Impact investing growing quickly, but has long way to go: GIIN

NEW YORK (Reuters) - Impact investments, which support social change while making money, have grown rapidly over the last three years as mainstream institutions such as pension funds and insurance companies have jumped on the bandwagon, a top industry executive said.

But the global market, worth at least $77 billion at the end of 2015, has a “long way to go in terms of potential,” Amit Bouri, chief executive of the Global Impact Investing Network (GIIN), said in a recent interview. The non-profit organization was formed to help the industry grow and operate more efficiently.

Impact investing, a term coined in 2007, grew out of the desire by socially conscious individuals to extend philanthropy to their financial holdings. But the sector’s healthy returns and social impact have spurred every major financial institution, led by Goldman Sachs and BlackRock, to participate in some way, Bouri said.

“We have certainly seen the market go from a nascent market to one that is really coming of age,” he said.

“Impact investing is unintentionally the best kept secret of how you can invest. Most investors don’t even think they can invest in a way that answers their social and environmental priorities, while also meeting financial objectives.”

Potential investors in Asia include financial services firms and insurance companies, many of whom are new to the impact investing market, Bouri said.

Prudential has committed to enlarging its impact investment portfolio to $1 billion by 2020 from $500 million in 2016, Bouri said, citing the asset manager’s response a GIIN survey. Its holdings include education, housing and financial services, primarily in the United States.

Sixty-two investors, mainly impact investing asset managers, saw their assets grow to $35.5 billion at the end of 2015 from $25.4 billion in 2013, according to the GIIN survey released in early December.

During that period, 98 percent of the respondents said, their impact investments performed in line with or exceeded expectations.

More than half of the respondents were fund managers and one-fifth were foundations. The survey included only those who had been in the sector since 2013, Bouri noted.