GIINsight 2023 Series, Volume 1: Impact Investor Demographics
Over the next four weeks, I'd like to provide you with an overview of four reports released by the Global Impact Investment Network in June 2023 about the impact investing industry.
In the ever-evolving landscape of finance and investments, a new star has been rising: impact investing. With a growing awareness of social and environmental issues, investors are increasingly seeking opportunities that align with their values. GIINsight Volume 1, released in June of 2023, provides a comprehensive look at the demographics of impact investors and unveils fascinating insights into this thriving field. In this series, we'll explore the key takeaways from these reports beginning with the first in series looking into “Impact Investor Demographics”. This first brief focuses on the sample characteristics of impact investors and demonstrates the diversity of investors in the industry. .
“The 2023 GIINsight series offers a comprehensive overview of the impact investing industry, with actionable insights on impact investing activity and impact measurement & management practice.” - GIIN, 2023
Understanding Impact Investing
Before diving into the demographics, let's recap what impact investing is all about. Impact investing is an approach that seeks to generate not only financial returns but also positive social and environmental impacts. Investors in this space aim to support businesses and initiatives that address pressing global challenges, such as climate change, poverty, and inequality.
A Diverse Landscape of Impact Investors
One of the standout findings of GIINsight Volume 1 is the sheer diversity of impact investors. In two really important ways. Firstly, the type of investors who are adopting impact investment strategies, and secondly in the sources of impact capital for impact investors. Gone are the days when this niche was dominated by a single investor type.
*'Other’ organisations include corporations, sovereign wealth funds and diversified financial institutions.
Investment managers aside, here are a few of the motivations of impact investor types:
Foundations: Foundations are one of the largest sources of impact investment capital. They are motivated by a desire to use their resources to address social and environmental problems.
Family offices: Family offices are the investment arms of wealthy families. They are increasingly looking to impact investing as a way to generate social and environmental impact alongside financial returns.
Institutional investors: Institutional investors, such as pension funds and insurance companies, are also starting to invest in impact. They are motivated by a desire to align their investments with their values, and to reduce the risks associated with their portfolios.
GIINsight Volume 1 reveals that impact investors are also spread across the globe, with notable growth in emerging economies. This suggests that the desire to make a positive impact is a universal aspiration. Impact investors are now found all over the world with sample of investors canvassed spanning over 49 countries. 7% of these being found in Southern Africa, and an additional 3% in North African and the Middle East.
The GIINsight Volume 1 report also found that impact investors are increasingly focused on investing in emerging markets. This is because emerging markets offer a number of opportunities for impact investing, such as the potential to address poverty and inequality, and to promote sustainable development.
Challenges and Opportunities
While impact investing continues to gain momentum, the report doesn't shy away from highlighting the challenges that come with it. These challenges include the need for standardised impact metrics, the risk of greenwashing, and the complexity of balancing financial returns with impact goals.
On the flip side, there are immense opportunities in impact investing. The report suggests that governments, corporations, and financial institutions are starting to recognise the potential of impact investing to drive positive change. This recognition is leading to more supportive policies and a growing ecosystem of impact-focused investment options.
A Bright Future for Impact Investing
In conclusion, GIINsight Volume 1: Impact Investor Demographics 2023 paints a vivid picture of the evolving landscape of impact investing. It showcases a diverse group of investors who are passionate about making a positive difference in the world while earning a financial return.
The report highlights the growing maturity of impact investing, with investors of all ages, genders, and backgrounds participating in this movement. It also underscores the importance of transparency and accountability in measuring impact, ensuring that investments genuinely contribute to a better future.
As we move forward, impact investing is likely to become an even more integral part of the global financial system. With continued growth, increased awareness, and evolving strategies, impact investors are poised to drive positive change on a scale never seen before. So, if you're considering impact investing or want to understand the evolving landscape better, GIINsight Volume 1 is a must-read resource that offers a glimpse into a brighter, more sustainable future for investments.
Episode 5 of the Woke Money Podcast features Langa Madonko, who is perhaps best known for his motivational WhatsApp stories and sneaker collection, but is the Deputy President of ABSIP and Investment Principal at Summit Africa.
I hope you find the conversation as interesting and as useful as I have, with one of the brightest stars in local industry and an agent for transformational change.
