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The Impact Investing Market size is forecast to increase by USD 1,041 billion, at a CAGR of 25.78% between 2023 and 2028. The growth of the market depends on several factors, including an increase in awareness regarding social and environmental challenges, government support and policies to promote impact investing, and the rise in investment into renewable energy. The growing awareness of social and environmental challenges is a major driver of market growth. Businesses and communities are recognizing their environment and seeking sustainable solutions. In retail, eco-friendly materials are gaining traction, while the energy sector shifts to renewables for both ecological and economic benefits. Corporate social responsibility efforts and individual actions further contribute to the rise of impact investing, fueling market growth.
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Impact investing continues to gain momentum, driven by growing interest from financial advisors, wealth managers, and fund managers. Private foundations and family offices are increasingly allocating capital towards sustainable practices and social impact funds. The rise of Generation Z investors is influencing the demand for investment products that align with their values. Trends indicate a surge in green bonds and sustainable ETFs as investors seek financial gains alongside positive social and environmental impact. However, challenges persist, including the need for data-driven decisions, defining metrics, and overcoming regulatory hurdles in the investing landscape.
The increase in millennial impact investing is a key trend in the market. A commonly seen trend is that millennials are opting for impact investment to ensure that their investment aligns with their key values and advances social and environmental progress. This is largely due to higher social consciousness, wanting one's investments to have a positive impact on the world and the planet and viewing it as a means to create systemic change. For example, Jessica Alsford, a managing director at Morgan Stanley and head of global sustainability research, established the bank's sustainable investing team, which identifies companies that are addressing social and environmental challenges, such as renewable energy and sustainable agriculture. She believes this could urge companies to become more sustainable and socially responsible.
Furthermore, millennials are also using alternative models of investing, such as crowdfunding platforms that allow individuals to invest in social enterprises and impact funds. Investors can opt to invest in companies that focus on issues and causes that they can identify with and want to support, such as climate change, sustainable agriculture, and access to healthcare. Thus, such factors are expected to fuel the growth of the global market during the forecast period.
The limited understanding of impact investing among investors and the general public is challenging market growth. This is primarily due to a greater understanding of traditional investment approaches such as stocks, bonds, and mutual funds that prioritize financial returns over positive social or environmental impacts and may not emphasize the need for social responsibility. Hence, investors may be skeptical about the potential benefits of impact investing and may view it as a less profitable approach to investing.
Additionally, a lack of awareness of impact funds that invest in environmentally beneficial projects such as renewable energy, sustainable agriculture, or affordable housing makes investors miss out on investing in these projects and serves as a hindrance in creating a sustainable future. Thus, such factors are expected to hinder the market's growth during the forecast period.
The market research report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Bridges Fund Management Ltd. - The company offers impact investing services such as Sustainable Growth Funds for impact investing in areas like renewable energy and affordable housing.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companieshas been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companiesas pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companiesas dominant, leading, strong, tentative, and weak.
Impact investing has gained prominence as a strategy that aligns financial gains with philanthropic donations and social or environmental objectives. It encompasses various players such as financial advisors, wealth managers, and fund managers who assist in directing investment capital towards sustainable practices and social impact funds. Private foundations, family offices, and financial institutions are pivotal in deploying capital into asset classes that generate positive social or environmental impact alongside financial returns. Generation Z investors, driven by values, seek sustainable ETFs and green bonds, contributing to the growth of impact investing. With data-driven decisions and incentives, impact funds aim to address global challenges while fostering economic development and social progress.
The institutional investor segment is estimated to witness significant market growth analysis during the forecast period. These investors are financial companies or institutions that manage large pools of money on behalf of investors, such as pension funds, insurance companies, and sovereign wealth funds. A noteworthy example of such an institutional investor in this market is the Calvert Foundation, which oversees a community investment note program that permits investors to make investments that target social and environmental benefits. Individuals can choose to invest in a variety of areas that include affordable housing, microfinance, and community development.
The institutional investor segment was the largest segment and was valued at USD 176.90 billion in 2018.
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In November 2022, the International Finance Corp (IFC) declared an investment of USD 1.1 billion to build the largest solar plant and wind farm in Egypt, which will help it achieve its renewable energy capacity targets and reduce its carbon footprint. However key challenges they face include difficulty in measuring impact, often long-term, higher risk, and greater due diligence compared to traditional investments. Thus, the institutional investors segment is expected to witness moderate growth in the global market during the forecast period.
Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. North America plays a vital role in the global market with investors recognizing its potential for both environmental and financial returns. The investment strategies and innovative solutions it implements are creating remarkable changes.
North America is estimated to contribute 57% to the growth of the global market during the market forecasting period.
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In the renewable energy sector, investors are prioritizing the creation of sustainable energy solutions that mitigate the climate change impact while also gaining significant financial returns. Additionally, North America has also been at the center of investing in the technology sector with various investors identifying the potential of investment in socially innovative technology start-ups. As a result, the region has innovated a variety of innovative technologies that tackle some of the most urgent social issues and challenges. Besides, impact investors have also driven significant changes in the educational landscape of low-income communities by improving access to education and financing innovative solutions in this sector. The above-mentioned factors are expected to drive the growth of the regional market during the market forecast period.
The market report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments
Impact investing is a financial strategy that blends traditional investment practices with philanthropy to achieve positive social or environmental outcomes. It involves individual investors, private equity, and debt firms directing capital towards real assets and initiatives like microloans and impact funds. Hedge funds and investor networks also play a role in funding microfinance loans and providing startup capital in emerging nations. ESG factors guide investment decisions, ensuring ethical governance and addressing issues like carbon emissions and pollution. Green investing attracts younger generations like Gen Z, who prioritize environmental health and societal well-being. Through transparent practices and investments in areas such as clean energy and affordable housing, impact investing aims to drive positive change while delivering financial returns.
Market Scope |
|
Report Coverage |
Details |
Page number |
159 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 25.78% |
Market growth 2024-2028 |
USD 1,041 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
19.03 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 57% |
Key countries |
US, Canada, Germany, China, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Aavishkaar Group, Acumen Fund Inc., Apex Group Ltd., Bain Capital LP, BlueOrchard Finance Ltd., Bridges Fund Management Ltd., LAVCA, LeapFrog Investments Group Ltd., M and G plc, Manulife Financial Corp., Morgan Stanley, Omidyar Network Services LLC, Reinvestment Fund, Root Capital Inc., Sarona Asset Management Inc., The Goldman Sachs Group Inc., Triodos Bank N.V., Unitus Capital, Vestergaard Sarl, and Vital Capital |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Sector
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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