The gains in global impact assets under management are coming in bigger chunks.
Pension and insurance funds that are increasing their allocations to investments intended to have measurable positive impact pushed total impact assets under management to $1.571 trillion, according to the Global Impact Investing Network, which kicks off its annual Impact Forum in Amsterdam today.
In his keynote talk, the GIIN’s Amit Bouri said, “$1.57 trillion dollars are bringing hope for a brighter future. $1.57 trillion dollars are: making healthcare more accessible, building affordable housing, providing clean energy, supporting the farmers that feed us, regenerating our lands and oceans, creating good jobs, and so much more.”
The exact $1.5 trillion-plus number in the GIIN’s latest sizing study is far from precise, as the report acknowledges. It cautions that the fudge factors make it hard to compare this year’s total with previous estimates, but still claims a 21% compound annual growth rate since 2019. And it doesn’t hurt that the new number is a decent jump from 2022’s extrapolation to $1.164 trillion, and slightly more than triple the GIIN’s 2019 estimate of $504 billion.
In any event, it is clear that the bulk of the new billions are coming from institutional investors.
Among organizations for which it had data, the average impact investment portfolio was nearly $1 billion, even while the median-sizedinvestment portfolio was only $42 million. The GIIN’s analysts say that suggests that “the average organization’s allocation to impact investing remains relatively small, but that uptake among large organizations is growing.”
Pension funds and insurance companies accounted for only 18% of the entities represented but nearly half of all impact-directed assets under management.Investment managers accounted for nearly 60% of the organizations surveyed, but only about a quarter of assets under management.
Known and unknown
The GIIN rounded up survey findings from 300 impact investing organizations managing nearly $490 billion in impact investing assets in a separate “State of the Market” report last month. A subset of 71 survey respondents that had also provided data in 2019 showed compound annual growth in impact AUM of 14% over the five-year period.
For the broader sizing report, the GIIN went beyond its own survey to identify a universe of 6,029 “known impact investing organizations.” It culled the list to include only “directly invested capital by both public market and private market asset owners and managers,” to avoid double-counting as assets made their way down the finance food chain.
That left 2,767 organizations for which the GIIN could collect current, self-reported data on impact assets under management, along with 1,140 organizations known to be making direct investments but with unknown assets under management. Researchers matched the characteristics of the unknowns to the knowns to add in the missing AUM data.
The GIIN gave the total a final boost based on what it said was the reasonable assumption that the research team may not have captured all the impact investing organizations making direct investments. The team assumed that it had captured 85% of the total impact investing market and applied that coverage to its “known universe,” a nearly 18% boost, “to arrive at the GIIN’s final estimate of market size.”
The commendable methodological transparency is likely to be lost as the new number gets cited and rounded in the months ahead. To shorten the cycle, let’s let it be known now that 2024 impact assets under management total $1.5 trillion-ish.
