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Global impact investing market soars whilst demand for transparency increases

The Global Impact Investing Network finds that dynamic and diverse strategies are key to impact investing success

A global not-for-profit dedicated to increasing impact investing around the world has found that the market is growing and becoming more diverse.

The Global Impact Investing Network (GIIN) published the eight edition of its Annual Impact Investing Survey, the most comprehensive collection of data on the global impact investing market, which found diversity was instrumental to growth.

CEO and co-founder of GIIN, Amit Bouri, said that for the market to succeed, impact investing “must continue to grow and build on the success of the past decade.”

Bouri added the report “provides data and insights to maximise [organisations’] impact and ultimately tackle critical global issues such as access to education and healthcare, gender inequality, poverty, climate change and more.”

The report compiled data and insights from 299 of the world’s leading impact investors and provided an analysis of the market’s activity and trends. The survey covered topics like capital allocations by sector and geography, improvements in the market and approaches to management and financial performance.

Over half of respondents surveyed made their first impact investment in the last ten years. This indicates that there are new entrants to the market. Moreover, the survey found that over $US35 billion went into over 11,000 deals in 2017.

The survey also found over half of respondents target both social and environmental objectives. An additional 40 per cent primarily focused on targeting social community objectives and 6 per cent targeted primarily environmental objectives.

“Nearly three-quarters of respondents (72%) seek to address climate change through their investments, most commonly by targeting investments that reduce greenhouse gas emissions, seeking investments that prevent future greenhouse gas emissions, and seeking investments that support climate change adaptation,” the report read.

Almost all respondents indicated that their investments have either met or exceeded their expectations for impact and financial performance. They have recognised the power of their capital to achieve the United Nations Sustainable Development Goals.

The report found that the most common challenges of growing the industry includes a lack of appropriate capital across the risk and return spectrum and the lack of common understanding of the definitions and segments of the market.

Director of Research at GIIN, Abhilash Mudaliar, said: “In order to address many of the world’s most pressing social and environmental challenges, we need more investors entering the market and more capital flowing into impact details.”

Eighty per cent of respondents agreed that “greater transparency from impact investors on their impact strategy and results” would mitigate risks of challenges. Organisations also point to third-party certification and voluntary principles to govern behaviour.

Mudaliar said the evidence presented in this year’s annual report, “Demonstrates that not only is this growth happening but also that investors are reporting strong results on both financial and impact performance.”

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