Insights on the survey sample

The survey covers 305 impact investing organisations managing over $10 million or with at least five investments. Most (73%) are investment managers and 87% are headquartered in developed markets. Investors span 39 countries, though concentration remains in North America and Europe. The sample reflects a diverse but developed-market-led industry.

Market developments and challenges in impact investing

Progress has been made in integrating financial and impact decision-making (82%) and improving research and talent availability. However, challenges persist, including fragmented impact frameworks (92%) and difficulty comparing results (87%). Macroeconomic pressures—particularly inflation (85%), rising interest rates (83%) and climate change (75%)—significantly influence strategies. Aligning financial and impact expectations between stakeholders remains a key constraint.

Asset allocations to impact

Investors collectively manage approximately $490 billion in impact assets, growing at a 14% CAGR over five years. Allocations are concentrated in developed markets, with 70% in the US/Canada and Europe. Energy (21%), housing (14%) and financial services (14%) dominate sector allocations. Private equity is the primary asset class (43% of AUM). Emerging markets receive lower capital despite increased investor interest, highlighting ongoing allocation imbalance.

Investment activity

In 2023, investors deployed $62 billion across nearly 10,000 deals, with expectations rising to $95 billion in 2024. Capital volumes have increased (6% CAGR), while transactions declined slightly, indicating larger deal sizes. Private equity and private debt dominate activity. Investment managers account for 78% of capital deployed. Fundraising remains the primary growth driver (81%), with less reliance on reallocating existing capital.

Blended finance

Participation in blended finance is moderate, with 42% of investors engaged and 24% planning future involvement. It is mainly used to address capital gaps (70%) and fund early-stage models (61%). Market-rate investments dominate allocations (39%). While widely recognised for de-risking (68%), many investors do not use it for this purpose, indicating potential misalignment between perceived and actual benefits.

Financial and impact performance

Most investors target market-rate returns (74%). Performance satisfaction is high, with 86% meeting or exceeding financial expectations and 90% achieving similar impact outcomes. However, actual returns often fall short of targets, suggesting expectations are adjusted to market conditions. Private equity delivers the highest returns (average 17%). Below market-rate capital is growing faster than investor numbers, indicating increased allocation intensity.

Measuring and managing impact

Seventy percent of investors use recognised metrics (e.g. IRIS+), while 62% embed impact targets into legal agreements. Despite this, fragmentation in frameworks remains a major challenge. Accountability practices are evolving, including third-party verification (40%) and impact-linked incentives. However, verification of actual results is less common, indicating a need for stronger accountability systems and standardisation.

Key observations and thinking ahead

The market shows steady growth but remains concentrated among large, developed-market investors. Emerging asset classes, particularly equity-like debt, are expanding rapidly. Investor satisfaction is high despite performance gaps, reflecting adaptive expectations. Strengthening measurement frameworks, improving data transparency, and increasing capital flows to emerging markets are critical for continued market development and credibility.