As much as 10 percent of the US$269 trillion of investable financial assets around the world could be tapped for social impact, according to a new study from the International Finance Corporation, the private sector arm of the World Bank.
The IFC estimates that appetite for impact investing, where capital is deployed for both social and financial return, could be up to US$21 trillion in public markets, with a further US$5 trillion in private equity, debt and venture capital. Currently, around US$71 billion is invested in private impact funds, with a further US$700 billion deployed through development finance institutions, and US$400 billion through green and social bonds, the IFC said.
The IFC has established a set of “operating principles”, developed with fund managers and DFIs, to harmonise standards around impact investing and lower the barriers to entry for the sector. Sixty investment groups have signed up to the new code, including major international fund managers such as AXA Investment Managers and BNP Paribas Asset Management, and banks including Credit Suisse and UBS. Collectively, they represent around US$350 billion in assets managed in impact investment funds and instruments.
“We believe there is now potential to bring impact investing into the mainstream,” said IFC CEO Philippe Le Houérou. “Our ambitions are very high—we want much more money managed for impact because there’s no time to lose to deliver on the billions to trillions agenda.”
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