Impact Investing to Become $1 Trillion Dollar Industry by 2020
The Impact Investing industry is set to become mainstream, as it is predicted to become a $1 trillion Dollar industry by 2020, according to Standard Life Investments. That is a huge leap compared to 2015, as the impact investing industry ‘only’ represented US$60 billion in 2015. Who drives this market? Those damned Millennials! The paper found that those under 40 were more likely to be familiar with the term impact investing and more likely to use values-based investing. Millennials were further found to place social justice and equality high, while 50% felt unaffiliated with politics.
The report highlights that millennials want to invest in companies that achieve positive social outcomes and, that the new products they create, will need to reflect their attitudes and beliefs. Millennials are primarily driven by investment vehicles that make a difference to the world. That doesn’t mean one would have to compensate on financial returns as 63% of respondents think value based investing delivers the same or better financial returns. Standard Life Investments’ head of responsible investment, Amanda Young, said:
“For asset managers and advisers that embrace impact investing and offer suitable products to cater for this market, the future looks bright”.
The report further underlined that the democratisation of information, thanks to new technologies, has and will increasingly hold companies responsible for their actions. As for the investment industry, the need to be as transparent and accessible as possible will be an important driver in building trust with Millennials. As we will start to see a wider range of investment vehicles, together with more diverse impact targets, measurement will too become increasingly sophisticated and standardised allowing for further growth in the sector. Check out the white paper to learn more about their findings.