Impact insights #6

Welcome back to the ESGI Horizon Newsletter! Today, we’ll dive into the latest GIIN report on the size of the impact market. Then we’ll look at some News & Trends in the context of the ongoing COP29 in Baku and lastly finish with some exciting impact deals.

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Focus Article:

🌍 The Global Impact Investment Network (GIIN) Sizing the Impact Investing Market 2024 report estimates that over 3,907 organizations currently manage $1.571 trillion in impact investing assets under management (AUM) worldwide.

The report shows impact investing is on a fast track:

• $𝟭.𝟱𝟳 𝗧𝗿𝗶𝗹𝗹𝗶𝗼𝗻 𝗔𝗨𝗠: More capital is going toward sustainable solutions aligned with the SDGs with impact assets showing a 𝟮𝟭% 𝗮𝗻𝗻𝘂𝗮𝗹 𝗴𝗿𝗼𝘄𝘁𝗵 𝗿𝗮𝘁𝗲 over five years among repeat organizations.

• 𝗛𝗶𝗴𝗵 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲: 𝟵𝟰% 𝗼𝗳 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 report meeting or exceeding both financial and impact goals—a win-win for returns and positive impact.

• 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝗮𝗹 𝗜𝗻𝗳𝗹𝘂𝗲𝗻𝗰𝗲: Big players like pension funds (𝟮𝟵%) and insurers (𝟭𝟵%) are leading in AUM, channeling capital into climate resilience and social development.

• 𝗚𝗲𝗼𝗴𝗿𝗮𝗽𝗵𝗶𝗰 𝗚𝗮𝗽𝘀: North America and Europe hold 𝟴𝟬% of AUM, while emerging markets get just 𝟱%. More funds here could bridge the $𝟰.𝟮 𝘁𝗿𝗶𝗹𝗹𝗶𝗼𝗻 𝗦𝗗𝗚 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗻𝗴 𝗴𝗮𝗽.

• 𝗚𝗿𝗼𝘄𝗶𝗻𝗴 𝗗𝗶𝘃𝗲𝗿𝘀𝗶𝘁𝘆: Now, 𝟯,𝟵𝟬𝟳 𝗼𝗿𝗴𝗮𝗻𝗶𝘇𝗮𝘁𝗶𝗼𝗻𝘀—including new investment managers—are investing in impact.

• 𝗣𝗼𝗹𝗶𝗰𝘆 & 𝗔𝗱𝘃𝗼𝗰𝗮𝗰𝘆: Initiatives like the U.S. Greenhouse Gas Reduction Fund and consumer demand are driving capital toward impact solutions.

• 𝗧𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝗰𝘆 𝗕𝗼𝗼𝘀𝘁: Regulations like the EU’s SFDR push for greater transparency and accountability in sustainable investing.

  
  🌱 As impact investing grows, so does our power to drive meaningful change. Contact ESGI Horizon to better understand, measure and report your impact!

News & Trends

• 🌍 A central objective of the COP29 summit in Baku (11-22 November) also called the "finance COP" is to decide who pays the trillions of dollars developing countries need to shift to green energy and adapt to climate change. The summit in the petrostate host nation is however overshadowed by controversies during its opening days, concerns about Argentina and the USA quitting the Paris agreement as well as the absence of more than half of the world’s leaders. This includes the absence of Biden, Xi Jinping, von der Leyen, Macron, Scholz, Modi, Lula, Putin and Starmer, representing some of the world's largest economies and top carbon emitters, while at least 1,773 coal, oil and gas lobbyists have been granted access to COP29 raising concerns about the potential purpose and outcomes of the conference. We will look at the progress made during this COP in the next newsletter!

  

  World leaders at COP29

• 🔋 The IEA’s annual renewables market report predicts that renewables will account for almost half of global electricity generation by 2030, from around 30% today. Currently more than a dozen countries already produce more than 2/3 of their energy with renewable energy and this number is expected to rise to over 20 countries. The report notes that in order to integrate these high shares of variable renewable energy nations will need to invest deeper in battery storage, transmission infrastructure, and demand-response programmes.

  

  This figure does not include countries like Buthan, Iceland, Scotland, Paraguay, Uruguay and Colombia that are already producing more than 2/3 of energy from renewables. It also does not take low carbon nuclear energy into account.

• 🎯 Acccenture’s Destination Net Zero report examines the world’s 2000 largest companies by revenue (G2000), focusing on their decarbonization efforts and progress toward achieving net zero. Only 55% of the G2000 with emissions data reported lower Scope 1 and 2 emissions totals than in 2016. Alarmingly only 16% of G2000 companies with emissions data are on track to reach net zero in their operations by 2050 (down from 18% in 2023). The large emitters are least likely to be on track (6%) while small emitters are most likely (36%).

  

Latest Impact Deals

• The World Bank Raises $900 Million in 10-Year Sustainable Development Bond, to support the financing of World Bank’s sustainable development activities in its member countries. The bond offers an annual coupon of 4.25% and increased from the original $630 million to $900 million, showcasing robust investor interest.

• The Climate Investment Funds launched a Clean Energy Bond Program on the London Stock Exchange aiming to raise up to $75 billion to finance clean energy projects in developing nations.

• The Asian Development Bank has launched its inaugural bond focused on biodiversity and nature to fund projects in Asia and the Pacific. The $100 million bond acts as a key vehicle to mobilize private capital in support of the United Nations Sustainable Development Goals while offering investors with a safe and attractive investment opportunity.

• Tozero, a Munich-based battery recycling startup, has raised €11 million in an oversubscribed seed funding. The two-year-old startup, was the first to ever deliver recycled lithium for end products in Europe. The global demand for lithium is expected to quadruple by 2030, driven by the growth of electric vehicles and renewable energy storage needs.