January 3, 2019
2018 was a landmark year. The idea that you could create profit alongside positive social and environmental impact was not new, but it spread rapidly, steadily approaching mainstream status in the investment world.
Last year, we saw more published research proving that impact investing could be just as profitable as traditional investing.
In the 2018 survey, across 229 respondents, total impact investing assets amounted to $228 billion, compared to the $114 billion across 209 participants in the 2016 survey. Overall, respondents in 2018 reported that they plan to increase their impact investment capital by 8 percent and the number of deals by 5 percent during the course of the year. In addition, five-year repeat respondents reported a compound annual growth rate (CAGR) of 13 percent for their collective assets under management.
Notably, over 50 percent of all respondents reported that they made their first impact investment within the past 10 years, which reflects how the industry has been experiencing rapid growth in recent years. And over one in three respondents were established organizations within traditional investing markets that have now also entered the impact investing industry.
In a significant finding, the GIIN reports that these organizations are “now making more impact investments, deepening their commitment to impact measurement, and gaining more buy-in from key internal stakeholders.”
Impact investing as a growing movement has caught the attention of global leaders as well. The annual G20 Leaders’ Declaration explicitly mentioned impact investing this past year – for the first time. The G20 leaders’ mission to create “fair and sustainable development through an agenda that is people-centered, inclusive and forward-looking” now formally acknowledges impact investing as an apparatus for meaningful global change.
We predict that as impact investing continues to trend upward, the industry will gain credibility in the eyes of institutional investors and major players, with more capital flowing in, more impact being made, and more consistent and clear standards for impact measurement. And as younger and more socially conscious investors enter the space in growing numbers – millennials and women in particular – the future looks bright.
With the recent release of the federal report on climate change, we foresee a re-evaluation of risk in the investment industry as a whole. Not investing in clean energy and not contributing to a low-carbon economy is ultimately the most risky thing we can do as stewards of our planet.
We must come together with a new understanding, with the mindset that all investing can be impact investing. In the words of Trevor Neilson, our co-founder and CEO, “Impact investing should not be seen as a niche – it should be seen as the norm.”
And eventually it will be, believes our President, Christine Harada, who likewise views impact investing as “the natural evolution of traditional investing.” One day, she says, “we will reflect back on the nascent years as, ‘I can’t believe we didn’t always do this’.”
We at i(x) investments look forward to a time when the impact investing ecosystem can both sustain the world and safeguard its future. We believe in profit with purpose.