Impact investing and blended finance - P&I EVENTS · based institutions, racial and ethnic...

1

Impact investing andblended finance

Wouter Koelewijn

European Liaison, Global Impact Investing Network (GIIN)

2

What is Impact? – The UN’s Sustainable Development Goals (SDGs) as common framework

3

What is impact investing?

Impact investments are investments made

with the intention to generate positive,

measurable social and environmental

impact alongside a financial return.

4

What is impact investing? (2)

Impact investments can:

• be made in both emerging and developed markets; and

• target a range of returns from below market to market rate, depending on investors’ strategic goals.

5

Core characteristics of impact investing

Impact investments have:

• the intention to create impact

• the expectation of a financial return

• measurement and management of impact

• application across a range of asset classes.

6

Who is making impact investments?

• Fund managers

• Development finance institutions

• Diversified financial institutions/banks

• Private foundations

• Pension funds and insurance companies

• Family offices

• Individual investors

• NGOs

7

The Global Impact Investing Network (GIIN)

• The GIIN is a non-profit organization dedicated to increasing the

scale and effectiveness of impact investing.

• Founded in 2009, the GIIN builds critical infrastructure and

develops activities, education, and research that can increase

the scale and effectiveness of impact investing around the world.

8

GIIN helps industry scale and effectiveness

Investors and investees need a

consistent way of measuring

social and environmental performance

IRIS & Impact Measurement and Management (IMM)

Many investors need to better understand impact investing

Research and Communications

Global impact investment industry needs leadership, organization, and sharing of best practices

Investors’ Council and Network Membership

9

www.thegiin.org/research

GIIN Annual Impact Investor Survey

Edition 2019

What does impact investing look like globally ?

10

Together, respondents invested USD 35 billion into over 13,000 impact investments during 2018

14%

0,5%

1%

10%

11%

14%

16%

34%

Other

Deposits & cash equivalents

Equity-like debt

Real assets

Public equity

Private equity

Public debt

Private debt

Percent of capital invested (excl. outliers)

Source: 2019 GIIN Annual Impact Investor Survey; n = 261. Excludes two outliers and three respondents that did not report 2018 investment activity.

11

Impact investors allocate AUM globallyPercent of AUM

Source: 2019 GIIN Annual Impact Investor Survey; n = 259. Excludes three outliers and three respondents that did not share AUM data.

6%

2%

4%

5%

5%

6%

6%

10%

14%

14%

28%

Other

MENA

Oceania

East Asia

South Asia

Southeast Asia

EECA

WNS Europe

SSA

LAC

U.S. & Canada

12

Impact investors have varied impact and financial goals and report generally strongperformance.

13

Respondents target a wide range of impact themes

Note: ‘Other’ themes include affordable and safe housing, sustainable technology, cybersecurity protection, strengthening of faith-based institutions, racial and ethnic equity and inclusion, circular economy, and SME development.

Source: 2019 GIIN Annual Impact Investor Survey.

73%

61% 59% 58% 55%50% 50% 50% 49%

42% 41% 40% 38% 37%27%

21% 18%

6%

Per

cen

t o

f re

spo

nd

ents

Targeted SDG-aligned impact themesn=252 (optional question)

14

Respondents target a range of financial returns

Source: 2019 GIIN Annual Impact Investor Survey

66%

19%

15%

Respondents’ target financial returns

Risk-adjusted, market-rate returns

Below-market-rate returns: closer tomarket rate

Below-market-rate returns: closer tocapital preservation

n=266

15

Respondents report strong performance relative to expectations

Source: 2019 GIIN Annual Impact Investor Survey

2%9%

82%77%

16% 14%

Impact expectations Financial expectations

Per

cen

t o

f re

spo

nd

ents

Respondents’ performance relative to expectations

Underperforming In-line Outperforming

n=254n=253

16

Spectrum of capital

Source: Bridges Ventures

17

Exciting growth, but much more needed for the Sustainable Development Goals

18

Defining Blended Finance:

Catalytic capital from public

or philanthropic sources to

increase private investment

in developing countries for

SDGs and global

development impact

Blending public and private capital

Source: Convergence, 2019

19

Goal of Blended FinanceTo create acceptable risk-return profiles, to mobilize private sector investment

into SDG projects in developing countries

Source: Convergence, 2019

20

Key regions of blended finance

21

Focus sectors of blended finance

22

wkoelewijn@thegiin.org

www.thegiin.org/research