The IFC - International Finance Corporation of the World Bank Group recently estimated the global market for impact investments.
The report, titled "Investing in impact - the Global Impact Investing Market 2020", shows that $𝟐.𝟑 𝐭𝐫𝐢𝐥𝐥𝐢𝐨𝐧 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐢𝐧𝐯𝐞𝐬𝐭𝐞𝐝 𝐢𝐧 𝐢𝐦𝐩𝐚𝐜𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬 𝐛𝐲 𝟐𝟎𝟐𝟎(!).
This is far more than the predicted investment amount, but it still only represents about 2% of the global AUM (so impact investing remains a small market niche, but one that is attracting growing interest).
In 2020, compared to 2019, the market has matured and more assets are being invested with identifiable impact management systems. In 2020, many investors recognized that companies with strong #ESG practices outperformed during the pandemic. In fact, impact investing experienced a surge in popularity during the COVID-19 pandemic as awareness of climate change and social challenges such as unequal access to healthcare and racial and gender inequality increased.
The report identifies impact investors based on three observable characteristics that distinguish them from other investors:
1. they intend their investments to achieve social and/or environmental goals.
2. they credibly demonstrate how their investments contribute to the achievement of the intended goals, i.e. how the impact investor's actions contribute to the achievement of the goals.
3. they have a measurement system that links their intent and the contribution of their investments to improving the social and environmental outcomes of the company in which they have invested. And this, in my humble opinion, is the biggest contradiction - investors' desire to ensure that their impact investments are measurable and ROI like any other investment.
Watch the full presentation here: