Conference Report, GIIN Investor Forum: Impact investing reaching a tipping point?

Event in Amsterdam presents compelling evidence for sector growth

Impact investing is on the rise says the Global Impact Investing Network (GIIN) as the nonprofit organisation’s new survey finds the assets under management of committed impact investors grew from $25.4bn in 2013 to $35.5bn in 2015.

Amit Bouri, co-founder and CEO of the GIIN, says its Impact Investing Trends Report provides “compelling evidence of a growing impact investing industry”.

He was speaking to Responsible Investor at the GIIN Investor Forum in Amsterdam where a sense of momentum behind the burgeoning impact investing industry was clear. But there were also frustrations.

David Blood, co-founder of sustainability-focused Generation Investment Management and a former CEO at Global Sachs Asset Management, said while a lot of progress had been made, it was too slow.

“We have to convince a lot of investors to take this more seriously. We need sovereign wealth funds and pension funds. It is changing but it is slow – we have to move the conversation from political to the long-term economic case,” he said.

He noted that only ten representatives from the 20 largest asset managers in the world were at the GIIN Investor Forum – and among this group America was underrepresented.

Blood also said ‘bad habits of finance’ shouldn’t be imported to impact investing.
He gave ‘exits’ as an example, saying “maybe we shouldn’t have exits in the same way as traditional finance”.

This was a recurrent theme at the event. Lisa Hall, the former President and CEO of the Calvert Foundation who is now managing director of impact investing at Anthos Asset Management, said the industry would face “deep vulnerability” if it didn’t manage exits effectively.

“I would hate to see people coming to the conclusion impact investing doesn’t work because markets can’t absorb exits,” she said. Anthos is part of the family office of the Brenninkmeijer family behind the C&A clothing chain.

Hall suggested that her fellow audience figure out ways to create “liquidity events” to not just rely on exits.

Another repeated theme to emerge from the GIIN Investor Forum was a focus on market demand. Jennifer Pryce, who took over from Hall at the Calvert Foundation, encouraged impact investors to “solve for market demand, not investor preference”.

She also said that debt investors were “a little left out” of the conversation in the impact investing world.“It’s not as sexy as private equity or social entrepreneurship but through our notes we have broad access to capital markets.” The Calvert Foundation issues ‘notes’ or bonds that can be purchased for as high as $10m or as low as a 20 dollar note.

Elsewhere, reflecting Blood’s comments on ‘bad habits’ of mainstream finance, the chair of Triodos Investment Management, Marilou van Golstein Brouwers, said the finance industry’s “one dimensional focus on lowest costs” could become a barrier to impact investing.

But, while there was much discussion on the challenges of the nascent industry, the GIIN Investor Forum also displayed signs of steady momentum behind impact investing.

Toniic, ‘a global action community for impact investors’ including high net worth individuals, foundations and family offices, talked about its members’ commitment to move their investment portfolios to ‘100% impact’. The total commitment represents nearly $4bn and report T100 found on average the portfolios are 64% deployed with impact, and 33% have already reached 90% or greater impact.

The Dutch government and Dutch central bank DNB presented at the GIIN Investor Forum, as did the United Nations. There was a sense that the UN Sustainable Development Goals could be a shared framework for engaging in impact investing.

Attendees stressed that the involvement of governments and public bodies to catalyse impact investing was essential, for example through de-risking tools or improved policy.

And there was some good input from pension fund leaders, notably Australia’s Christian Super, an active participant in impact investment accounting for 10% of its portfolio.

Tim Macready, Chief Investment Officer at Christian Super said he hoped the drive, pushed by its members, would help break perceptions that institutional investors can’t do impact investing and meet their fiduciary duty.

He continued: “Twenty years ago pension funds had no infrastructure. Now funds allocated 4-6%.”

Sharing this sentiment was Nick O’Donohoe, Senior Advisor at the Gates Foundation and founding CEO of Big Society Capital, who chaired the conference. O’Donohoe said: “We are at a tipping point and having a moment. We’ve this in the venture capital movement and the private equity movement, in the hedge fund movement, when investment movement gets momentum we have today. It doesn’t stop it carries on.”