The Growth of the Impact Investment Market
Impact investing is a rapidly growing share of the investment market. How much is it growing? Figures vary, but nearly everyone agrees – it’s big and only getting bigger. Morningstar, citing data from a 2019 US-focused Morgan Stanley survey, showed that 85% of investors are interested in sustainable investing, up from 71% in 2015.
More telling, I think, is that those ‘very interested’ in sustainable investing jumped from 19% in 2015 to a whopping 49% in 2019.
What is the Definition of Impact Investing?
Impact investing, broadly defined, is investing in a way to creates positive impact in the world. Impact investing is often looked at through Environmental, Social, and Governance (ESG) screening criteria, which can help determine which companies are defined as ‘impactful.’ However, ESG has only a vague definition and no clear definition.
This can lead to investor confusion, and opens the door to misrepresentation on the part of investment managers and firms, who may add impact funds or impact strategies into their offerings with no real oversight – or commitment to the cause.