Impact Investing

According to The Financial Times, impact investing has become one of the hottest fields in asset management. The Global Impact Investing Network (GIIN) reports that impact investing is already a 220 billion USD industry. Growth has been exponential—the industry was worth 25.4 billion USD in 2013. Recently, UBS raised over $400 million for an oncology impact fund which addresses a growing need for early-stage cancer treatments. The fund targets an annual financial return of 10%, and will donate some of the profit to cancer researchers. More and more individual investors, pension funds, hedge funds, private equity firms, foundations, and family offices have become interested in investing for impact.

With these mainstream players’ active participation, impact investing is expected to grow even faster in the years ahead. The UN’s SDGs (Sustainable Development Goals) set in 2015, have played an important role in the growth of impact investing. The SDGs comprise 17 objectives with 169 targets covering diverse topics such as poverty, hunger, health, and education. As the UN proposed to meet these goals by 2030, impact investors began to move together to find and support solutions which would make the world a better place for all. The International Finance Corporation (IFC), a member of the World Bank Group, was one of the earliest organizations to use investment to solve social problems it has been investing in developing countries for 60 years now.

To address the big gap between available resources and the resources needed for sustainable solutions well-established int’l development institutions such as the World Bank, USAID, and DFID pay a lot of attention to impact investing. Interestingly, the rapid growth of impact investing can be partly attributed to the large-scale transfer of wealth to the two groups of investors — women and millennials. According to Mark Haefele, global chief investment officer at UBS, these groups are very interested in sustainability and investments that make an impact. Accordingly, the trend towards impact investing is expected to continue in the 21st century.