Impact Investing to hit $9 Billion in 2013

Focus on Generating Measurable Social and Environmental Impact alongside Financial Returns

January 10, 2013

Read the full arti­cle on Envi­ron­men­tal Leader here. Also, full dis­clo­sure: DBL Part­ners is a Found­ing Net­work mem­ber of the Glob­al Impact Invest­ing Net­work.

Impact invest­ing is expect­ed to grow 12.5 per­cent to reach $9 bil­lion in 2013, accord­ing to a sur­vey released by JP Mor­gan and Glob­al Impact Invest­ing Net­work.

Graphs cour­tesy of JP Mor­gan, click to enlarge

The results, out­lined in the Per­spec­tives on Progress report, reveal expec­ta­tions and per­cep­tions of 99 impact investors who man­age at least $10 mil­lion or more of impact invest­ment cap­i­tal, defined by the Glob­al Impact Invest­ing Net­work as invest­ments made into com­pa­nies, orga­ni­za­tions and funds with the inten­tion of gen­er­at­ing mea­sur­able social and envi­ron­men­tal impact along­side a finan­cial return.

Most respon­dents report­ed that their port­fo­lios’ finan­cial and impact per­for­mance are in line with their expec­ta­tions, with near­ly two-thirds of the sam­ple tar­get­ing mar­ket rate finan­cial returns on their impact invest­ments.

Of those who respond­ed, 96 per­cent mea­sure their social and/​or envi­ron­men­tal impact. Four out of five fund man­agers high­light­ed the impor­tance of impact mea­sure­ment for rais­ing cap­i­tal, accord­ing to the report.

Respon­dents said the mar­ket is still chal­lenged by a lack of appro­pri­ate cap­i­tal across the risk-return spec­trum and a short­age of high-qual­i­ty invest­ment oppor­tu­ni­ties. But sur­veyed investors indi­cat­ed that progress was made in these areas and across oth­er indi­ca­tors of mar­ket growth in 2012.

Among emerg­ing regions, last year’s impact invest­ing focused most on Sub-Saha­ran Africa and Latin Amer­i­ca, fol­lowed by East, South­east and South Asia. Among devel­oped mar­kets, impact investors focused on oppor­tu­ni­ties in the US and Cana­da, accord­ing to the report.

The major­i­ty of respon­dents (86 per­cent) focus on mul­ti­ple sec­tors. Four­teen per­cent of respon­dents invest­ed in sin­gle-sec­tor oppor­tu­ni­ties, includ­ing food and agri­cul­ture, finan­cial ser­vices, micro­fi­nance and ener­gy.

In devel­oped mar­kets, investors focused on health­care and edu­ca­tion. In emerg­ing mar­kets, respon­dents said they invest­ed in food and agri­cul­ture, fol­lowed by finan­cial ser­vices and micro­fi­nance.

The UN Glob­al Com­pact and the Rock­e­feller Foun­da­tion launched a frame­work for impact invest­ing and social enter­prise at the Rio+20 Earth Sum­mit in June.

The two groups said a num­ber of large cor­po­ra­tions and pio­neer­ing impact investors have begun invest­ing more active­ly in the social enter­prise sec­tor in recent years. These include com­pa­nies such as Cemex, Cis­co, Intel, Nes­tle, Safari­com, SK and Star­bucks, and investors such as Acu­men Fund, Bam­boo Finance Dai­wa Secu­ri­ties, ECOM, HSBC, Mahin­dra Finance, Sequoia Cap­i­tal, SNS Asset Man­age­ment and TIAA-CREF.