Introduction to Impact Investing
Impact investing is an investment strategy that seeks to generate both financial return and positive social or environmental impact. It is an approach that intentionally targets specific outcomes, such as reducing carbon emissions, improving education, or promoting health and wellness. Over the past decade, impact investing has gained significant traction among both individual and institutional investors.
Latest Trends in Impact Investing
Increasing Demand
The demand for impact investing has been on a steady rise. A survey by the Global Impact Investing Network (GIIN) showed that the market size of impact investing doubled from $114 billion in 2016 to $228 billion in 2017. This trend is expected to continue, with more investors seeking investment opportunities that align with their values.
Greater Transparency and Accountability
Investors are increasingly demanding transparency and accountability in impact investing. This has led to the development of several tools and frameworks for measuring and reporting on the social and environmental impact of investments. For instance, the Impact Management Project (IMP) provides a framework for measuring impact across different dimensions, including scale, depth, and duration.
Integration with ESG Investing
Impact investing is increasingly being integrated with Environmental, Social, and Governance (ESG) investing. While ESG investing focuses on the integration of ESG factors into investment decisions, impact investing goes a step further by targeting specific social or environmental outcomes. This integration is expected to drive further growth in the impact investing market.
Recent Impact Investing News
Launch of New Impact Investing Funds
There have been several new impact investing funds launched in recent months. For example, BlackRock, the world’s largest asset manager, recently launched an impact investing fund that targets companies contributing to the United Nations Sustainable Development Goals.
Increased Regulatory Support
Regulatory support for impact investing is also on the rise. In the U.S., the Department of Labor recently issued a guidance that allows retirement plan fiduciaries to consider ESG factors in their investment decisions, a move that is expected to boost impact investing.
Impact Investing in Emerging Markets
Impact investing is gaining traction in emerging markets. According to a report by GIIN, nearly half of impact investment dollars are directed at emerging markets. This trend is expected to continue as these markets present significant opportunities for both financial return and social or environmental impact.
Conclusion
Impact investing is no longer a niche market. It has become a mainstream investment strategy that is reshaping the financial landscape. With increasing demand, greater transparency and accountability, and integration with ESG investing, impact investing is poised for further growth. Stay tuned for more impact investing news and trends.