Amsterdam, January 31, 2023: Phenix Capital Group has released today its Impact Fund Universe Report 2023, which reveals that impact investing is a steadily growing investment industry. The 4th edition of Phenix Capital’s Impact Fund Universe Report shows that, until the end of 2022, €539 billion had been already committed to more than 2,200 impact investing funds, cumulatively.
Impact funds have attracted, to date, capital commitments of €278 million on average, which is 187% greater than it was in 2021. The total number of impact funds has increased by almost 12% and the total capital committed to impact funds has increased even more - almost 13%.
Even with a backdrop of continuing economic, social and geopolitical challenges exacerbated by the pandemic and the war, impact investing continued to regain ground in 2022. The escalation of the energy crisis and food security risk drives greater allocations towards SDG 7 (Affordable and Clean Energy) - and displaces Climate Action as the Sustainable Development Goal with the greatest cumulative capital allocation in 2022.
- Around 70% of asset movements into real assets went into infrastructure structure funds that raised €127 billion.
- There are currently 889 impact funds raising capital, with an average target size of €350 million per fund.
- There were 130 new impact funds launched in 2022 - with 54% of them investing in private markets, which is the most prominent asset class in the database.
- Regional and local impact rather than global mandates were the focus of new fund launches for the year.
Effects of the war
Meanwhile, the war on Europe’s doorstep showed a discernible trend of money away from climate mitigation towards impact funds financing the energy transition/clean energy (SDG 7) and investing in agriculture and sustainable food production (SDG 2) - asset growth of €255 billion and €117 billion, respectively.
That means access to food, foodtech (smallholder farming and sustainable agriculture and farming) saw assets in SDG 2 grow by 318% in 2022, while climate-focused funds (SDG 13) raised only €99 billion in 2022 (a considerable decrease, compared to the €259 billion raised in 2021).
“Rapidly rising energy prices escalating cost of food have affected the most vulnerable, who are struggling to pay their heating and grocery bills. This has been reflected in the changing flows towards energy and food related Sustainable Development Goals (SDGs)”, highlights Dirk Meuleman, Chief Executive Officer, Phenix Capital Group.
“The energy transition is still a major focus for impact investors, and will continue to be so throughout 2023. The European Commission’s plan to reduce dependence on Russian fossil fuels includes measures to fast forward the green transition”, adds Meuleman.
In addition to top-down data from Phenix Capital’s Impact Database, the report also features one interview with Brunno Maradei, Global Head of Responsible Investment at Aegon Asset Management, which is an active global investor managing and advising on assets of U$299 billion (as at September 30, 2022).
Maradei talked, among other things, about the hurdles the industry needs to overcome before impact investing can become the main form of investing:
“If, as a society, we do not reduce our spending on certain activities, institutional investors will continue to be required to capture the returns from those activities,” he alerts.
The report also brings a timely and strong opinion piece by Hadewych Kuiper, Managing Director of Triodos Investment Management, and Hans Stegeman, Chief economist at Triodos Bank.
Kuiper and Stegeman discuss the importance of disclosing the negative impact of dirty funds:
“Dirty investment funds do not have to give any warning about the damage that they are inflicting on natural capital or, for instance, on biodiversity. Funds that claim to be sustainable, on the other hand, do need to show explicitly what that claim is based on. It is high time to repair this flaw because every investment has impact and most of the time this impact is not positive”, they emphatically argue.
Read the full report and discover free data from Phenix Capital’s Impact Database, the database of impact investments and impact funds worldwide.
About Phenix Capital Group
Phenix Capital Group is an impact investment consultant that enables institutional investors to make impact investments. Founded in 2012, the company has been dedicated to building a solid knowledge base of the impact investing industry, educating asset owners, and catalysing institutional capital to impact investing.
About the Impact Database
Phenix Capital Group’s Impact Database provides investors with access to and intelligence on the impact fund market opportunities available to them. The Phenix Capital’s Impact Database has been tracking the allocation of capital to impact investing since 2015, and now includes new data sets of outcome-based investable themes mapped against the Sustainable Development Goals (SDGs).
The Impact Database includes a detailed overview of more than 2,200 impact funds. Three main variables are used to construct, monitor and update the dataset: 1) funds considered to have an impact proposition; 2) institutional scale, and 3) target market-rate returns.
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