Until now, there has been no good answer to the question, “How big is the UK impact investing market?” The Global Impact Investing Network (GIIN) 2020 Annual Impact Investor Survey estimated the impact investing sector to be at $715 billion globally but could not give a clear sense of the UK’s contribution to the global picture. Big Society Capital’s rigorous UK annual social investment market sizing speaks to the social investment part of the impact investment market but not the whole. Our aim was to provide an answer to this question.
What are we doing to achieve it
Working with our research partners, the professional services firm EY, we have developed a methodology for suitably sizing the UK impact investing market and baselining its size. Working across the impact investment field we obtained data and insights from asset owners, asset managers and industry stakeholders to develop a picture of where the market is today.
Our report, “Estimating and describing the UK impact investing market” is the culmination of these efforts and contains, for the first time, an estimate of the UK impact investing market in its totality. Below is a summary of the reports key findings:
- The UK impact investment market was worth an estimated £58 billion in 2020.
- The UK market represents an estimated 3.3-8% of the total global market.
- Social investors, private equity and venture capital firms and foundations were identified as the leading impact investors in the market today. Institutional investors, were identified as the primary drivers of future growth.
- Despite the rapid growth in the market, impact investing today still accounts for less than 1% of total AUM in the UK.
The report also incorporates insights from surveys of more than 40 market participants and 20 interviews with relevant industry bodies and subject matter specialists. Key findings from this study include:
- 97% of survey respondents held the view that over the past two years asset allocation to impact had increased.
- 64% predicted 10% annual growth in funds flowing to impact investments with 36% forecasting above 20% a year.
- Healthcare, affordable and clean energy, and sustainable cities and communities are the top focus areas for investment.
- Approximately 90% of the survey respondents reported that 2020 returns were either in line with or exceeded their targets.
- 75% of survey respondents are planning to increase their allocation to impact by more than 10% in the next five years. Applying a weighted average of all respondents to current estimated impact AUM results in a potential 15% growth, which would double funds allocated to impact to £100 billion in five years.