Impact Investing… How investors are changing the world
Since the 2008-09 financial crisis, the term “impact investing” has grown from an exciting and disruptive concept into a vibrant and complex investment ecosystem. Today, the market size of the global impact investment universe is estimated at over USD 500 billion – with the industry playing a pivotal role to channel both public and private capital into companies, organisations, and funds with the intention to generate social and environmental impact alongside financial returns.
Members of the Global Impact Investing Network (GIIN), a non-profit group that promotes the industry, have witnessed average annual growth in assets of nearly 17 per cent in the past four years. The industry is also attracting new players -- including global investment firms such as KKR, Blackstone and TPG -- with more than half of the institutions in GIIN’s research making their first impact investment in the past decade.
Despite the recent buzz, the global impact investment industry is still relatively new and, on an international scale, still relatively small. As time progresses and the industry expands, the growing pains also need to be addressed. The 2020 MASIC Annual Investment Forum will therefore explore the rapid growth of impact investing; discuss the opportunities and challenges of impact-driven investment strategies; and debate what the industry’s growing prominence means for the long-term investment landscape.
The specific themes for discussion include:
- The Growing Demand
What are the megatrends driving the rise in impact investment? How is the industry addressing the growing demand from individual (especially millennials) and institutional investors that are requesting their capital to do more than just appreciate in value?
- Specific Investment Strategies
Are impact investors re-focusing their investment strategies from developing to developed markets? Is Africa, for example, as attractive an investment destination as it was a decade ago? What are the promising sectors and industries for impact investors? Is deal flow and deployment a challenge for impact fund managers as the size of impact funds grow substantially?
- Creating Enduring Impact
Is it possible for fund managers to create true social and environmental impact, as well as generating strong financial returns? How does one define impact when operating in diverse geographies, sectors, varying levels of risks and returns? How do fund managers measure and report impact given the numerous different standards?
The United Nations estimates that reaching the Sustainable Development Goals in developing countries will cost around US$ 3.9 trillion per year—and that private and public investment currently provide just US$ 1.4 trillion. The global impact investing market has some way to go before achieving mainstream maturity and responding to today’s global social and environmental challenges. But with the recent interest from major investors, entrepreneurs and governments, much of the foundations have been laid for the industry’s full potential to be unlocked.