Last month J.P. Morgan and the Global Impact Investing Network (GIIN) released a report titled Perspectives on Progress, a market research study that included interviews of 99 major impact investors that each manage at least $10 million discussing their habits and outlook for the future. The study reported that global impact investing totaled $8 billion in 2012, a significant growth over previous years. Furthermore, the sector seems poised to continue its rapid expansion – GIIN predicts from its interviews that total impact investment will grow to $9 billion in 2013.
Furthermore, impact investors reported a high level of satisfaction with their investments. Ninety eight percent said that their investments were meeting or exceeding their expectations when it comes to social and environmental benefits, and 89% reported their expectations being met or exceeded with regard to financial performance. That’s a good thing, because ⅔ of respondents named their top priority in impact investing as “pursuing market rate returns”.
This 12% YOY growth is in line with other news from around the industry. The Social Investment Organization of Canada reported last month that impact investing in their country has grown by 20% (around $1 billion) since 2010, and the Silicon Valley Community Foundation announced that they received $985 million in gifts from individual and corporate donors in 2012. Further, the UK’s Department for International Development has promised GBP $10.5 million for impact investing in sub-Saharan Africa and South Asia.
In order to unlock the full potential of impact investing capital, there are two separate but related tasks for the community. The first, as Jonathan Weber puts it in the New York Times, is to convince investors “that for-profit companies with a social mission at their core could constitute an ‘asset class’.” That’s where big impact investing funds have value -- making sure that this asset class is efficiently invested and adequately diversified.
The second is to make potential investors excited about making a difference by introducing them to specific opportunities that are both in line with their investing goals and their morals. The goal here is to essentially convert traditional investors into impact ones by piquing their interests with a spotlighted project. This is where companies like Mosaic come in – by enabling individuals to invest in solar projects, their marketplace is unlocking new capital that can flow into the sector. If investors continue to have their investing goals and morals satisfied, there is hardly a limit to the amount of capital that could enter the impact investment space.
Phil Narodick is a cleantech enthusiast and former founder of Solar Pathway, a startup working on creating a market for community supported solar arrays. He has worked as a project finance analyst for Solar Trust of America and has a background in energy consulting. In addition to being an evangelist of innovative solar finance and impact investing, he holds both a Master’s and a Bachelor’s degree from Stanford University.
Disclaimer: Any opinions expressed herein by persons not affiliated with Mosaic reflect the judgment of the author and not necessarily that of Mosaic. Nothing herein shall constitute or be construed as an offering of securities, or as investment advice or recommendations by Mosaic. Mosaic's investments are limited to investors who meet applicable suitability standards based on income, net assets and state of residence. Please click here to learn more.