Impact investing remains a broad church

A 20-foot banner emblazoned with the slogan ‘Not all heroes wear capes’ welcomed delegates to the event space. A recorded video message from Richard Branson championed the importance of the blue economy and the work of the non-profit Ocean Risk and Resilience Action Alliance. The audience punctuated panel sessions with spontaneous rounds of applause.

For a cynical financial journalist, used to more restrained industry gatherings, the emotion on display at the annual Global Impact Investing Network (GIIN) Impact Forum, which took place in Copenhagen earlier this month, can seem alien.

The event’s ardent tone is a reminder that the impact community is made up of far more than just institutional investors and fund managers, something of which GIIN co-founder and CEO Amit Bouri is well aware. GIIN has identified two “departure points” from which stakeholders enter the market, he told New Private Markets this week: “impact first”, which includes NGOs and others, and “finance first”, which would apply to banks and asset managers.

After a GIIN forum back in 2018, affiliate title Private Equity International noted the diverse nature of the organisations present. We noted that discourse, which focused a lot on promoting the concept of impact investing, should shift to the financial implications for investors. In the intervening five years, the sector has scaled up considerably: just over $9 billion was raised for private markets impact strategies in 2018, less than a quarter of the $44 billion raised last year.

We still maintain that financial performance – which is what will make or break the notion of “mainstream” impact investing – needs to be a top talking point (and will be at our impact summit in New York at the end of the month). But that is not to dismiss the role that less returns-oriented market participants play.

For all its growth in recent years, impact remains a small fraction of the investing landscape. There are still unresolved questions around industry standards and best practice in relation to both impact management and investment structures. Input will be needed from all areas if these questions are to be resolved. As Bouri says: “Both sides need to be taken seriously.”

And let’s not forget why impact investing exists in the first place. “It’s encouraging that we are beginning to have institutional solutions to these problems, but we should all remember where these problems come from and how they are felt by people,” Jonathan Dean, GIIN forum veteran and head of impact investing at AXA IM Alts, told us this week.

If that means enduring the occasional impromptu round of applause, then so be it.

The Impact Investor Summit North America runs from 31 October to 1 November in New York. More information can be found here.