The financial benefits from sustainability have also created a new class of investors, specifically those who chose to support businesses that abide by ethical and moral standards having to do with the environment and society. Corporate sustainability has become a main drawing point for such investors, and it will be even more important moving forward, new research says.
Impact investing to reach $9 billion
According to "Perspectives on Progress" released by J.P. Morgan and Global Impact Investing Network, impact investing is expected to grow 12.5 percent to $9 billion in 2013. Impact investing is defined as investments made into corporations and organizations with the intention of generating measurable social and environmental impact, along with the expectation of financial return.
In a survey of 99 investors that manage at least $10 million in capital, researchers found such investors had already contributed $8 billion in impact investments during 2012. Respondents planned on committing an average of $25 million in impact investments in 2013.
Diverse sectors benefit from impact investing
Research found that impact investors were increasingly allocating resources to companies and industries outside of finance. Overall, 86 percent of investors said they focus on multiple sectors. Fifty-seven percent of impact investors committed funds to the food and agriculture sector, 51 percent to healthcare, 44 percent to housing, 43 percent to energy and 36 percent to water and sanitation.
Investors are also seeing returns: 64 percent of respondents said at least one of their impact investments significantly outperformed financial expectations while also delivering the expected environmental and social impact.
"[W]e are especially encouraged by the findings in this survey .. [that] investors' portfolios are meeting financial expectations in addition to social and environmental expectations," said Yasemin Saltuk, director of research for J.P. Morgan Social Finance and co-author of the report. "The findings from this report are insightful and we are optimistic for the continued growth in investments that have a positive social and environmental impact."
Additionally, impact investors follow up on what they're money is doing to spur change: 96 percent measure the environmental and societal impact of their investments using standardized metrics.