Impact Investment Market

Part
01
of three
Part
01

Impact Investment Market: Trends

Some global trends in impact investment are educational programmes, wholesale institutions, capacity building, AUM allocation to infrastructure, etc. The trend of increased level of interest for Catholic-based organisations in impact investing is covered by UK media.

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

The first 4 trends were noted following a detailed working group report by GSGII, based on a country by country analysis, through which a number of trends relating to policy tools within impact investment were identified. Out of these, 4 such trends were picked up which were implemented or are most priortized across all the countries covered in this report.

The fifth and sixth trends were noted from the report which presents findings from the Global Impact Investing Network’s ninth Annual Impact Investor Survey reflecting 266 respondents’ impact investing activities and perspectives on industry development, including new sections exploring human resources; diversity, equity, and inclusion; and the role of governments in supporting the industry. The report also analyzes trends among the subset of 83 four-year repeat respondents. These trends were selected out of others mentioned in the survey because the other trends were more inclined towards being presented as a result of the survey while these two were more of a trend than just a survey result.

The seventh trend was found as the common opinion from 50 thought leaders and practitioners in the impact investment space from source #3.

The only trend we identified (8th Trend) as covered by the UK media was "an increased level of interest for Catholic based organisations in impact investing." We found this trend in the UK Reuters website which generally covers other UK news as well. We also found the key driver to this trend. This was taken as a trend since many Catholic-based organisations across Vatican City and the USA connected with Argentine Pope Francis, are now taking an interest or are already shifting towards impact investing. However, this was the only trend covered by the UK media and the other identified trends were not.

In order to find out the trends covered by UK media we considered every possible UK media online source like BBC, The Sun, Telegraph, Guardian, Independent, Mirror, Reuters, Morningstar, etc., out of which we only found one trend which was covered.

The other trends were not covered by UK Media.

The driving factor for the identified first 7 trends were not available since these were a part of report, survey, and expert opinions which mainly focused on current trends in brief. We were limited to sources covering the past one and half years. While we did look for the same in the UK news database, into regional news portals and available reports, the only data that came out was the trends but not the factors driving them.



Part
02
of three
Part
02

Impact Investment Market: Journalists/Influencers

There were no ranked lists found on the most prolific UK journalists or influencers that write about impact investment stories or get interviewed regularly. Nevertheless, based on an assessment of publicly available related articles that they have written, the following are the UK journalists that were inferred to fit the bill: Lee Mannion, Tim West, and Ellie Ward. In the case of an influencer, there were several articles and press releases found that feature interviews and statements from Rodney Schwartz.

FINDINGS

Based on the evaluation of the number of articles that they have written around impact investing, the following are the UK journalists found:
  • 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.

As for an influencer, Rodney Schwartz has been interviewed and quoted several times about impact investing.

RESEARCH STRATEGY

We started our research by looking for readily available ranked lists of journalists or influencers who are the most prolific in terms of writing articles about impact investment. We then looked for this information in various sources such as in press release sites such as PR News Wire, Globe Wire, and others; journalist databases such as Clippings, Muck Rack, Paydesk, and others; publications such as Forbes, Financial Times, Pioneers Post, and similar sites; media outlets such as Reuters, The Telegraph, The Globe and Mail, and other relevant sources. Based on this search approach, we were not able to find ranked lists of journalists or influencers who are the most prolific in terms of writing about impact investing. What we found are separate entries on several journalists who have written about impact investing. We also found several individuals who have been interviewed or got quoted in several articles.
We also checked journalist associations such as the British Association of Journalists, the National Union of Journalists, the Chartered Institute of Journalists, and other relevant sites. We hoped to find citations or awards that can help in triangulating the information. However, what we found were mostly insights on the general journalism profession.
We then looked at government, civic, or charitable sites such as Charity Water, World Wild Life, Just Giving, The Giving Machine, and other related sites to determine if there are mentions of social investment impact reports. We hoped to gather some data from these reports that might help in triangulating some information. However, we also were not able to find relevant insights from these sites. What we found are mostly general reports on social responsibility.
We derived that the reason why the information is not available could be due to the highly specific nature of this information.
We then attempted to derive the answer by looking at the names of the journalists that we originally found from databases such as Muck Rack and counting the number of articles that they have written. Based on this approach, we were able to identify those that have several articles about impact investing based on the given definition of this type of funding. We also found an influencer with several interviews and was quoted in various articles.
Part
03
of three
Part
03

Impact Investment Market: Editorial Competitors

The three organizations that are editorial competitors to Trib Impact Capital in the U.K. are Big Society Capital, UKSIF, and The Impact Programme. Below is an overview of the findings.

KEY FINDINGS

The Big Society Capital

INVOLVEMENT IN IMPACT INVESTING
  • 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.

QUOTES OR REFERENCES
  • 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)

INVOLVEMENT IN IMPACT INVESTMENT
  • 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."

QUOTES OR REFERENCES

The Impact Programme

INVOLVEMENT IN IMPACT INVESTMENT
  • 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."

QUOTES OR REFERENCES
  • 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

To find the information, we started searching for the agencies in the area of impact investing in Europe and the UK (such as Global Impact Investing Network (GIIN), the Department for International Development (DFID) in the UK), international development organizations (such as the World Bank, IMF, UN), and professional networking sites (such as LinkedIn). Through these sources, we wanted to locate organizations dealing with impact investment in the U.K., which we were able to do. We found many organizations in this space, however, their coverage in the U.K. media (such as BBC, the Guardian, the Daily Mail, the Telegraph) was practically non-existent. Therefore, we conducted a second level of search in more specific sources such as Charity Update, Business Green, and Euromoney. These sources provided more specific coverage pertaining to the area of impact investment. Here we were able to find coverage on the organizations. However, not all of them had equal coverage in U.K. sources. Therefore, we ranked them in terms of the frequency of coverage.
  • 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.
Based on the above criteria, these three organizations were chosen as potential editorial competitors to Trib Impact Capital in the U.K. in terms of being regularly quoted or referenced in the U.K. media.
Sources
Sources

From Part 03
Quotes
  • "The Impact Programme seeks to support impact investments into businesses reaching underserved as consumers, suppliers, distributors or employees, in the world’s poorest and hardest to reach geographies, and innovative business models. It has two components: building the market for impact investment and providing technical assistance for companies supported by the Impact Fund and Impact Accelerator investment vehicles."
  • "The Impact Programme was launched by the UK Department for International Development (DFID) in 2012. Through the programme, DFID is providing £157.8m over 23 years to catalyse the market for impact investment in Sub-Saharan Africa and South Asia."
Quotes
  • "The research conducted in partnership with Dalberg, with support from the UK’s The Impact Programme also revealed that the recurring mischaracterization of Impact Investing with [venture] philanthropy has led to difficulty in raising capital because a fair amount of local investors are convinced ‘impact investing’ implies a compromise on financial returns."
Quotes
  • "This report takes an in-depth look at how the Impact Programme helped develop the impact investment market in developing countries in 2016. It reviews the new commitments made by its two investment vehicles – the Impact Fund and the Impact Accelerator – as well as its Technical Assistance Facility."
Quotes
  • "The latest edition of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked, is now available. Among the stories in this week’s edition are Indonesia’s first floating bank branch, a new report from the Impact Programme on the impact investing markets in sub-Saharan Africa and South Asia"
Quotes
  • "UKSIF champions the development of impact investment as part of the spectrum of sustainable and responsible investment. Impact investments are most widely defined as those which generate social and/or environmental good and a range of returns to the investor, from principal to above market. In the UK, the terms impact investment, social investment and social impact investment tend to be used interchangeably"
Quotes
  • "We are a membership organisation for those in the finance industry committed to growing sustainable and responsible finance in the UK."
Quotes
  • "The recent “Survey of the Fund Managers’ response to the climate-related risks facing fossil fuel companies” by the UK Sustainable Investment and Finance Association (UKSIF), in partnership with The Climate Change Collaboration, reports that “90% of fund managers expect at least one risk to impact significantly the valuation of International Oil Companies (IOCs) within 2 years,” but “they are not yet setting firm target deadlines for when the companies need to act"
Quotes
  • "Over a year which has seen large banks halt funding for fossil fuel projects, major institutions divest from oil, gas and coal holdings, and oil companies snap up power and renewables companies in a bid to diversify their asset base, research published today by the UK Sustainable Investment and Finance Association (UKSIF) and the Climate Change Collaboration suggests nervousness over climate risk has shot up in financial circles."
Quotes
  • "Simon Howard, CEO of the UK Sustainable Investment and Finance Association said: “These data will come as no surprise to those who know UK sustainable finance. The drive and innovative flair of the UK’s experts in this area is clear. "The study confirms the irresistible logic of sustainable investment: that money should be managed considering risks such as climate change, and exploiting positive trends such as recycling. “UKSIF and its members have pushed this issue up the political agenda, and Government and regulators are now pursuing a policy environment that pushes investment to areas where, as this report shows, the UK has outstanding skills."
Quotes
  • "The UK Sustainable Investment and Finance Association (UKSIF) coordinates Good Money Week, which this year runs until 14 October and aims to spread awareness to consumers about the sustainable and ethical options that exist for their finances. "
  • "Pointing to YouGov research that suggested nearly half (47%) of people wanted both to make money and have a positive impact through their investments - compared with 39% stating they were only concerned if their investments made money - UKSIF chief executive Simon Howard (pictured) said the opportunity now existed for the financial services sector to "make it easy" for the public to invest responsibly."
Quotes
  • "We improve the lives of people in the UK by connecting social investment to social enterprises and charities to create a greater social impact."
  • "We have a number of core focus areas where social impact investing has a particular opportunity to make a difference; homes, places and early action."
  • "With our co-investors, we have made over one billion of new capital available to organisations with a social mission, through investments into fund managers and social banks."
Quotes
  • "The Community Investment Enterprise Facility, which as been established by Big Society Capital and is managed by Social Investment Scotland, will meet some of the capital needs of CDFIs, help build a better understanding of their lending, and test models of funding for CDFIs to attract other social investors."
Quotes
  • "Big Society Capital, alongside other investors, has made £1.7bn available for social enterprises and charities in order to help tackle some of the toughest social issues faced by people in the UK."
Quotes
  • "The social investment market is growing, according to latest figures released by Big Society Capital (BSC). Investments outstanding at the end of 2016 amount to £1,950 million, an increase of 30% compared to 2015 figures."
Quotes
  • "Power to Change and Big Society Capital have come together in a partnership to tackle a key market failure in the energy sector; how to facilitate community ownership of existing ground-mounted solar farms in England and maximise the social, environmental and financial impact they generate for their local area."
Quotes
  • "In January, the UK government announced it would be distributing £100 million to social investment firm, Big Society Capital. An extra £35 million is also being placed with Big Society Capital and Access – the Foundation for Social Investment, with the specific aim to increase the sustainability of the UK social investment market. "
Quotes
  • "We are a team of wealth managers and impact specialists focusing exclusively on aligning wealth stewardship and creation with our clients’ personal values."
  • "Our goal is to deliver long-term positive impact and growth for everyone, in support of the UN Sustainable Development Goals. Our theory of change? To change the very nature of wealth and its impact."