IMPACT INVESTING

M.S.SUNDARARAJAN

WHAT ARE IMPACT

INVESTMENTS?
Impact investments are investments made into
companies, organizations, and funds with the
intention to generate social and
environmental impact alongside a financial
return.
Provides capital to address the worlds most
pressing challenges in sectors such as
sustainable agriculture, clean technology,
microfinance, and affordable and accessible
basic services including housing, healthcare,
and education.

CORE CHARACTERESTICS
INTENTIONALITY-An investors intention to
have a positive social or
environmental impact through
investments is essential to impact
investing.
INVESTMENT WITH RETURN
EXPECTATIONS-Impact investments are
expected to generate a financial return
on capital or, at minimum, a return of
capital.

CORE CHARACTERESTICS
RANGE OF RETURN EXPECTATIONS AND ASSET
CLASSES-Impact investments target financial
returns that rangefrom below market
(sometimes called concessionary) to riskadjusted market rate, and can be made across
asset classes, including cash equivalents, fixed
income, venture capital, and private equity.
IMPACT MEASUREMENT-A hallmark of impact
investingis the commitment of the investor to
measure and report the social and environmental
performance and progress of underlying
investments, ensuring transparency and
accountability while informing the practice of
impact investing and building the field

CORE CHARACTERESTICS
Components of impact measurement- Establishing and stating social and
environmental objectives to relevant
stakeholders
- Setting performance metrics/targets related
to these objectives using standardized metrics
wherever possible
- Monitoring and managing the performance
of investees against these targets
- Reporting on social and environmental
performance to relevant stakeholders

WHY IMPACT INVESTING?

Offers diverse and viable opportunities for investors to
advance social and environmental solutions through
investments that also produce financial returns.
Many types of investors are entering the growing impact
investing market. Here are a few common investor motivations:
Banks, pension funds, financial advisors, and wealth
managers can PROVIDE CLIENT INVESTMENT
OPPORTUNITIES to both individuals and institutions with an
interest in general or specific social and/or environmental
causes.
Institutional and family foundations can LEVERAGE
SIGNIFICANTLY GREATER ASSETS to advance their core
social and/or environmental goals, while maintaining or growing
their overall endowment.
Government investors and multilateral development
finance institutions can PROVIDE PROOF OF FINANCIAL
VIABILITY for private-sector investors while targeting specific
social and environmental goals.

WHO IS MAKING IMPACT INVESTING?

Both individuals and institutions
Diversified financial institutions
Pension funds
Private foundations making program- and/or
mission-related investments
Insurance companies
Development finance institutions
Specialized financial institutions
Large-scale family offices
Fund managers
Individual investors

HOW DO IMPACT INVESTMENTS

PERFORM FINANCIALLY?
Diverse financial return expectations.
Some intentionally invest for concessionary returns -to maximize
impact or to catalyze additional investment capital by accepting a
riskier position in a deal.
Others pursue market-competitive and market-beating
returns, some of whom are bound to do so by fiduciary
responsibility.

HOW DO IMPACT INVESTMENTS

PERFORM FINANCIALLY?
Respondents also report that portfolio performance overwhelmingly
meets or exceeds investor expectations for both social and
environmental impact and financial return, in investments spanning
emerging markets, developed markets, and the market as a whole

HOW DO IMPACT INVESTMENTS

PERFORM FINANCIALLY?
Although very few investors report significant risk
events in their impact investing portfolios,
business model execution and management is by
far the most often cited contributor to risk.

INTRODUCING THE IMPACT

INVESTING BENCHMARK
InJune 2015, to provide more
concrete data on the financial returns
of impact investments, the GIIN and
Cambridge Associates published
Introducing the Impact Investing
Benchmark, the first comprehensive
analysis of the financial performance
of market rate private equity and
venture capital impact investing
funds.

IMPACT INVESTING FUNDS

Many impact
investors choose
to invest through
funds whose
social,
environmental,
and financial goals
match their own
Managed by the
GIIN, Impact
Base is the online
global directory
where investors go

HOW BIG IS THE MARKET?

Impact investing is a relatively new termhence the market size has not yet been
fully quantified.
However, the aggregate assets noted
below indicate that the market is
substantial, with significant potential for
growth.

MARKET POTENTIAL FOR IMPACT

INVESTING
Impact investing has attracted increasing interest
among investors who are allocating more capital to impact
investments year-over-year.
What does this mean for the social and environmental
good that might be funded by impact investing now
and in the future?

CURRENT STATE OF IMPACT INVESTING MARKET

While some investors have been making impact investments for
years or even decades, in recent years there has emerged a new
collaborative international effort to foster the development of
a high- functioning market that supports impact investing. While
this market is still relatively new, investors are overall optimistic
about its development and expect increased scale and efficiency in
the future.

CHALLENGES.

THANKS FOR YOUR PATIENT

LISTENING