Impact investing could become too big for its britches.
In the seventh Annual Impact Investor Survey by the U.K.-based Global Impact Investor Network (GIIN), impact investors expressed concern that the size of the impact investing industry could harm their ability to target investments that could make social or environmental change.
As large-scale firms enter the space, 71 percent of the survey’s respondents said that impact investments could suffer from mission drift or “impact dilution.” Half of the survey’s participants also were worried that capital could start to shift away from smaller intermediaries as larger companies start to dominate.
“We need to explore approaches to protect the integrity of the industry and keep impact at the forefront, while also welcoming new entrants,” said the report. “The GIIN’s vision of the market is not to integrate impact into traditional capital markets, but to integrate the capital markets into the global pursuit of social and environmental progress.”
As impact investing grows as an industry, the GIIN’s respondents expressed concern about the lack of appropriate capital across the risk eturn spectrum, and scarcity of exit options.
As a result, some impact fund managers told surveyors that they were having difficulty raising capital – 73 percent of the developed market-focused fund managers said that they were having difficulty raising capital due to investors’ liquidity concerns.