Impact investing – viewed as a luxury asset class in some quarters; an untested one in others – seemed a likely victim of a flight to safety in private markets.
Recent evidence points to the contrary. Bain Capital collected $800 million for its second Double Impact fund in November, more than twice the size of its 2017-vintage predecessor, Private Equity News reported. At least eight impact funds have held final closes in 2020, raising at least $3 billion collectively, according to PEI data.
Brookfield Asset Management tapped former Bank of England governor Mark Carney in August to help raise and lead its debut impact investing fund. The firm expects impact to become a $100 billion strategy over time, chief executive Bruce Flatt told investors recently.
Impact is becoming mainstream, as Private Equity International found in its recent Impact Investing Report 2020. The Global Impact Investing Network has grown from just a handful of members in 2009 to more than 300 investors managing more than $303 billion of capital today.
That the asset class remains active at a time of major dislocation – when LPs could reasonably be expected to double down on their safest bets – shows that investors’ focus on meaningful non-financial outcomes from their investment has not been obscured by the pandemic.
One specific area where this is pronounced is climate change. In our upcoming LP Perspectives 2021 Study, out next week, over a fifth of investors say GPs are not taking the risks of climate change seriously enough in their own investment policies and practices.
GPs, meanwhile, are making more of an effort to signal their intent when it comes to the climate. Last week, five private markets giants, including Ardian and Carlyle Group, launched the One Planet Private Equity Funds Group to share knowledge on climate-related risks and “improve the resilience” of long-term investment portfolios. The devil will be in the detail, none of which can come too soon, as our colleagues at Infrastructure Investor argued this week.
Whether it is investing with purpose, or thinking smartly about the environment, investors’ good intentions do not appear to have suffered amid this year’s shifting priorities.