Impact investing 2024: interactive listing

Once a niche strategy, impact investment is gaining ground among large-scale investors, according to new research by industry body the Global Impact Investing Network.

As part of a broader study, the GIIN has, for the first time, produced a list of impact investing organisations that — unlike its previous aggregated research — includes specific data from named firms, some with billions of dollars in impact assets.

This list, shared exclusively with the Financial Times and published below, is based on data collected in the first three months of 2024 from more than 300 organisations (the list consists of those that agreed to have their details published).

The data is designed to provide an overview of the impact sector, globally, and forms part of broader research — to be published in September — on investment trends, including deal size, target sectors, and regional differences.

Impact investors seek companies whose principal purpose is making a measurable positive impact alongside financial returns. To deliver both, Amit Bouri, the GIIN’s chief executive, advises developing a strategy that will guide all investment decisions. “You use that to inform how you design your portfolio and how you select and manage your investments all the way through to the exit,” he explains.

The GIIN research suggests that many mainstream investors are now deploying such strategies. Dean Hand, the GIIN’s chief research officer, points to the fact that, among the organisations surveyed, investors managing more than $500mn in assets hold 92 per cent of the impact investing assets. “If you look at what’s driving growth, the obvious thing is the larger investors,” she says.

While the research features foundations, development banks and specialist impact investment firms, it also includes asset managers such as Baillie Gifford, which has almost $8.2bn allocated to impact investments, insurers such as Zurich, with almost $7.9bn, and private equity groups such as Vistria, with nearly $11.4bn.

Also apparent is the growth of impact investing in developed markets, as compared with emerging markets, as well as growth in blended finance transactions and asset classes such as public assets and real assets. Allocations to developed markets increased by 29 per cent over five years, compared to an 8 per cent increase for emerging markets.

Based on data tracking investment activity over the past five years, including by organisations on the list, the GIIN says that the allocation of assets to impact strategies has increased at a compound annual growth rate of 14 per cent in that period. 

Equally interesting, in Hand’s view, is a shift towards fewer deals but a greater volume of allocations, with average deal size increasing by 7 per cent over the past five years and larger investors allocating $12mn per deal on average.

“If you are confident in the market, you will go in with increasing ticket sizes,” she says. “That is often the purview of larger investors and is what I think of mainstreaming.” 

In terms of the destinations for investment, several sectors stand out. While there is growing interest in areas such as biodiversity and the so-called blue economy — marine resources and ecosystems — the top four impact investment sectors are information and communications technology, affordable housing, education, and infrastructure.

This, says Hand, reflects the fact that more than 74 per cent of the investors surveyed are seeking risk-adjusted market-rate returns as well as social impact — both of which these sectors can deliver.

Of course, there are no guarantees. While the GIIN’s researchers have long asked investors whether their impact and financial performance has met expectations — with 80-90 per cent affirming this over the past decade — in recent years, it has asked them specifically to compare targeted with actual financial performance. “In all but two asset classes, investors are not meeting their targeted performance,” observes Hand. 

However, she argues that this is another indication that impact investing is becoming more exposed to mainstream investment trends. “What we are seeing is normal headwinds in the market, such as inflation and concerns around conflict zones,” she says. “But that’s probably consistent with the wider markets.”

Having discipline in how you measure progress is essential for any impact investor

Measuring impact performance is trickier, given a lack of widely used benchmarking mechanisms for peer-to-peer comparisons.

“We don’t know whether targeted performance meets actual results from an impact point of view,” says Hand. “A lot of audits and verification are going on around the practices of impact investing. But impact investors need to do independent auditing of impact results.” 

Bouri argues that this is critical if good intentions are to translate into tangible results. “Having discipline in how you measure progress is essential for any impact investor,” he says.

This emphasis on measurables is a key reason why the GIIN has produced the list of impact investment organisations, assets under management and areas of activity.

“Organisations’ public accountability for impact investing strategy data is important information for the scale and integrity of impact investing,” says Hand.