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Impact Investing ‘to Hit $9 Billion in 2013’

Impact investing is expected to grow 12.5 percent to reach $9 billion in 2013, according to a survey released by JP Morgan and Global Impact Investing Network.

The results, outlined in the Perspectives on Progress report, reveal expectations and perceptions of 99 impact investors who manage at least $10 million or more of impact investment capital, defined by the Global Impact Investing Network as investments made into companies, organizations and funds with the intention of generating measurable social and environmental impact alongside a financial return.

Most respondents reported that their portfolios’ financial and impact performance are in line with their expectations, with nearly two-thirds of the sample targeting market rate financial returns on their impact investments.

Of those who responded, 96 percent measure their social and/or environmental impact. Four out of five fund managers highlighted the importance of impact measurement for raising capital, according to the report.

Respondents said the market is still challenged by a lack of appropriate capital across the risk-return spectrum and a shortage of high-quality investment opportunities. But surveyed investors indicated that progress was made in these areas and across other indicators of market growth in 2012.

Among emerging regions, last year’s impact investing focused most on Sub-Saharan Africa and Latin America, followed by East, Southeast and South Asia. Among developed markets, impact investors focused on opportunities in the US and Canada, according to the report.

The majority of respondents (86 percent) focus on multiple sectors. Fourteen percent of respondents invested in single-sector opportunities, including food and agriculture, financial services, microfinance and energy.

In developed markets, investors focused on healthcare and education. In emerging markets, respondents said they invested in food and agriculture, followed by financial services and microfinance.

The UN Global Compact and the Rockefeller Foundation launched a framework for impact investing and social enterprise at the Rio+20 Earth Summit in June.

The two groups said a number of large corporations and pioneering impact investors have begun investing more actively in the social enterprise sector in recent years. These include companies such as Cemex, Cisco, Intel, Nestle, Safaricom, SK and Starbucks, and investors such as Acumen Fund, Bamboo Finance Daiwa Securities, ECOM, HSBC, Mahindra Finance, Sequoia Capital, SNS Asset Management and TIAA-CREF.

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