While interest in impact investing continues to accelerate, estimates of the global market size vary. An annual survey conducted by JP Morgan in 2015 showed that globally, impact investors managed USD 60 billion as of 2014, and were expected to commit an additional USD 12.2 billion to impact investments in 2015.
This growth has been largely driven by increased capital commitments from foundations, development finance institutions, impact investment funds, family offices and by governments that are using their capital to achieve a blended financial and social return.
Many of the world’s largest financial institutions are engaged in or are actively exploring impact investing in a variety of ways, including through investing their own capital, or as stewards of capital from clients. Some mainstream financial institutions have provided customized strategies for high net worth individuals and families within private wealth management departments, and others are offering SRI products, and seeking to broaden their range of products to include options that integrate impact investing.
BOX 2.1: Global Impact Investment Trends
An annual survey conducted by JP Morgan and GIIN describes the trends for impact investors globally: In the latest survey, some notable trends included:
• Housing accounts for a largest proportion of impact investments, followed by microfinance, financial services (excluding microfinance), and energy.
• Just over half of total capital is invested through debt instruments, and a third is invested through private equity.
• Over 90% of currently-managed capital is invested in companies in the post-venture stage, with 28% allocated towards companies at the Growth Stage, 52% in Mature, Private companies, 11% in Mature, Publicly-traded companies, and only 9% committed to Seed/Start-up companies or Venture Stage businesses.
– JP Morgan and GIIN: Eyes on the Horizon
Canada’s impact investment market is anchored in a rich history of regional community economic development, notably in Québec. The Canadian impact investment market has been estimated to be between $2 billion to $4 billion. Market surveys have shown steady growth in impact investing using multiple indicators, including assets under management, investor interest and activity, product availability across asset classes, and demand for impact investment. Notable drivers of these trends include leadership from the private and community foundation sector, as well as activity among credit unions across the country.
Purpose Capital and MaRS Centre for Impact Investing (2014) State of the Nation: Impact Investing in Canada
Canada G8 Social Impact Investment Taskforce (2014) National Advisory Board Report
Responsible Investment Association (2015) Canadian Responsible Investment Trends Report
E.T. Jackson and Associates (2012) Accelerating Impact: Achievements, Challenges and What’s Next in Building the Impact Investing Industry
JP Morgan and GIIN (2015) Eyes on the Horizon: The Impact Investor Survey