Impact investing continued to attract investors in 2020 as more people increased their awareness of climate change and social
challenges affecting people around the world. The Global Impact Investing Network describes impact investments as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”
According to a report released by the International Finance Corporation (IFC), impact investments reached a record $2.3 trillion globally in 2020. The IFC report noted, “Impact investing has seen a boost in popularity due to heightened awareness of social challenges such as unequal access to healthcare and racial and gender inequality, as well as increased attention to the effects of climate change.”
Companies with solid Environmental, Social, and Governance (ESG) practices outperformed their peers last year, leading to a shift in the way institutions invest.
Green, Social, and Sustainability Bonds also grew in popularity last year. Kenya welcomed its first green bond in January 2020 after Acorn Holdings listed the bond on the Nairobi Securities Exchange. According to the report by IFC, cumulative investments in green bonds have so far exceeded $1 trillion.
“There is still tremendous opportunity to bring impact investing to the next level. The pandemic shook society to its core, causing us to reconsider our values. Impact investing allows the opportunity to align assets with convictions, and we encourage more investors to become impact investors,” said John Gandolfo, IFC’s Acting Vice President, Economics and Private Sector Development and Treasurer.