The impact investing industry is often perceived as being fairly young, even though it has been around for quite a while. Triodos Investment Management, for example, has been an impact investor for more than 25 years. This image of being the new kid on the block creates quite a few misconceptions. Not being able to realize competitive returns with impact investing is an often-heard misconception. Or even worse, being seen as a form of investing similar to philanthropy. We are pleased that studies such as the Impact Investing Benchmark can shed light on the reality of impact investing and show that it is possible to realize competitive market-rate returns in comparison to mainstream investing. Even though impact investing is becoming more and more popular among investors, these types of benchmark studies can give our sector an extra boost and help take it to the next level. 

Another interesting conclusion of the benchmark is the importance of manager selection. For all investment activities manager selection is key for managing risk and obtaining competitive returns. An experienced fund manager can truly make a difference. While we primarily invest directly in sustainable companies and projects, the same principle applies to Triodos Investment Management. We have a dedicated team of investors who are experts in the sectors we invest in and regularly visit the entrepreneurs in our portfolios. By doing this we build sustainable and long lasting relationships with our investees, which contributes to maximizing their impact. In our opinion, long experience and extensive knowledge of impact investing not only generates significant value to the realized impact, but also to the realized returns. We are pleased that this is validated by the study. 

Although it is a helpful and welcome study, we regret that it focused solely on private, closed-ended funds and that public, open-ended funds were excluded. As an impact investor with almost 70 percent of its assets under management coming from individual investors, we believe that this study could have been even more influential if it had covered public funds that are accessible to individual investors as well. We see a growing interest in impact investing among individual investors. As an industry we have the possibility of playing a catalyzing role in the much-needed transition to a more sustainable society by facilitating individual impact investors. More research like this benchmark that includes public, open-ended funds can help inform individual impact investors. 

These types of studies are also important for influencing government decision makers who regulate the financial services industry. Last year we published a blueprint for retail impact investing, which concluded that although a large proportion of individuals and financial advisors are interested in impact investing, only a very small portion are able to access them. The key market barriers are retail financial regulations and a lack of tax incentives. In the report we proposed that governments, regulators, investor groups, intermediaries, and the impact investment community join the debate on how to develop an inclusive impact investment market. A benchmark study that includes open-ended funds accessible for individual investors would provide beneficial input for this debate.   

This benchmark plays an important role by contributing to the unraveling of some of the misconceptions that surround impact investing, such as the belief that impact investing necessitates concessionary returns. We hope that this benchmark and similar studies will help the impact investing industry continue to grow and lead to creating a fairer, values-based, and transparent financial sector. 

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