MICROFINANCE PAPER WRAP-UP: “2020 Annual Impact Investor Survey,” by Dean Hand et al, published by the Global Impact Investing Network (GIIN)

The 10th edition of this survey includes responses from 294 impact investors, those that seek to “generate positive, measurable social and environmental impact alongside a financial return.” From the data the authors have collected, they reach the following conclusions:

1) The impact investing industry is diverse, as is illustrated by the variation in the respondents’ goals, methods and locations. The investors’ headquarters span 46 countries in both developed and emerging markets. Developed markets received most of the capital they deployed, with the majority allocated to energy and mainstream financial services, i.e. excluding microfinance. Other top sectors include healthcare as well as food and agriculture.

2) The impact investing industry has grown over time, driven by investor satisfaction with both financial and impact performance. Eighty-eight percent of the respondents report having met their expectations on financial returns, and 99 percent met their expectations on impact performance.

3) Investors are using impact measurement and management (IMM) tools to boost accountability regarding the impact of their investments. Despite this progress, the authors argue that IMM tools should continue to evolve as the industry faces new challenges. The largest anticipated challenge, which was cited by 66 percent of respondents, is “impact washing,” whereby organizations claim significant impact, yet fail to demonstrate tangible results.

4) While investors have adjusted their performance expectations in light of the COVID-19 pandemic, they maintain an overall “positive outlook.” Fifty-seven percent said they are “unlikely” to change the amount of capital they place in impact investments this year. In terms of financial performance, 46 percent “expect underperformance,” while 34 percent anticipate “ performance in line with their original expectations.” Regarding impact, 16 percent expect underperformance and 18 percent expect outperformance versus their initial expectations.

By Jessica McLeod, Research Associate

This is a summary of a publication by Dean Hand, Hannah Dithrich, Sofia Sunderji and Noshin Nova; published by the Global Impact Investing Network; June 2020; available at https://thegiin.org/research/publication/impinv-survey-2020.

Sources and Additional Resources

GIIN Annual Impact Investor Survey 2020
https://thegiin.org/assets/GIIN%20Annual%20Impact%20Investor%20Survey%202020.pdf

GIIN homepage
https://thegiin.org/

More MicroCapital paper summaries
https://www.microcapital.org/?s=paper

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