, the vast majority of surveyed investors report their impact investment portfolio performance is meeting or exceeding social, environmental, and financial expectations. Two-thirds of respondents are principally pursuing market-rate financial returns. Investors surveyed for the report include fund managers, development finance institutions, foundations, diversified financial institutions, and other investors with at least $10 million committed to impact investment.
“Although investors have been making socially and environmentally motivated investments for quite some time, collaboration to develop a coherent and supportive market has increased significantly in the last five years,” said Amit Bouri, Managing Director at the GIIN and co-author of the report. “In the results of this survey, we see positive indication of a market growing in both size and sophistication, which we hope will encourage more activity and attract new investors to the impact investing field.”
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Though the impact investing market is relatively new, a majority of respondents report that some or many investments passed their initial screens in nearly all regions of the world, with U.S. & Canada, South Asia, and Latin America & the Caribbean providing the most robust pipelines to surveyed investors. However, respondents believe the market is still challenged by a lack of appropriate capital across the risk/return spectrum and a shortage of high-quality investment opportunities. Encouragingly, surveyed investors indicate that progress was made in these areas and across other indicators of market growth in 2012.
Respondents also highlight the importance of impact measurement for both raising capital and general industry development. Notably, 96 percent of respondents measure their social and/or environmental impact, with most utilizing third-party standards, including the Impact Reporting and Investment Standards (IRIS) metrics, offered as a free public good by the GIIN.
Perspectives on Progress is the third in a series of reports, started in 2010, that present perceptions of the impact investment market as well as portfolio performance from a sample of impact investors.
HIP Investor's Paul Herman gave a presentation on Impact Investing at Sustainable Brands' New Metrics of Sustainable Business Conference in Philadelphia last September. Slides are available here.
@Bart_King is a freelance writer and communications consultant.