Introduction

The report examines the extent to which impact investing is becoming integrated into mainstream financial markets. It focuses on market growth, investor behaviour, institutional adoption, and the systems required to support scale while maintaining impact integrity.

The state of impact investing

Impact investing continues to expand, with assets under management increasing steadily over recent years. The report notes growing participation from asset managers, superannuation funds, development finance institutions, and private investors. Impact strategies are increasingly applied across asset classes, including private equity, private debt, listed equities, and fixed income.

Drivers of mainstream adoption

Key drivers include heightened awareness of social and environmental risks, regulatory developments, and beneficiary demand for responsible investment. Improved data availability and the alignment of impact objectives with long-term financial performance are also contributing factors. Institutional investors are increasingly embedding impact within portfolio construction rather than treating it as a niche allocation.

Measurement and standards

The report highlights progress in impact measurement and management, including wider use of recognised frameworks and metrics. However, inconsistency in methodologies remains a constraint. Limited comparability of data and varying definitions of impact reduce confidence and increase due diligence costs. The report stresses the need for clearer standards and better integration of impact data into investment decision-making.

Capital allocation and market infrastructure

Capital is increasingly directed towards themes such as climate transition, affordable housing, health, and inclusive growth. Despite this, capital flows remain uneven, with early-stage and emerging market opportunities facing persistent funding gaps. The report identifies weaknesses in market infrastructure, including limited track records, insufficient intermediaries, and challenges in blending public and private capital at scale.

Barriers to scaling impact investing

Key barriers include perceived trade-offs between impact and financial returns, limited internal capability within institutions, and regulatory uncertainty in some jurisdictions. The report also notes concerns around impact washing, driven by inconsistent disclosure and weak verification practices, which risk undermining market credibility.

Role of policy and regulation

Policy settings are identified as an important enabler. Supportive regulation, clearer guidance on fiduciary duty, and public capital participation can help crowd in private investment. The report notes that policy coherence across financial, social, and environmental objectives remains uneven, limiting effectiveness.

Actions to support mainstreaming

The report outlines actions to strengthen the market, including improving impact data quality, standardising reporting frameworks, and building investor capability. It also emphasises the role of collaboration between asset owners, managers, policymakers, and impact enterprises to reduce fragmentation and support scalable solutions.

Conclusion

The report concludes that impact investing is increasingly embedded in mainstream finance but has not yet reached full maturity. Addressing measurement challenges, market infrastructure gaps, and policy barriers is critical to sustaining growth while ensuring genuine social and environmental outcomes.