In a year marred by a pandemic, with whole industries shut-down, the International Finance Corporation (IFC) reports that Impact Investing did in fact continue to grow. 

The impact of the pandemic has been dramatic in its unevenness, with the sharemarket showing a boom in companies aligned with remote work and digital disruption, while others, such as those in hospitality and travel were obliterated. In the world of impact investing there was a similar dispersion.

The IFC’s recently released Investing For Impact: The Global Impact Investing Market 2020 reports that funds invested into impact funds rose to $US2.3 trillion, which represents some 2% of globally invested capital For many this may seem like a huge figure, but that comes partly from the definition of impact.

The headline figure of $2.3 trillion represents investments with an “intent to have a positive impact”. The report goes on to explain that funds that were invested with the more stringent approach; “with a contribution to impact and measurement systems in place”, reached a more modest $636 billion, up from $505 billion in 2019.

The assets in this broader categorisation of impact intent, pushed to $1.65 trillion in 2020, up from $1.57 trillion in 2019. 

It’s also worth noting that the IFC allocated impact funds invested in public equities to the ‘intended’ impact investment category, as they felt that for investors in listed equities; “it is not clear how such investments contribute to the achieved impact, even if there is a measurement system in place”. This group represented $63 billion of invested funds. 

That’s not to discount the importance and influence of investing in public markets. The report recognises that at $95 trillion, public equity markets dwarf private markets, so we must find levers for influence. It is estimated that $6.395 trillion in assets, in 2020, were managed using shareholder engagement and active stewardship strategies (this doesn’t include Europe, but does include Australian and New Zealand).

Source: IFC Investing for Impact Report, 2020

The growth shows that while covid-19 certainly caused dislocations for many businesses, and bruised confidence, it didn’t reverse the gains made in raising awareness of environmental and social issues, and capital continued to flow. 

There was, however, an impact on the growth of new impact funds in 2020. While the total volume of FUM grew, only 76 new impact funds were launched in 2020, raising $21 billion. While in 2019, 168 new funds hit the market with commitments of $40 billion.

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