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Business Times
18-07-2025
- Business
- Business Times
Inside Asia's impact investment boom
BACK in 2019 while working to launch the Global Impact Investing Network (GIIN), I attended an impact investing conference in India. What struck me most was the mix of energy, enthusiasm and innovation in the crowd. It was apparent even then that impact investing had undeniable potential to take root and take off in Asia. Impact investing aims to generate positive, measurable social or environmental impact alongside a financial return. In short, it is about harnessing capital to solve real-world problems for people and the planet. This approach creates jobs, energises local economies and makes communities more resilient – the foundations of a healthy society, regardless of the continent you are on. Focus areas range from increasing access to education and mitigating carbon emissions to supporting ageing populations, all representing opportunities where impact capital can help drive solutions. This is true globally and increasingly so in East, South and South-east Asia. The continent has always been significant in impact investing's history, but Asia is now elevating its leadership role, with Singapore as a major hub. I have always appreciated Asia's dynamism – it is both a source of impact capital and a global destination for such capital. As Asia continues on its path of growth, impact investing will remain essential for the region's sustainable development. Data confirms that impact investing is booming in Asia. Our 2024 report on the state of impact investing in Asia, which covers the activity of 68 Asia-focused investors who manage more than S$48.6 billion in assets under management (AUM), found that the AUM dedicated to impact is growing significantly. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up There is accelerating interest in East Asia specifically, with 60 per cent of such investors planning to increase their allocations in the coming year. Energy, healthcare, education, and information and communication technologies were all noted as priority sectors. Asian organisations are now leaders within the global impact investing industry. Singapore, a convenor and thought leader in Asia's sustainable finance space, has seen a tremendous amount of leadership from family offices like the Tsao Family Office and intermediaries like Impact Investment Exchange, among others. Our research reveals other indicators of increasing momentum and satisfaction: 89 per cent of Asia-focused impact investors said their financial returns were outperforming or in line with expectations, and 88 per cent reported the same for their impact performance. This is part of a broader trend, and should fuel continued global interest in impact investing in Asia. Two key factors are driving this growth. First is a positive shift in government support and policy frameworks for the industry. For instance, in 2024, Japan's Financial Services Agency launched formal principles for impact investing, which reflected many definitions and guidance originating from the GIIN. Japan's Government Pension Investment Fund – the world's largest – recently pivoted to allocate more capital to impact investments, in an effort to create long-term value for pensioners and meet the country's social and environmental needs. The closer alignment of corporate interests with impact-focused goals in Japan may be associated with the 150 per cent rise in the country's impact investing market from 2023 to 2024. Family offices are also a major force. According to Empaxis, Asia is home to 9 per cent of the world's approximately 20,000 family offices, with more than half of Asia's family offices located in Singapore. Many of these families, who lead large family businesses in Asia, are reconsidering how to approach long-term value creation for their legacies and future generations, with impact investing as a tool. The GIIN has been active for more than 15 years, and I am excited to see that the leadership, dynamism and rigour I saw on my first trip to Asia have only grown. Investors in Asia have advanced on their impact journeys remarkably quickly – moving directly from intention to implementation. I like to think this leapfrogging is owed in some part to the power of global networks like the GIIN and others, that provide opportunities to learn best practices from fellow practitioners. Impact investing in Asia holds tremendous potential and power. The latest estimates indicate that more than S$2 trillion in impact AUM is circulating in the world now. While this market size is itself a milestone for the global impact investing movement, it is also a call to action for investors to mobilise in service of improving livelihoods, communities and the natural world, in Asia and beyond. The writer is chief executive officer and co-founder of the Global Impact Investing Network
Business Times
30-06-2025
- Business
- Business Times
Impact investing: Helping to solve major global challenges
[SINGAPORE] What is impact investing? The Global Impact Investing Network (GIIN) defines impact investing as 'investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return'. GIIN makes it clear that impact investing provides capital to solve some of the world's most pressing challenges in a wide array of sectors such as energy, healthcare and infrastructure. We align with GIIN's definition. We also adhere to the BNP Paribas Group's framework, which we were a key architect of. This framework sets out three characteristics of impact investing: Intentionality: Investments must be made with the intention of generating a measurable positive social or environmental impact – the impact can't be an unintended by-product, but should be a focal point. The intention should be stated clearly. Additionality: Without the investor's involvement, the investment would not have had a positive impact. Additionality can take various forms: for example, the investor's capital can support underserved populations or be used to provide financing at below market rates. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Impact management: The social and environmental performance of the investments must be measurable, reported on and fed back into the investment process. The impact might be in terms of, for example, avoided emissions or the number of people who have access to affordable housing as a result of the investment. There's a misconception among some investors that impact investing involves sacrificing return potential, but that's not necessarily always the case: according to GIIN's 2024 state of the market report, 74 per cent of impact investors are targeting market-rate risk-adjusted returns, and 86 per cent reported that their financial returns were outperforming or in line with their expectations. A growing market The impact investing market has been growing steadily, with assets under management increasing from US$1.2 trillion in 2022 to US$1.6 trillion in 2024, according to GIIN. Europe has played a leading role in this growth: 45 per cent of the world's impact investors are based in the region and they hold 53 per cent of impact assets. According to Mercer's survey of large asset owners in 2024, 39 per cent integrated impact investing in their policies. Large investors hold a sizeable share of impact assets: although pension funds, insurance companies and banks only account for 22 per cent of impact investors, they provide 66 per cent of the impact capital, according to GIIN. Many asset owners are embracing impact investing, and a number of pension funds and insurers have publicly said they intend to invest several billion in impact strategies. Insurer-owned asset managers often manage impact strategies for their parent companies, enabling them to offer these strategies to external clients. Some of the opportunities available Investors can make a positive impact by allocating to asset classes including green and social bonds, real asset (such as infrastructure and real estate) funds, venture capital, or even private equity funds of funds. Such asset classes give investors access to themes such as renewable energy, climate change mitigation, affordable housing, social inclusion and healthcare. Impact strategies result in a wide range of environmental and social benefits. Below we list some of our investments and their positive impacts. Our social bond strategy invests in a 600-million-euro (S$896 million) sustainable bond issued by a French institution in 2022. Over 50 per cent of the bond's proceeds help fund projects linked to education and social inclusion, mainly by providing career development, training and employment opportunities for disadvantaged people under 30, people older than 55, and people with disabilities. Our green bond strategy invests in a 575-million euro green bond issued by a Danish energy company in 2022. The proceeds have been used to finance two offshore wind and two photovoltaic projects that, according to the issuer, help avoid 160,000 tCO 2 e1 – or tonnes of carbon dioxide equivalent – of emissions per year. Our private equity impact fund of fund strategy invests in a US company that converts unsold and undonated food from major food retailers into renewable fuels and nutrients for fertilisers. In 2022, its activities helped avoid emissions equivalent to those produced by 17,600 cars and avoid waste that could fill 17,000 rubbish trucks . Challenges to overcome, but progress is being made While impact investing is playing a role in solving major global challenges, we believe more private capital is needed to speed up the process: the Organisation for Economic Co-operation and Development has calculated that US$4 trillion per year of extra financing is required if the UN Sustainable Development Goals are to be achieved by 2030. What's more, impact investing faces challenges such as the need to overcome some investors' perception that it can be difficult to make a profit while making a positive impact. Another challenge is impact washing – when companies or impact investors claim to be making a bigger positive impact than is actually the case. Investors should know that impact investments involve not just financial risk, but also impact risk – that is, the actual impact may be higher or lower than that targeted. If it is lower, this is not necessarily a case of impact washing. Transparency is central to avoiding impact washing. The expected impact must be defined carefully at the outset as do the actions to achieve the target and measure the impact. Progress is being made with the development of tools and frameworks to help companies and investors report on standardised measures of impact. Examples include Iris+ from GIIN and the Operating Principles for Impact Management. Meanwhile, fresh approaches to help make a positive impact are being developed. One example is blended finance, which aims to attract private capital to impact projects that might otherwise be deemed to involve too much financial risk. Blended finance has the potential to play an important role in helping emerging markets move closer to meeting the UN Sustainable Development Goals. Berenice Lasfargues and Maxence Foucault are sustainability integration lead and ESG specialist – private markets lead, respectively, at BNP Paribas Asset Management
Forbes
28-03-2025
- Business
- Forbes
Reframing The Impact Measurement Conversation
Standardized impact measurement is key to advancing the flow of capital to impact. By Allison Boxer Over a plate of local Utah cookies in a sunny conference room of our new office space at the Impact and Prosperity Epicenter, the Sorenson Impact Institute's leadership team recently dove into the 2024 State of the Market report from the Global Impact Investing Network (GIIN). Our agenda was to analyze trends and implications for our work, but one topic, in particular, became the focus of extended debate and discussion: the purpose and value of standardized impact measurement. The persistent nature of the topic of standardization (it consistently ranks high on impact investors' list of frustrations, it seems) spurred this roundtable discussion. According to the GIIN report, investors face three main challenges with measurement: fragmentation of measurement frameworks, difficulty in comparing results, and verifying the impact data itself. Despite these challenges, the majority of investors (70%) are using generally accepted impact measurement frameworks such as IRIS+, SASB, GRI, and HIPSO. This presents a paradox: while a majority of investors are attempting to apply standardized frameworks, measurement-related challenges remain the most acute. So much so that 30% of impact investors are not using standardized methods at all. All of this helped us reframe how we think about impact measurement by recasting the broader conversation around why it's truly important and how it can best be accomplished, starting with this question: How can an impact investor standardize impact outcomes in a way that allows them to compare an organization's impact on kindergarten readiness with a different organization's impact on curbing deforestation? Or, for that matter, how would an impact investor standardize an organization's impact on kindergarten readiness in Canada versus another organization's impact on kindergarten readiness in Brazil? One colleague argued that, fundamentally, standardization leads to watering down metrics such that the measurement is no longer useful. Therefore, they concluded, the whole exercise of standardizing impact measurement is simply impossible to do in a meaningful way. A fair point. I took a hard line in the other direction. I argued that we have something to learn from the history of financial accounting and reporting, which we now consider highly standardized but was not even developed in the early 20th century (the Federal Reserve set the first standard in the United States in 1917, and auditing was mandated in 1933). Financial accounting and reporting have a lot more wiggle room than I think we choose to acknowledge. And financial accounting and reporting are only useful when the analyst knows the company's goals and strategy. I also argued that the goal isn't to standardize in order to compare all impact areas with each other. For example, I like what SASB has done by identifying what is material for any given industry, making it more of an apples-to-apples comparison, and only on relevant dimensions. Taking financial accounting and reporting as a case in point, much of financial analysis depends on the competitive set the analyst selects. For example, an exit multiple for a SAAS company is not determined by looking at the recent exit multiples of a tugboat company. But the truth is, I don't disagree with my colleague. The reality isn't nearly as binary as for or against standardization. Our discussion evolved. As an Institute dedicated to the growth of the market for impact, this is a key question. Capital markets need some way to measure and evaluate outcomes to allocate capital. So regardless of our ideological conversation, it's a necessary condition of capital flows. And as our goal in impact investing is to increase the flow of capital to impact, the GIIN data shows that forward movement in standardizing impact measurement is needed. That question was easier to answer, but it leads to other considerations, such as: Why do we care about standardization of impact outcomes, and when is it most helpful? A few notable benefits came up during our discussion. First, comparability allows capital allocators to more effectively identify and fund projects with the greatest potential for positive outcomes. This also enhances tradability. With comparable outcomes, investments become more liquid, which leads to increased market development. Standardization can also reduce due diligence burdens. Clear, standardized metrics allow wider participation from investors who might otherwise hesitate from uncertainty around impact data and more efficiency in deploying mission-aligned investments. For new and smaller entrants, turnkey frameworks and reports offer a significant advantage. Instead of developing custom measurement approaches, organizations can adopt established tools, skip that time-consuming and expensive hurdle, and accelerate their participation in the impact investing space. Furthermore, standardized metrics foster transparency and credibility. When consistent metrics are used, investors gain confidence in the legitimacy and effectiveness of impact claims, enabling a level of trust essential for the continued growth of the impact investing market. Lastly, standardization plays a critical role in policy setting. When outcomes can be reliably compared, policymakers are better equipped to assess program effectiveness and design incentives that guide capital toward the most impactful solutions. Standardization supports a more efficient and impactful allocation of resources by those who, though not subject matter experts, have enormous influence on the distribution of funds. After thinking through these benefits, we thought that rather than asking, 'Is standardization possible,' a better set of questions might be: In other words… As we start looking at this question, I go back to the SASB approach, which identifies material issues for each industry. This approach leads to standardization of organizations within a field rather than across fields. For example, one of my colleagues noted that in the climate space, impact measurement helps us evaluate opportunities on a global scale. Because climate represents a global crisis, it is helpful to know which interventions and which locations will produce better outcomes to prioritize investment. Targeting the most effective and efficient interventions will help us better address the crisis as a whole and save the planet sooner. However, this is not necessarily the case in early childhood development, where moving a dollar from India to Brazil is neither feasible nor objectively considered a better investment. While our round table conversation raised more questions than answers, these questions outline a pathway for new ways of thinking about impact measurement. Our goal is to reframe the broader conversation away from a binary argument by asking new and different questions. In our discussion, we felt it would be helpful to identify the potential criteria to make a field ripe for standardization. They should have: Using this list, fields that may be ripe for standardization of outcomes measurement and reporting could include climate change, public health, financial inclusion, and economic development. Fields where standardization may be less useful include early childhood development, community development and social cohesion, and policy advocacy. It's helpful to bring in the perspective of my colleague Dr. Nzinga Broussard, head of our impact measurement and management practice. She explains that she is less interested in standardized metrics themselves and more interested in a standardized approach to thinking about measurement that enables investors to better understand why and how outcomes measurement is determined. Dr. Broussard has observed that while some entities have notably attempted to standardize outcomes by converting them across organizations and fields into dollar values, those expected to implement the approach almost always push back. Their critique is that interventions that can be more easily monetized will inevitably attract greater investment even when they are not the only approaches meriting investment. Most impact professionals agree that impact is equal to breadth times depth. So the goal, Dr. Broussard explains, is to design a way to measure breadth and depth since these two dimensions define impact. We can easily calculate breadth, she points out. Measuring depth is harder. The way to develop effective impact measurement is to develop a framework around how to measure depth. In response to this challenge, Dr. Broussard advocates for monetization accompanied by a narrative so that benefits that cannot be monetized are not overlooked. Dr. Broussard's hybrid model brings me full circle to the example of financial reporting, which has coalesced over the past century into a standardized set of metrics and accompanying notes, sometimes hundreds of pages long. This data is extensive, and it creates a narrative that allows investors to find the nuance they need to make investment decisions. As with financial reporting, impact measurement and reporting will likely coalesce into a combination of standardization and nuance via narrative. By the end of our roundtable discussion, our team had shifted the conversation. Rather than a binary discussion about the merits of standardization across all industries, we sought to understand where standardized measurement and reporting would be most useful to address specific market challenges and how to identify boundary conditions for where standardization would be most practical. Our hope is that reframing in this way will similarly help the industry move forward in a way that helps investors feel more comfortable channeling capital to impact ends. Allison Boxer is the Managing Director of Impact Academics at the Sorenson Impact Institute and the James Lee Sorenson Presidential Endowed Chair in Applied Research. She leads all academic programming and program development related to Impact Investing and social impact. At the University of Utah's David Eccles School of Business she teaches the courses Social Impact Strategy and Innovation, Global Ventures, and Social Entrepreneurship, among others. Additionally, Allison leads strategic planning for the Business School as Strategic Advisor to the Dean of the David Eccles School of Business at the University of Utah.
