INSIGHT by the Global Impact Investing Network (GIIN)
〉Impact investors report meeting performance expectations in 2022 and plan to allocate more capital to emerging markets over the next five years
〉The final report in the 2023 GIINsight series explores how investors are pursuing climate solutions across sectors and also shares how global macro events have factored into impact investors’ strategies
Yesterday, the Global Impact Investing Network (GIIN) released the final report in its four-part 2023 GIINsight series. The report, titled Emerging Trends in Impact Investing, examines impact investors’ views on industry progress, current challenges and the effect of global events on impact investing strategies and performance. The report also surveys the regions and sectors where impact investors plan to invest over the next five years, as well as their plans to invest in targeted climate solutions related to mitigation, adaptation and resilience. A key report finding is that investors plan to increase capital allocation to emerging markets and the energy sector despite global macro event risks.
“In the face of global challenges, it is inspiring to see that impact investors are actively prioritizing strategies that address the basic needs of communities worldwide. The trends in the data reveal impact investors are committed to channeling more capital into emerging markets and pursuing climate solutions across their portfolios, reinforcing their dedication to investing in a sustainable future.”
-Amit Bouri, CEO & co-founder of the GIIN
| Key findings from 2023 GIINsight: Emerging Trends in Impact Investing
〉Investors cited that the greatest area of progress in the industry is the availability of professionals with relevant skillsets, with 86% of investors indicating either some or significant progress. Additionally, 84% of investors reported either some or significant progress being made on the harmonization of impact measurement frameworks.
〉On industry challenges, 75% of investors cited the inability to compare impact results to peers as either a moderate or significant challenge.
〉The global challenges that investors reported as most significantly affecting their strategies include the climate crisis (45%) and the COVID-19 pandemic (42%), followed by rising interest rates (28%).
〉The majority of investors are pleased with their performance after all factors, including the influence of global macro events, are taken into account. Investors reported strong performance, with 79% indicating that they had outperformed or met their financial performance expectations and 88% indicating the same for their impact performance.
〉Impact investors plan to increase their capital allocations in emerging markets – with the top four regions for planned allocations being sub-Saharan Africa (56%), Latin America & the Caribbean, including Mexico (48%), Southeast Asia (42%) and South Asia (40%).
〉 The most cited sectors impact investors plan to increase their allocations to over the next five years are energy (69%), food and agriculture (60%) and infrastructure (59%).
〉Within climate solutions, most investors reported investing in the energy sector (79%), followed by 70% in agriculture and land use and 57% in waste management.
“Impact investors are navigating the effects of global macro challenges – such as the COVID-19 pandemic, Russia’s invasion of Ukraine, inflationary pressures and supply chain issues, among others – while still ensuring overall financial and impact performance remained strong in 2022. Remaining adaptable and finding opportunities in challenging times is what impact investors do best.”
-Dean Hand, Chief Research Officer of the GIIN
This report accompanies three other 2023 GIINsight reports: Impact Investor Demographics, Impact Investing Allocations, Activity & Performance and Impact Measurement & Management Practice. Please visit this link to read all four reports in the GIINsight series and explore the interactive data dashboards.
The Global Impact Investing Network (GIIN) is the global champion of impact investing, dedicated to increasing the scale and effectiveness of impact investing around the world. Impact investments are investments made into companies, organizations, and funds with the intention to generate positive, measurable, social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets and target a range of returns from below market to market rate, depending upon investors’ objectives. The GIIN builds critical infrastructure and supports activities, education, and research that help accelerate the development of a coherent impact investing industry. For more information, please visit www.thegiin.org.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.