Impact Investing: Growth and Measuring Impact

There has been promising growth in the impact investing space recently, and investors and academics alike are looking for better and easier ways to measure impact. The articles and reports below highlight recent activity.

US Sustainable, Responsible and Impact Investing Assets Grow 76 Percent in Two Years Press Release on The Forum for Sustainable and Responsible Investment

According to US SIF – The Forum for Sustainable and Responsible Investment’s latest survey, sustainable, responsible, and impact investing (SRI) assets have expanded 76% from $3.74 trillion at the start of 2012 to $6.57 trillion at the start of 2014. These findings demonstrate that “sustainable investment strategies are being applied across asset classes to promote corporate social responsibility, build long-term value for companies and their stakeholders, and foster businesses that will yield community and environmental benefits,” said Lisa Woll, CEO of US SIF.

The survey highlights emerging trends in the investment space and explains the growth, citing the expansion of the investment funds offered by money managers that incorporate environmental, social, and governance (ESG) factors into investment decision-making and larger pool of assets to which institutional owner apply ESG criteria as the major contributing factors.

Can Impact Investing Help Save the Planet? By Dan Winterson, Eric Hallstein & Camilla Seth on SSIR

It is no secret that the world needs more capital and new innovative models for sustainable economies to address the growing demand for food, water, and fuel. A new cross-sector investigative study, “Investing in Conservation: A Landscape Assessment of an Emerging Market” examines whether impact investing can make a difference in global conservation efforts. The report examines three areas of conservation investing: sustainable food and fiber production, habitat conversation, and water conservation. It includes data from a survey covering more than 1,300 transactions between 2004 and 2013.

The key findings include:

  • $23.4 billion of investments in global conservation opportunities were made from 2009 through 2013
  • The conservation impact investment market is nascent but expanding quickly across investment stage, type, sector, and region
  • Case studies revealed rapid business model innovation
  • Investors reported a variety of challenges consistent with an immature market

In short, the report reveals that conservation impact investing is real and growing rapidly, providing a potential path for attracting capital at the scale of the problems we face.

Curbing the “Impact Impostors”: The growing movement toward transparency in impact investing by William Burckart on NextBillion

Impact investing’s rising popularity has created some debate. As demand for a social component has grown among investors, some standard equity investments are inappropriately branded with an impact label. With the recent growth of impact investing activities, it can be difficult to detect these “impact imposters”. Some leading systems are growing in popularity that are designed to measure impact, including Global Reporting Initiative (GRI), Impact Reporting and Investment Standards (IRIS), and Global Impact Investing Rather System (GIIRS). The creation of these systems is part of a greater move towards greater transparency in the space. The benefit of the effort will increase the usefulness of information available to investors and improve corporate performance on the ESG issues most likely to impact value. Of course, impact is in the eye of the beholder, but these metrics will be useful for institutionalizing impact.

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