Trends, data and doubts: an interview with GIIN's CEO
Over 7,500 deals done in 2015, more than $15bn committed and steady growth forecasted in the year ahead – these are some of the key findings of the Global Impact Investing Network’s sixth Annual Investor Survey published today. Ellie Ward caught up with CEO Amit Bouri whilst he was in London last week.
Having been founded in 2009, for the past six years the Global Impact Investing Network (GIIN) has published an in-depth survey of active impact investors from around the world. In the words of CEO Amit Bouri, the survey aims to take the “pulse of the market”, make forecasts about future activity and “help new impact investors get up to speed”.
The 2016 survey comprises 158 of the world’s leading impact investors, the majority of whom are based in the global north (US and Europe), but who are using their capital to invest in social and environmental impact across the globe.
Some key findings from this year’s survey include:
- A total of $15.2bn was committed to impact investments by survey respondents in 2015
- Investors plan to increase capital committed by 16% to $17.7bn in 2016
- Impact investors surveyed committed capital to 7,551 deals in 2015 and plan to commit capital to 11,722 deals in 2016
- Nearly 90% of all respondents said the financial performance of their investments was in line with or above expectations (with 19% reporting outperformance), and 99% reported impact performance in line with or better than expectations
Meet the boss
In a noisy café just of Trafalgar Square in central London, Bouri (pictured below) took an hour out of his schedule to talk trends, data and doubts.
Pioneers Post: What do you consider the most significant findings of the 2016 survey?
Amit Bouri: One is the projection of market growth (16% growth in 2016 versus 2015). This is a very credible number in our view because it’s active investors projecting their portfolios for the next year… This is just data on existing impact investors and doesn’t even include new impact investors who might enter the market this year. This is a really positive sign – strong, steady growth in spite of all the changes that have been happening in broader global markets since the GIIN was founded.
The second key point is that 90% of respondents are finding that their investments are meeting financial performance targets (the details of the targets are not included in the survey)… If anything is going to be a driver for continued growth it is the sense that investments are performing.
PP: The 2016 survey reveals that the ‘most commonly targeted social impact themes were access to finance, employment generation, and health improvement, followed by education and income growth/livelihoods’. Have any sector specific trends emerged since the GIIN was founded and if so which stand out to you?
AB: In general we’re seeing strong growth across a number of sectors. An important trend that continues is that while in emerging markets microfinance continues to be a strong area, we’re increasingly seeing diversification… Whereas microfinance may have been an entry point, investors are now branching out into areas such as healthcare, housing and renewable energy.
An area that’s interesting in the global north is conservation. When people think about environmental investing they tend to think about renewable energy... but beyond renewable energy, there are other environmental strategies ranging from sustainable timber and forestry, all the way to sustainable land use and agriculture. It’s not a big portion of the market but it’s an interesting development that’s now on our radar that wasn’t six years ago.
Where things can get a bit dicey is if impact investing is being referred to as a panacea that would solve all our problems...
PP: Which countries outside of the US and Europe have stood out as being pioneers in impact investment market development?
AB: It’s been a dramatic, explosion of activity… Less than seven years ago we had 20 members, now we have over 200. This is a movement that’s happening in all six continents. One market that’s one of the most exciting that isn’t discussed as much as the US or European, is the Indian market. You now have fund mangers with specific track records and are now starting to think about how to scale up their businesses.
PP: Some critics argue that hype around the potential of impact investment distorts the reality of what’s happening on the ground. What are your thoughts about this?
AB: Impact investing is still new to most investor audiences. As a result we tend to see people getting excited about it before they’ve had time to build their portfolios and start moving their capital. In that regard it’s what I would expect.
Where things can get a bit dicey is if impact investing is being referred to as a panacea that would solve all our problems at the expense of other meaningful strategies. Impact investing is an incredibly powerful tool that is completely underutilised as a means of dealing with social and environmental issues. That said it does not replace the efforts of government and philanthropy, but can been seen as a complement to them… The ultimate end goal must always remain top of mind in that it’s a means to an end.
PP: How significant a role do social impact bonds (SIBS) play in the broader impact investment market?
AB: SIBs have really captured the imagination of many governments, social sector workers and also some private investors. Our data continues to point to the fact they are still a small, small element of the overall impact investment market.
...when you’re doing something that audacious, I certainly had some doubts
We need to understand where social impact bonds are most useful, and where they’re not in comparison to more traditional funding of social outcomes… SIBs are a limited but exciting part of the market that fit into a much broader picture that includes cash deposit strategies, hybrid debt, real assets investment, venture capital and many other instruments.
PP: Have you ever experienced any doubts about impact investment as a concept?
AB: When we first started the GIIN I had a lot of hopes and expectations, but when you’re doing something that audacious, I certainly had some doubts – not about the potential of impact investing, I’ve never had any doubts about that part – what I did wonder was this whole notion of ‘if you build it, will they come?’
I think the momentum of the market since we were founded has in large part alleviated those doubts… but there is still a lot of work to do.
PP: Tax evasion and offshore funds have dominated mainstream media outlets as the Panama Papers came to light in recent weeks. To what extend is it the GIIN’s role to influence and educate traditional investment institutions about socially responsible investing?
AB: We see part of our role as helping to direct some activities of these mainstream financial institutions into impact investing. There are a number of other policy issues where the GIIN won’t play a thought-leadership role but I think it’s critical that we help educate institutional investors, banks, asset managers and others on how they can build impact into their portfolios.
PP: What are your priorities as the CEO of the GIIN going forward?
AB: In terms of market growth, we’re really interested in educating the next wave of impact investors… There’s a great opportunity for us to play a role in awareness raising, education and then helping them understand the practice of impact investing so that not only do they become active, but active in an effective way. To support that there are a couple of priorities that stand out:
- Build our research
- Going deeper in our understanding of the practice of impact investing… how do you structure deals, how can people lend finance, what does more effective impact measurement look like and many other areas.
To read the 2016 Annual Impact Investor Survey in full, please click here.