The global shift towards impact investing
The world’s most pressing issues are increasingly stirring wealthy families and individuals to use their capital for social and environmental good.
The past five years have witnessed a boom in private global wealth with the number of billionaires having surged by 55% since 2012, according to the Hurun Global Rich List 2017.
Many of these wealthy individuals are observing the growing inequalities and challenges that our societies face. They’re also aware of the impact their wealth has on the world and the choices they have regarding how it is used – both in philanthropy and investments.
As sponsors of the Financial Times ‘Investing for Global Impact’ report, in collaboration with GIST and Clearly Gottlieb, we are pleased to share highlights of the motivations and behaviours of high net worth individuals (HNWIs), family offices, and their foundations in philanthropy and impact investing.
This unique research collates insights from 325 wealthy participants who represent a conservative estimate of $123bn of assets.
In this report - the fifth anniversary edition - readers can benefit from a mapping of the industry’s developments over time as they consider their own impact activities.
New possibilities for good
Over the last five years, we can see the upward trend of those active in both impact investing and philanthropy.
While philanthropy continues to play a central role, it’s the rise of impact investing that stands out, with 58% of respondents now involved. Importantly, this is not to the detriment of philanthropic giving.
With continued commitment to philanthropy it’s clear that many, including ourselves, believe these are two complementary approaches for global impact.
In this growing movement to invest intentionally for both financial returns and a positive social and environmental impact, it’s individuals and families leading the way.
Increasing commitment to impact investing
For HNWIs and family offices active in impact investing, 31% of total investment portfolios are in impact investments.
This is a significant leap from its starting point of 17% in 2014.
Moreover, these investors are building the case for impact investing through first-hand positive experience. As many as 85% have met or exceeded their expectations of financial performance and 87% have seen equally positive social impact results, the report reveals.
The environment takes the top spot
Protecting the environment is the top priority for wealthy investors.
When asked what causes and themes their impact investments were in, 46% said clean energy and green technology. And 47% said they will invest in this area in the next year.
In fact, 28% of HNWIs say they no longer hold any investments that could harm the environment. A further 26% report having divested 'some of our holdings on this basis'.
While the environment is the current dominant theme, education and skills as well as health and quality of life were both second place finishers for future investments.
Interestingly, this year the largest increase between current holdings and future investments was into supporting women and gender equity. A quarter(25%) said they are planning to invest in this cause over the next twelve months.
Nurturing education and awareness
The growing momentum towards impact investing is clearly demonstrated in the report but many more are still not active impact investors.
A lack of education about investment routes and approaches is the biggest hurdle, the report reveals. Similarly, ‘general awareness’ of impact investing is cited as a key barrier by respondents.
This research hopefully highlights the importance of sharing approaches with others active Investors.
This is why we also support other efforts, such the Impact Management Project and Toniic, who are working to increase understanding of impact investing across the investment industry and families respectively.
At Barclays, we continue to support individuals and organisations when making decisions about the impact of their wealth as it is invested, given and passed on.
We are committed to enabling our clients to use their wealth intentionally to protect and grow their assets, and to make a positive contribution to our world.
If you are a client and would like the full report, please contact your private banker. If you are not a client, contact us.