Shortage of specialist skills a challenge to growing impact investing market
Client demand appears to be driving the recent surge in impact investing – but a lack of professionals skilled in this field could hamper further growth.
These are among the findings published by the Global Impact Investing Network (GIIN) last week in its ninth Annual Impact Investor Survey, which draws on data gathered earlier this year from 266 impact investors.
Among the 169 fund managers surveyed, 85% said client demand was a ‘somewhat’ or ‘very’ important motivation for making impact investments – which GIIN CEO and co-founder Amit Bouri said showed “the powerful potential for people to influence positive change in the financial system.”
The report also suggests that the persistent idea of a trade-off – that choosing impact means sacrificing some financial return – is starting to wane: a third of all survey respondents said they were motivated to invest because of, not in spite of, potential for financial return. Managing director Sapna Shah said this signalled that “investors increasingly see alignment between business objectives and transformative impact.” Over 90% of respondents reported performance in line with or exceeding both their impact and their financial expectations.
However, along with a number of obstacles – including the lack of appropriate capital across the risk–return spectrum and of suitable exit options – respondents said availability of skilled professionals was a challenge. More than half said the number of professionals with impact measurement and management skills is insufficient, while 41% believe there aren’t enough people skilled in deal making and structuring. Attracting and retaining talent is also an issue for many, with 40% citing competitive pay as a significant factor.
Those responding to this year’s GIIN survey manage a combined US$239bn in assets (GIIN has previously estimated the full size of the market at $502bn). Respondents represent a range of types including fund managers, banks, foundations, family offices, pension funds and others. They are investing in a range of sectors with the greatest share going to energy (15%), microfinance (13%) and other financial services (11%).
Eighty respondent organisations that participated in the GIIN survey both four years ago and this year grew their impact investing assets from $37bn to nearly $69bn this year. The report highlights a significant number of newcomers to the field, with nearly three-fifths of all respondents entering the market within the last ten years. Of these, 66% make only impact investments and the remainder make both impact and conventional investments.
Header photo by Clem Onojeghuo on Unsplash