A study published by the Global Impact Investing Network (GIIN) analyzed data from over 3,000 public and private market asset owners and managers to determine the current size of the impact investing market. Local Initiatives Support Corporation is proud to contribute data to this study as we recognize the need to demystify and encourage others to learn about the impact investing space.
The study estimated a market size of $1.164 trillion in assets under management (AUM), a significant increase over the past twelve years.
Development finance institutions (DFIs) represented 5% of organizations in the sample study, but accounted for 27% of impact AUM. This demonstrates the "important role they continue to play in the market as providers of significant sums of capital for impact,"(GIIN).
The study looks at two areas of market growth in impact investing: green bonds and corporate impact investing.
Cash reserves held by U.S. companies, typically used to weather market uncertainties or fund future products, increased 32% since 2019, with an estimated $5.8 trillion held in reserves by all U.S. companies in 2022. Increasing pressure in recent years for shareholders to invest cash reserves productively and for corporations to address social and environmental goals has led to a rise in corporate impact investing.
According to the GIIN study, there is a funding gap of USD $4.2 trillion to achieve the 2030 UN Sustainable Development Goals, and financial markets have stepped up in allocating capital to achieve these goals. Estimates from the OECD report that only 1.1% of all assets held by banks and asset owners are needed to close this gap, but the financial industry has a long way to go in being close to achieving these goals However, this information offers hope that by increasing capital allocation toward impact solutions, the world can have the means of avoiding the worst outcomes of climate change and global inequity.
Dean Hand, GIIN Chief Research Officer
Ben Ringel, GIIN Research Senior Associate
Alexander Danel, GIIN Research Summer Associate