REPORT BREAKDOWN: GIIN 2019 Annual Impact Investor Survey

Each year, the Global Impact Investing Network - GIIN - releases an Annual Report that captures the scale of assets being managed in the impact investing space. That research also sheds light on a range of organizations entering the fray, and helps highlight emerging challenges and opportunities that affect our ability to scale.

This month, the GIIN released the 2019 Annual Impact Investor Survey, offering a snapshot of latest market trends. This year’s report points to increased AUM, positive changes in measurement and management practices, and a commitment to align impact objectives with existing frameworks, like the SDGs.

Key Highlights:

  • 13,000 deals made in 2018

  • $239Bn impact investing assets under management (AUM) tracked across 226 respondents

  • 170 of the 226 respondents surveyed in the 2019 survey also participated in the 2018 survey

    • In fact, a subset of this year’s respondents (80) also participated in the survey 4 years ago

    • Four years ago, that group of 80 collectively represented $37Bn AUM. That same group represents $69Bn AUM in this year’s survey, with a compound annual growth rate (CAGR) of 17%

  • Target Returns: 66% of respondents principally target market-rate returns for their impact investments

  • Target Impact: 56% of respondents target both social and environmental impacts

Here are some of the emerging impact investing trends:

  1. An increase in alignment with the Sustainable Development Goals (SDGs)

Increasingly, impact investors are aligning their investment with the SDGs. Figure iii demonstrates the percentage of survey respondents that track their impact performance in line with the SDG framework.

Figure iii 2019 Annual Survey - SDGs

For more than 90% of respondents, the principal benefit of SDG alignment is using a universally recognized framework to communicate that impact. For over 70%, alignment with the SDGs also offers a way to integrate impact outputs within a broader “global development paradigm.”

Figure 30 reasons for tracking to the SDGs - GIIN 2019 Annual Report

Finally, respondents offered several ideas on how they can tactically integrate the SDG framework into their investment activities. For 71% of respondents, the whole of their investment portfolios are mapped to the SDGs. For 52% of the group, incorporation of the SDGs shows up in investors’ impact measurement and management systems.

Figure 31 SDG incorporation methodology - 2019 GIIN Investor Survey

2. Continued growth of impact-dedicated investors

Fund managers represented just under 66% of respondents, 51% of the sample identifying as “for-profit” managers and 13% identifying as “not-for-profit”

Figure 1 org type by AUM.png

Not-for-profit fund managers are predominantly designing impact-only funds, with 85% of the 34 not-for-profit managers engaged in an impact-only mandate. Most interestingly, for-profit fund managers are also skewing predominantly towards impact, with 73% of the qualifying 135 managers building initiatives with an explicit impact focus.

This trend is meaningful in demonstrating how we’re moving the conversation from mainly traditional activities with a side of impact, to double bottom line products that can deliver both impact and financial returns.

Figure 4 impact only investors by org type.png

3. Research, best-practices, and reporting is improving. Government support is still missing.

Each year the GIIN survey asks respondents where they see the most progress within the field. This year’s respondents pointed to better market research and performance data being designed and shared, along with increased overall sophistication of measurement practices (a commonly cited barrier in the space.) Conversely, government support around market-building saw the least amount of forward momentum (in the eyes of survey respondents).

Figure 8 progress indicators.png

4. Private Debt remains an attractive asset class for impact

Across the 261 respondents who provided insight in the asset classes they are invested in, private debt still remains an area of predominant activity. 69% of investments made by respondents were in private debt, representing about 39% of the total capital invested.

Figure 12 volume of capital by asset class.png

In an optional question, 138 respondents identified “senior debt” - debt that takes priority over other unsecured or otherwise more subordinated investment - as the most engaged type of debt.

Figure 23 types of private debt.png

5. Attracting and retaining talent is still challenging

When asked what they perceived the greatest challenge in talent retention and attraction to be, 82% of 243 respondents pointed to competitive compensation.

Figure 40 challenges in talent.png

Across 99 investor respondents, 75% suggested that track record and experience in investment selection and management was the primary motivation for successfully selecting a manager to invest in. Juxtaposed with the figure above around compensation difficulty, we continue to face a systemic disconnect between the investor qualifications required to create investor confience and the ability to attract qualified investment professionals to the space.

figure 42 motivations for investing via fund managers.png