In the taxonomy of investments, "impact" investments are characterized by the highest degree of involvement, because in addition to the dimensions of the return and the financial risk, they support the environmental or social result, which must also be measurable.
What is that
The Global Impact Investing Network (GIIN), a non-profit association founded in 2009, defines them as "investments in companies, organizations and funds made with the intention of generating a measurable social and environmental impact and capable, at the same time, of producing a financial return for investors”.
The salient features are contained in a manual produced by the Forum for sustainable finance and the result of a working group, which was also attended by Morningstar, which brought together representatives of the savings industry, foundations and the third sector around a table. The book was presented on November 15 during the SRI Week in Milan.
It's not philanthropy
Compared to a traditional investment, which pays no attention to ESG (Environmental, social and governance) factors, but purely to profit, impact investing is at the opposite extreme, one degree ahead of philanthropy, which pays no attention to returns financial. It is characterized by intentionality, heterogeneity of asset classes (cash flow advances, green and social bonds, private equity and venture capital), measurability of the impacts generated, reporting and financial performance. The latter can vary greatly from one another and even be lower than market rates, but they must still provide for the return of capital.
The sustainable development goals
More and more impact investors have as a point of reference the 17 Sustainable Development Goals (SDGs) established by the United Nations for 2030, which include the fight against poverty and hunger, the abolition of inequalities, the defense of the earth and waters, interventions to stop global warming, the right to health and school education for all. For example, Sella Sgr decided this year to integrate these objectives into the impact report of the Sustainable Investments fund, as parameters for measuring the environmental and social results achieved.
How do
The instruments available to investors vary by nature and issuer. They range from traditional and alternative mutual funds, to green and social bonds, up to more recent approaches such as social impact bonds (they differ from the previous ones because investors are remunerated only if a positive impact is actually produced) and crowdfunding (collection of financial resources for a project through web platforms). According to Shade Duffy, head of sustainable investments at Axa Investment Managers, "it is possible to generate impact investments in all asset classes, building diversified portfolios and in line with clients' risk/return objectives".
Where to act
In fact, the areas of intervention can be really many. According to the 2017 GIIN report, those that catalyze the greatest investments today are housing services (in Italy the two investment funds for housing of Cdp Investimenti sgr are an example), energy, microfinance (such as micro- loans provided by Banca Etica), social inclusion, agriculture and health care.
The size of the market
Impact investing is one of the fastest growing sustainable strategies. According to the 2016 Eurosif Report, assets under management in Europe increased by 385% between 2013 and 2015, going from 20 to 98 billion euros (from 2 to 2,9 billion in Italy). Globally, the GIIN estimates $114 billion at the end of 2016.
“This approach is becoming increasingly transparent and linked to the UN Sustainable Development Goals,” comments Jon Hale, head of sustainability research at Morningstar. “Although it is not possible to directly invest in the SDGs, they ask the financial industry to do its part, together with other actors, to achieve them by 2030. For this they are becoming the measurement parameter of impact investing. Fund underwriters are increasingly demanding transparency, and the SDGs provide a useful framework for monitoring the completion of socially responsible activities."
