JP Morgan and Global Impact Investing Network (GIIN) have released the 2016 Annual Impact Investor Survey, sharing their vast findings on the many international perspectives, challenges and processes of today’s dynamic impact investing market.
158 organisations participated in this year’s survey, which included some of the world’s biggest players in the impact investing market (including fund managers, foundations, banks, development finance institutions and pension funds) spanning across sectors and geographies.
Respondents collectively committed more than US$15 billion to 7,551 impact investment deals in 2015. In a highly encouraging move, they plan to increase the capital committed in 2016 to US$17.7 billion, and the number of deals to 11,772.
This year’s report revealed a deeper consideration from investors on topics such as the use of social and environmental data, responsible exits and investment decision-making.
Where the raising of capital is concerned, the intermediary landscape is crucial to the impact investing ecosystem. The 93 fund managers who participated in the survey plan to raise US$12.4 billion in 2016 in comparison to the US$6.7 billion in 2015.
Investors however, have raised concerns about the most significant challenge hindering industry growth as involving the appropriate types of capital across the risk-return spectrum. This remains unchanged from the year before.
Amit Bouri, CEO of GIIN says that the data shows ‘impact investing is no longer a nascent market’ and the coming of age of the impact investment market is very timely considering the momentous levels of importance being placed on the COP21 climate agreement and the United Nation’s Sustainable Development Goals.
Key findings relating to environmental impact support Bouri’s statement:
– Large numbers of respondents planned to increase allocations in 2016, towards food and agriculture (53) with increases to energy (43) and healthcare (41) trailing close behind.
– Top areas of focus among participants pertaining to the targeting and measuring of impact fell under the category of environmental. Renewable energy, energy efficiency and clean technology ranked highest, signalling a greater commitment to environmental impacts.
– The most common ways of seeking impact to benefit a target population was reported to be through selling products/service (82%) or through providing employment (66%) to a target population while 54% do the same to benefit the environment.
High levels of satisfaction with the investment performance were reported by respondents. A vast majority said both their financial (89%) and impact (99%) performances were in line with or better than expectations. This was a significant improvement compared to the findings of last year.
Bouri says a key takeaway from the report is that ‘99% of respondents say they measure impact, with 65% using metrics aligned with IRIS, the GIIN’s catalog of social and environmental metrics’.