Global Trends in Impact Investment

Educational Programmes

• These programmes have been implemented in almost all countries, with the remaining countries in the process of developing them.
• As impact investment has become a larger market, educational programmes have helped to broaden the ecosystem and deepen the knowledge of the sector.
• Additional human capital into the impact economy is crucial to continue its expansion.
• The majority of countries analysed have some educational programmes in place, such as university courses, research centre courses, and investor training.
• This shows a clear intention to build an understanding around the industry.

Wholesale Institutions

• These have been favoured among developed countries, while developing countries are still in the early stages of considering whether to establish such an institution.
• South Korea is an example of how quickly countries are now able to set up wholesale institutions, with the official inauguration of the NAB in February 2018 and the wholesaler expected to be established in September 2018.
• The aim has been to directly support the development of intermediaries and to champion market building within impact investment.
• The National Advisory Board (NAB), alongside different government departments, have been discussing the establishment of a wholesale fund.
• The local NAB for each country covered is currently in conversations with the government to undertake an analysis of the feasibility of a wholesaler.
• One method for establishment could be to partially use unclaimed assets alongside additional money from other sources (e.g. banks).

Capacity Building

•  Capacity building seems universally acknowledged as one of the foundational tools that government facilitates.
• Countries have recognised its importance to help create a pipeline of opportunities for investment.
• This is demonstrated through the large number of countries, 16 in total, who either already have targeted programmes or are in the process of establishing them.
• This is to promote impact businesses by providing them tools to support and grow their businesses.
• The majority of the countries have capacity building programmes, largely in the form of incubators and accelerators.

Access to Capital

• Countries universally recognise that access to capital is a foundational policy tool for the impact investing ecosystem.
• All countries have funding programmes to support impact businesses either specifically (impact funds) or indirectly (e.g. funds for SMEs).
• At the national level, each government has been working to catalyse investment in affordable housing.
• This is facilitated by capital for seed, early stage, and growth capital for all enterprises (including impact businesses) through grants and subsidies.
• Using a portion of this capital specifically for impact investing would help to further support impact businesses.

AUM Allocation to Infrastructure

• Over the past four years, AUM allocation within impact investment grew towards infrastructure at the fastest rate, at 61% per annum.
• Other fast-growing sectors included WASH and ICT, at 43% per annum each.
• Substantial energy investments are again reflected, with allocations to the sector growing at 30% per annum.
• Interestingly, whereas non-microfinance financial services grew at 27% per annum, microfinance grew at just 6% annually.

AUM by Equity

• Impact investors deploy capital through a range of asset classes, often leveraging multiple financial instruments through diversified investment strategies.
•  67% of investors allocate via private equity as the most common trend.
•  55% allocate via private debt, which account for 22% and 26% of total AUM excluding outliers.
• Including outliers, however, private debt allocations account for 39% of respondents’ assets.
• Much capital also flows to public markets, with 17% in public equities and 14% in public debt.

Gender-focused Investing

• Within the impact investment space there has been more attention on gender lens.
• There is a new awareness within the impact investment community that investing in women and minority-led businesses is critical to creating a more equitable world.
• Impact investing drives more capital to female founders than traditional VC capital.
• Women make up larger percentages of impact investing asset management teams than traditional asset management.

Trend Covered by the UK Media

Increased Level of Interest for Catholic-based Organisations in Impact Investing:

• Catholics are starting to put their philanthropic billions into profitable investments instead — a new aid model, backed by Pope Francis, that experts say could help end poverty.
• Catholic investment funds, which manage capital from hundreds of faith-based organisations, are increasingly investing in projects in emerging economies and earning a return while also doing good, experts say.
• "There’s definitely an increased level of interest for Catholic based organisations in impact investing", said the head of the Swiss foundation, which is directed by Catholic teachings about social justice and giving dignity to the poor.
• At the first of three conferences hosted by the Vatican on impact investing in 2014, he said it was important that ethics play its part in finance, and that markets should serve the interests of people and the common good of humanity.
• Matthew Zieger, the first national director of impact investing with Catholic Charities USA, said impact investing to fund affordable housing and job creation was growing at his network, which represents more than 160 Catholic agencies worth about $50 million.
• Another organisation spearheading the new mission is Catholic Relief Services (CRS), the church’s U.S.-based humanitarian agency and joint host of the Vatican conferences, to explore how the faithful can harness capital to help the poor.
• Other big Catholic institutions, such as Ascension Health, the largest non-profit health system in the United States, and Georgetown University, are also impact investing, according to Amit Bouri, chief executive of GIIN.

Key driver:

• Charismatic Argentine Pope Francis, who has championed the poor since he took the helm of the 1.3 billion-strong church in 2013, is a key driver of the new investment trend.

Other UK Media Coverage on Impact Investment

• Millennials are set to inherit a £1.2 trillion windfall from baby boomers in the next 30 years, according to a recent study by Sanlam UK.
• Barclays’ latest Impact Investing Report, which surveys 2,000 investors, shows the number of investors that have made a sustainable investment has increased by two-thirds, to 15%, since 2015.
• However, this increase has been driven by millennials.
• Almost half of respondents under 40 had made an impact investment.
• That compares to 9% of those between 50 and 59; and just 3% of those aged over 60.
• Further, millennials said they would allocate three times as much of their portfolios to impact investing as the over 60s pledged.

Research Strategy

FINDINGS

•  Lee Mannion has written or co-written more than eleven impact investment related articles.
• Tim West has written around eight impact investment-related articles.
•  Ellie Ward has written around five impact investment-related articles.

RESEARCH STRATEGY

KEY FINDINGS

The Big Society Capital

• Big Society Capital aims to "improve the lives of people in the U.K. by connecting social investment to social enterprises and charities to create a greater social impact."
• Big Society Capital and its co-investors have given organizations with a social mission access to more than one billion of new capital through investments in fund managers and social banks.

•  Charity Update, which publishes news on charity activities, quoted the Big Society Capital in 2019.
•  Pioneer Post and Media, headquartered in London, referred to Big Society Capital in 2017.
•  Power to Change, a nonprofit organization management organization in London quoted Big Society Capital in 2017.
•  Euromoney, which is based in London, quoted Big Society Capital in 2018.

UK Sustainable Investment and Finance Association (UKSIF)

• UKSIF is a membership organization for those in the finance industry who are "committed to growing sustainable and responsible finance in the UK."
• UKSIF, as per its stated agenda, "champions the development of impact investment as part of the spectrum of sustainable and responsible investment."

• UKSIF was quoted/referred to in an article by Forbes in 2019.
• The U.K. based publishing agency Business Green quoted it in 2018.
• The Responsible Asset Owners Global Symposium (RAO Global) with its registered office in England and Wales referred to UKSIF in its publication in 2019.
•  Professional Adviser, which is based in London, referred to UKSIF in its article in 2017.

The Impact Programme

• In 2012, the U.K. Department for International Development (DFID) launched the Impact Programme. The objective of the program was to "catalyze the market for impact investment in Sub-Saharan Africa and South Asia."
• Its agenda is to support "impact investments into businesses reaching under-served as consumers, suppliers, distributors or employees, in the world’s poorest and hardest to reach geographies, and innovative business models.''
• The work it does can be divided into two aspects. The first aspect is that it builds the market for impact investment. The second aspect is that it gives technical assistance to companies that are supported by "the Impact Fund and Impact Accelerator investment vehicles."

•  Inclusive Business Action Network (IBAN), which is based in Bonn, Nordrhein-Westfalen, Germany, made a reference to the program in 2019.
• In 2016, Alliance 54 referenced it as it quoted one of The Impact Programme's reports done in collaboration with Dalberg. Alliance 54 is registered in England and Wales and specializes in promoting, connecting, and driving growth in businesses with development impact in Africa.
• In 2017, the CDC Group referred to research which detailed how the Impact Programme helped develop the impact investment market in developing countries in 2016. The CDC Group PLC, which provides advice on impact investing, is located in London, UK, India, and South Africa.
• The Center for Financial Inclusion, based in the U.S. referenced The Impact Programme's report in its report "Financial Inclusion 2020."

RESEARCH STRATEGY

• The Big Society Capital had the four most recent mentions, all from U.K. media sources.
• UKSIF, out of the four most recent mentions, three were from U.K. sources
• The Impact Programme, out of the four most recent mentions, two were from U.K. sources.