The data’s speaks for itself — companies solving real-world problems are also delivering real-world profits. When impact runs deep, the returns often do too.
A joint study by Schroders and Oxford Saïd Business School finds up to 9% annual alpha through impact investing.
And here’s the kicker: Nearly all Gen Z (99%) Millennial (97%) investors say they want their money to make a difference. Together, they are projected to inherit $124 trillion in wealth over the next two and a half decades. That’s not just wealth transfer. That’s power transfer.
Meanwhile, plenty of investors cling to the old idea that doing good means giving up returns. But that’s changing — fast.
So let’s break it down — here’s what the numbers are really saying about making money and making impact.
A shift in perception
Perception among private investors is shifting fast.
Whether it’s gut instinct or growing evidence, more investors now believe sustainability pays. In 2025, 38% already say sustainable investments outperform traditional ones — and more than half plan to increase their allocations next year. Only 3% plan to dial back.
Underlying conviction regarding the need for a more sustainable form of capitalism is strong. More than 80% of investors believe companies should address environmental issues, and over two-thirds say social issues should also be tackled.
Given that the Gen Y and Gen Z are projected to be on the receiving end of a $124 trillion wealth transfer over the next 25 years, impact investing could be a huge trend in the making.
Evidence of outperformance in impact investing
What if the companies shaping a better world are also building the strongest portfolios? The evidence says: they are.
Widespread acceptance of the superiority of long-term, sustainability-focused business strategy in corporate value creation could be the game changer.
The potential for outsized returns through breakthrough solutions, for instance in energy storage, healthcare or recycling, is hardly the subject of debate.
In the following, we present three compelling pieces of evidence that doing well and doing good is anything but mutually exclusive.
Schroders Finds Significant Alpha
A joint study by Schroders and Oxford Saïd Business School found that impact-focused equity portfolios didn’t just keep up — they often beat the market.
8 out of 10 randomly built 40-stock portfolios outperformed the MSCI ACWI IMI from 2010–2023. Some generated over 9% annualized alpha, with lower volatility and smaller drawdowns.
The bottom line – Doing good isn’t just morally sound — it’s a sound investment strategy.
Schroders pinpoints the drivers of this outperformance to a combination of strong business execution, including operational efficiency, more active capital deployment, and growth orientation.
Clean200 Index beats MSCI World by 29%
Take the Clean200 – a portfolio of the world’s most sustainable companies. Over the last eight and a half years, it’s crushed the MSCI World by 29% (191% vs. 162%).
The Clean200 Portfolio is compiled by Corporate Knights, a Toronto based B Corp. Its research division provides rankings and ratings that currently serve investors representing $15 trillion in assets under management.
These Clean200 companies don’t just talk sustainability — they sell it. On average, 55% of their revenue comes from sustainable lines of business, compared to just 16% in the broader market.
Outperformance with sustainable funds
Morgan Stanley’s latest analysis adds another layer: sustainable funds outperformed traditional funds by 9% from 2019 through mid-2025.
Looking at Morningstar data, Morgan Stanley finds that a $100 investment in sustainable funds back in 2018 would be worth $154 today — compared to $145 in a traditional one. Doing the right thing has literally paid off.
Sustainable funds invest in companies that meet environmental, social, and governance (ESG) standards, aiming to generate financial returns while promoting positive impact.
The drivers of outperformance
So what’s behind this consistent outperformance? Turns out, impact-driven companies share a few traits that set them apart.
1. Operational efficiency
Impact firms exhibit significantly higher operating margins, suggesting they are more efficient at generating profit from their core business operations compared to the benchmark.
2. Capital structure
Impact firms put capital to work. They tend to hold a lower percentage of cash to total assets, suggesting a more active capital deployment strategy.
3. Higher valuation multiples
Investors reward impact firms with higher valuation multiples — for good reason. Impact firms trade at higher valuations relative to earnings and cash flow, a common characteristic of growth-oriented firms.
4. High asset tangibility
Impact firms build more real stuff than the average company. A larger share of their assets consists of physical, tangible items like property, equipment, and inventory, rather than intangible assets such as goodwill, patents, or brand value.
This could mean they are in industries that require more physical capital (e.g., renewable energy, infrastructure, or manufacturing).
It could also indicate that they have less goodwill on their balance sheet, as they tend to be smaller and earlier stage, so may have fewer acquisitions.
5. Work force expansion
Impact firms show higher employee growth, pointing to active expansion and investment in human capital.
The massive opportunity in impact
Let’s be real — the planet’s in trouble. Climate change, plastic waste, inequality, health crises… the list is long.
But every problem sparks innovation and massive opportunities. From clean energy and food tech to circular manufacturing, founders and investors are building the next economy — one that works for both profit and planet.
Gen Y and Gen Z investors aren’t just inheriting wealth, they’re inheriting responsibility — and opportunity. The Gen Y and Gen Z generations want to live in a world worth living in. They will direct trillions to companies solving the biggest challenges of our time over the next few decades.
Impact investing Will you be part of it?
And let’s face it — telling your friends you invested early in fuel-cell tech or next-gen food startups sounds a lot better than bragging about oil stocks.