Impact investing rides the waves of social unrest

Impact investing rides the waves of social unrest
Investors are happy with both the portfolio performance and the impact, according to a recent study
JUN 11, 2020

The time is now for impact investing, according to Amit Bouri, co-founder and chief executive of the Global Impact Investing Network, GIIN.

There’s nothing quite like a global pandemic and sweeping waves of social unrest related to racism and economic inequality to pave the way for a deeper focus on how investing capital can have an impact on the world.

“In the context of what’s happening around the world, there is growing recognition from investors, large and small, that investment capital has a role in creating a positive impact,” he said.

According to GIIN’s latest research, the 2020 Annual Impact Investor Survey, the global impact investing market is estimated at $715 billion.

“What it means is that the market is big enough to get the attention of large investors and has tremendous potential for growth,” Bouri said.

Impact investing is in the same general category as sustainable investing or investing based on environmental, social and governance issues, but is typically more proactive.

“Impact investing is investments made to achieve a positive measuring social or environmental impact alongside a financial return,” Bouri said. “We think of it as complimentary to ESG investing but designed to produce positive solutions.”

The examples are found across various asset classes and could include a debt fund that is financing micro-lending programs, or, “in it’s simplest form, it could be as basic as opening a checking or savings account at a community bank,” he added.

While the examples are varied and often unique, the appetite is strong and growing, according to the GIIN report, which included results of a survey of 294 of the world’s leading impact investors, who combine to manage $404 billion.

While activism might be driving investors toward impact strategies, the investment performance is keeping them there.

According to the survey, 88% of respondents report meeting or exceeding their financial expectations. And in terms of impact performance, 99% of respondents noted that they have met or exceeded their expectations.

That level of satisfaction is quantified in a 17% compound annual growth rate of assets under management of survey respondents who participated over the past five consecutive years.

The annual survey, which dates to 2010, also showed some promising developments in terms of institutionalizing the research and data related to impact investing.

“Increasingly investors are aligning their approaches with external systems and frameworks, with 89% of investors now using external systems and frameworks,” Bouri said. “In early days, 85% of respondents were using their own framework for impact investing. For the market to scale we need more convergence around common standards.”

Latest News

Cerulli: Advisors struggle to turn 401(k) savers into wealth clients
Cerulli: Advisors struggle to turn 401(k) savers into wealth clients

Just over 10% of advisors' wealth clients come from defined contribution plans, as capacity, data and technology gaps block the bridge to wealth

Alto to buy Forge Trust from Schwab in self-directed IRA push
Alto to buy Forge Trust from Schwab in self-directed IRA push

Deal creates a $20B-plus custody platform for private market investing in IRAs, months after Schwab closed its Forge Global purchase

Wall Street bonanza! The Street on track to hit a record $90 billion in profits: Report
Wall Street bonanza! The Street on track to hit a record $90 billion in profits: Report

Despite the good times, advisors should tread carefully, said one veteran industry executive.

Most workers have retirement plans but no retirement strategy
Most workers have retirement plans but no retirement strategy

Gallagher data reveals a huge gap in financial confidence between employees who work with an advisor and those who don't.

Small employers are more open to pooled retirement plans
Small employers are more open to pooled retirement plans

PEP assets hit $34bn at year-end 2025 as advisors navigate mandate deadlines and a 48% employer interest rate.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor