Key Findings
Impact Investing
Though impact investing markets are now estimated at over 1 trillion USD, the general population is under-informed on, and often unaware of, impact investing as an investment option. The 2024 survey asked Members to dive into the case for impact investing, presenting questions centered on how we can collectively scale and ways to innovate and improve the field.
The Compelling Case for Impact Investing
When asked to articulate their most compelling case for impact investing, Members’ responses focused heavily on shifting narratives so there is no “impact investing,” only “better investing” across the markets as a whole. Some even expressed the need to “reframe all investing as impact investing. We need to consistently beat the drum that all of our investments have an impact.” This theme was echoed across multiple responses, emphasizing that all investments have some form of impact, whether positive or negative. Impact investing is simply recognizing that where money is invested has an impact and thus intentionally allocating funds in a way that helps drive positive outcomes.
Some Members considered impact investing a form of fulfilling our human and moral obligations to help create a better world. Even with over $1T USD deployed into the field of impact, participants expressed that, “More capital is needed to create the world we want than philanthropy can ever unlock.” Because of the influence of the capital markets, one respondent added,“impact capital can steer social entrepreneurs and governments to advance socially responsible initiatives that reduce the overall societal costs of negative behaviors and endeavors.” Another participant argued, “If we want to have a more equal and just world, we have to take Impact into every investment decision.” Responses reflected a growing sense that government and philanthropy, working together, have a better chance of overcoming the challenges they have been less effective at combating independently.
“Inaction is no longer an option if we have any consideration for what happens to society over a medium- to long-term horizon, which is only a matter of years not decades.”
– Survey Respondent
Another recurring sentiment posited that social and environmental issues are complex and multi-faceted, and require creative uses of capital, in particular blended capital solutions, one Member stating, “No one type of capital can provide everything that’s needed at every point in time. We need capital to take risks and innovate new technology and markets, to build and strengthen new businesses and institutions, and to sustain and evolve key players over time.” Multiple responses highlighted the positive influence impact investing can have on job creation, small business growth, workforce training, healthcare, and education.
Some expressed concern regarding the pace at which impact investing is adopted into the mainstream, noting the “existential threat to [Gen Y and younger’s] quality of life and well-being if the SDGs are not addressed.”
One Member expressed, “The social and environmental issues confronting people and the planet – everywhere in the world – are too big to ignore. Inaction is no longer an option if we have any consideration for what happens to society over a medium- to long-term horizon, which is only a matter of years not decades. Impact investing is an invitation to deploy financial resources to contribute to the solutions that can chip away at the significant social and environmental threats to lives and livelihoods. It is an opportunity to use finance for good.”
These uncertainties, although acknowledged, seemed to coincide with, and perhaps even fuel, an overall determination to push impact investing to the forefront. “Capitalism is a reflection of human nature, and impact investing is an expression of our best tendencies. We can solve the pressing challenges that confront us – but we need concerted, coordinated action to do so,” said one respondent.
“Capitalism is a reflection of human nature, and impact investing is an expression of our best tendencies. We can solve the pressing challenges that confront us – but we need concerted, coordinated action to do so,”
– Survey Respondent
Collaborative Scaling and Accelerating of Impact Investing
In order to scale impact investing to have a significant influence on social and environmental outcomes, the survey asked how to collectively scale or accelerate impact investing. The most prominent suggestions were enhanced policy and regulation frameworks, alternative systems and structures to increase implementation, and improved marketing and education.
As Members emphasized in their responses related directly to public policy and impact, respondents largely believe governments and policymakers are a vital component to scaling and accelerating impact investing. Responses made the case for clear, supportive, and actionable policy that incentivizes the adoption of impact investing into more consistent practice. Participants mentioned legal frameworks, tax exemptions, and impact-related requirements tied to subsidies as possible regulatory incentives.
When asked which had the highest potential to improve innovation within the impact field, improved public and private collaboration and policy was the leading response by 44% of participants. Multiple responses highlighted how regulatory levers have already contributed to getting the field to this point.
View all respondent data
Improved Public + Private Collaboration and Policy (44%)
Use of Technology Innovation (eg. AI) (22%)
New Models for Deploying Capital (18%)
Other (Please Specify) (11%)
Developing-Country Economic Empowerment (2%)
Education for HNW and Next Gens (2%)
Responses also highlighted that working with government and policy should not mean making impact investing political: “Together, we collectively accelerate impact investing through a combination of private-sector action and public-sector incentives and requirements. We have seen the field grow over the last few years thanks to those drivers. Recently, the anti-ESG and anti-DEI movements have threatened ESG and impact investing. It’s important for the field to work against the politicization of our work.” Public and private collaboration toward regulatory improvements helps bring about new systems and structures for increased implementation.
“Recently, the anti-ESG and anti-DEI movements have threatened ESG and impact investing. It’s important for the field to work against the politicization of our work.”
– Survey Respondent
Examples of regulatory influence on systems for implementation included broadening the definition of fiduciary duty to include social impact, requiring impact investing on pensions, mandating impact activities within mergers, and “[forcing] the issue with endowments, pension funds, mutual funds, and other large institutional investors that manage our collective money.” Multiple responses discussed the need for standardized impact measurement frameworks that could help demonstrate the utility of impact investing. One participant suggested that “creating a system of empirically quantifiable impact measures that increases market confidence in outcome measures will draw more impact capital to the impact sector.” Similarly, some participants called for simplified, standardized reporting requirements to ensure showcasing impact would be more effective.
Impact storytelling, whether through reporting, marketing, or educating, was among the most frequently mentioned strategies for scaling and accelerating impact investing. Responses repeatedly focused on combating the perception that impact investing must rely on concessionary returns. “The Double Bottom Line thesis has been proven out through successful early investments in climate technology like solar and EVs: non-concessionary financial returns are achievable and made possible by investments in companies that have impact as core to their business, while top-tier market performance is one of the most effective ways to scale impact solutions,” explained one Member.
Respondents cited multiple examples that can showcase impact investing’s proven track record. One participant shared, “A recent one is the SDG Loan Fund that was catalyzed by the MacArthur foundation. In that case, a $25 million loan guarantee helped create a fund of over $1.1 billion to address 3 SDG’s in emerging markets.” Responses also included the rise in private equity impact funds, the current figures on impact investment capital, and successful investments in early childhood programs, as ways to make the case for impact investing.
“Non-concessionary financial returns are achievable and made possible by investments in companies that have impact as core to their business, while top-tier market performance is one of the most effective ways to scale impact solutions,”
– Survey Respondent
Finally, results emphasized educating everyone, from practiced, long-time investors to those just embarking on their investment journey. Responses called for demystifying impact investing so that a larger audience is aware of the purpose and potential of investing driven by impact. Some specified that the field should focus on educating practitioners who can better advise their clients. Others detailed the need for individuals to become more educated on how their investments are deployed. “With choice and proper advice, more capital would be allocated from asset owners to fund managers specializing in this space. There is no shortage of investable deals/funds/companies, just a shortage of capital that has a specific mandate by clients to invest in this space,” voiced one participant. Many suggested that a key to informing more investors on the opportunities within impact investing is simply a matter of persistent, loud, and intentional advocacy for leveraging funds for social benefit by those already deeply engaged in the work.
Keep Reading: Conclusion
Explore the Report
Foreword by Senior Fellow Rob Brown
History and Purpose
Key Findings:
– United Nations Sustainable Development Goals
– Public Policy and Impact
– Impact Investing
Conclusion
