Impact investing areas to watch
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Impact investing areas to watch

7th March 2022

With a total market size of around $715 billion, it’s fair to say that impact investing across private markets has gained significant traction in the last few years.

The reasons behind this momentum are quite straightforward. Not only are impact investments beginning to show greater transparency in the financial returns they can offer, but they also enable investors to align their portfolio to their personal values and invest in businesses that will have a positive impact on society and the planet. While renewable energy and climate change might be some of the more commonly-known investment areas, the impact investment sector itself is broad. Here are three impact investing areas to watch.

Waste and water management

With global economic return on sanitation set to be $5.5 per US dollar invested, waste and water management is an attractive long-term investment for investors’ portfolios.

Water-related Sustainable Development Goals (SDG6, SDG14) can sometimes be overlooked. Yet, with 4.5 billion people living without suitable sanitation services and 2.1 billion people unable to access safely managed drinking water, they should be at the forefront of investors’ minds. Clean water is a basic human right, helping to prevent disease, increase education and improve people’s health. As water scarcity can lead to long-term social, political and economic consequences, investors will be deploying capital to much needed solutions that have the potential to transform the way of life for people living in some of the world’s most deprived regions. 

Therefore, impact investors can look to water and waste management as a means of achieving longevity, whilst also meeting their ESG goals. 

Agritech

Agriculture could be argued to be one of the most stable and predictable markets for investors. The reason is simple: as the world’s population grows, so does the need for food. 

Agriculture technology, or Agritech, refers to the use of technology in farming, with the aim of improving yield, efficiency and profitability for growers and farm managers. With the global population projected to continue growing for much of the next century, the traditional way of farming is no longer sustainable, let alone scalable. 

Agritech is an appealing sector for investors as it conforms to an impressive nine SDGs, each of which would benefit from the development and investment into Agritech. As wealth shifts from Baby Boomers to Millennials and Gen Z, these generations are actively seeking to support or invest in companies with these values in their business models. 

Healthtech

If the past two years have shown us anything, it is a new appreciation for health services. With the pandemic highlighting the importance of vaccine development and innovation, technology-enabled healthcare products and services have received a boost in investments.

The healthtech industry is broad – from remote patient monitoring to artificial intelligence – and investors have ample opportunities to deploy capital to a sector that is predicted to grow by 14% in the next 12 months. The case for healthtech is strong; healthcare companies with a strong technology element to their proposition are valued at 17.1 times earnings versus an average of 14.9 times across the wider industry

While the adoption of technology in healthcare has traditionally been slower than other sectors for reasons such as data compliance, healthtech is beginning to take off with a record breaking £38.1bn invested globally in 2021, a 280% increase on 2016 levels. The adoption of, and investment into, healthtech can result in substantial benefits, such as the production of new drugs and treatment procedures as well as improving the quality and efficiency of care.

A new wave of impact related investment opportunity

As highlighted, waste and water management, agritech and healthtech are just three of the opportunities available to investors who want to meet their ESG and SDG goals whilst achieving sustainable financial returns. 

Here at Delio, we’re proud to be working with a number of impact organisations that are changing the way in which capital is used for social and environmental benefits. For example, we have partnered with Barclays to power Impact Agora, an institutional marketplace for impact investing opportunities. We have also worked with Future Planet Capital to provide the technology and expertise that enabled their clients to co-invest in previously inaccessible opportunities in the biotech sector.

If you would like to find out more about our agile technology and how it can support your private market impact investing proposition, please get in touch.

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