As EVPA is finalising its own Industry Survey 2012, J.P. Morgan and the Global Impact Investing Network (GIIN) released Perspectives on Progress, a report that reveals the experiences, expectations and perceptions of 99 impact investors in 2012, as well as their plans for 2013. The report makes an interesting read – all the more as this report is a further sign of how divers ‘the impact investment community’ has become. This will become even more clear when we publish our Survey, early March 2013. As a first example: within this report, 65% of respondents said they were principally pursuing market-rate financial returns. For the EVPA community, we expect this number will be quite different.
Investors surveyed for the report include fund managers, development finance institutions, foundations, diversified financial institutions and other investors with at least $10m committed to impact investment. Foundations represent around 11% of the sample. The researchers said the participants, though diversified across regions and sectors, were not necessarily representative of the market.
Perspectives on Progress is the third in a series of reports, started in 2010, that present perceptions of the impact investment market as well as portfolio performance from a sample of impact investors.
The survey results indicate a growing market, with respondents committing up to $8bn to impact investing in 2012 and planning to commit $9bn this year.
84% of respondents reported that their portfolios’ impact performance was in line with their expectations, with 14% reporting results that exceeded expectation. On the financial side, 68% of respondents reported in-line performance, 21% reported outperformance and 11% reported underperformance.
Considering the geographic investments focus, the report shows a primary focus on sub-Saharan Africa, and Latin America and the Caribbean, followed by east, south-east and south Asia, with only 13% investing in Western Europe. The sectors are defined according to traditional industry sector categories rather than as social sectors. The type of organisations invested in is mostly growth-stage (78%), indicating that start-up and venture stage companies are not the focus of these investors.
Despite the apparent increase in impact investment, respondents believe the market remains challenged by a “lack of appropriate capital across the risk-return spectrum” and “a shortage of high-quality investment opportunities with track records”.
Respondents also highlighted the importance of impact measurement for both raising capital and general industry development. Notably, 96% of respondents measured their social and environmental impact, with most utilising third-party standards.