Despite political headwinds, impact investing is maturing beyond idealism into a movement that benefits from strong returns while scaling urgent solutions.
The great wealth transfer to the sustainability-minded Gen Y and Z generations will only accelerate the growth of impact investing.
Impact Investing Prevails In A Difficult Setting
The world feels louder than ever. Politicians are acting irrationally. Wars are spreading. Climate change is wreaking havoc. Change crawls where we desperately need it, yet races ahead in places we’re unprepared for.
In the corporate world, a new era of silent CEOs has taken hold in the US. Once outspoken and influential, the leaders of some of the world’s most powerful companies have grown conspicuously quiet—especially in response to President Trump’s recent withdrawal from the Paris Agreement and the UN Sustainable Development Goals.
Institutional investors, overwhelmed by the pace and unpredictability of change, are retreating into a wait-and-see stance. Meanwhile, governments are flip-flopping on major policies and investment strategies, adding to the uncertainty.
A New Wave Of Impact Investors
So who can really lead the way into a prosperous future for people and the planet? Who can step up to be the not-so-silent hive of impact change makers?
To those who look, the answer is crystal clear.
According to the Sustainable Signals Survey by Morgan Stanley, 88% of private investors (99% of GenZs) express interest in investing for return and impact. Impact investing is the hot new trend waiting to take off.
The need to build resilient and regenerative businesses that can provide a compelling future for all of us – hasn’t been lost on the generations that will be living in it.
Impact investing has matured and is ready to move from the realm of idealism into the mainstream.
Importantly, it has demonstrated the ability to generate strong returns and scale the solutions the world needs at speed.
“ESG Investing Is Dead“
“ESG investing is dead” – is something we keep hearing. As a matter of fact, it probably always had to die.
To solely focus on the intrinsic management of ESG risks at the company level – at the expense of everyone around – turns out to be an approach doomed for failure on a planet as small and crowded as ours.
As in nature, the death of traditional ESG investing may well be a necessary part of our transition to something new and better. The framework of environmental, social and governance factors in connection with sustainability and impact and is currently being re-defined, and for a good reason.
Impact Investing 2.0
Impact investing – also often referred to as sustainable investing – has been around for a long time, supported by a steady and diverse stream of believers and visionaries.
But impact is no longer a ‘PR-stunt’ or an idealist vision of the future. It’s a tangible investment approach able to scale from idea to large-scale systems change, supported by all types of investors across the capital ladder.
It is starting to gather mainstream traction. The vast majority of millennials and Gen Z investors want change from today’s unaccountable and free wheeling capitalism.
And they have serious firepower. According to Forbes and Coldwell Banker Gen Y and Z will collectively control $104T in financial wealth by 2030.
A large majority of Gen Ys and GenZs stand ready to make major commitments to impact investing by allocating billions to strategies that aim to generate both financial returns and create measurable positive impact.
Impact Investing 2.0 begins here. By striking the right balance between purpose and profit, humanity can lay the foundation for a regenerative economy—unlocking trillion-dollar markets and delivering outsized returns that align with equally outsized positive impact.
Trust And Data
Bad and even misleading data has been a leading contributor to the downfall of traditional ESG investing.
ESG data shortcomings have occurred on many levels.
The most frequently cited issue
AI has the potential to be the game changer in how sustainability and social impact is tracked and measured. It can pull together data from reports, supply chains, news, and even satellites to spot progress and problems people often miss.
Data will be more granular, reliable and timely. The leeway for businesses to refrain from reporting altogether, report bad data or hide data in the depth of 300-page sustainability reports will shrink rapidly.
Thanks to AI, investors will get a clear picture of how companies are really doing and be able to hold them accountable.
From Wishful Thinking To Real Returns And Systems Transformation
Businesses have always been a driving force in creating a compelling vision of the future for their investors, employees, customers and other stakeholders.
Now more than ever, there is an opportunity for pioneering companies to take the lead in providing innovative, technological solutions to large scale problems and positively transform the sectors they are operating in – profitably, globally and at pace.
Impact investors play a significant role in enabling this transformation. By supporting exactly this kind of real, systemic change, they are presented with an opportunity to allocate capital to impact investment opportunities for long term gain and tangible positive outcomes.
Call it impact investing, systems investing, conscious investing, regenerative investing or investing for resilience – in the end the label does not matter.
Look For Trendsetters – Not Followers
The best companies don’t follow trends—they set them. They reshape their industries for the better. The most successful companies in the different sectors will help accelerate systems change towards a regenerative and circular economy to mitigate risks, attract the best talent and become market leaders in ways we may not even understand yet.
Just look at companies like NextEra (NEE 📈) – the world’s largest producer of wind and solar energy. Previously a predominantly fossil-fuel powered utility, NEE actively retires fossil fuel assets and has publicly commitment to net zero emissions by 2045.
Or look at Warby Parker (WRBY 📈) – Public Benefit Corporation and Certified B Corp – that has donated over 20 million glasses to people in need through their “Buy a Pair, Give a Pair” program.
The concept of long-term stakeholder impact is formally included in the company’s governance. By publishing impact reports in line with GRI, SDG and SASB frameworks, Warby Parker delivers market-leading level transparency on its impact.
Another great example is Amalgamated Bank (AMAL 📈). This bank has also adopted public benefit corporation status and scores an exceptional B Impact Score of 155.3 (compared to a median of 50.9). 100% of Amalgamated Bank’s lending is mission-aligned, with ~39% directed to high-impact climate solutions and another ~18% toward workforce development and affordable housing.
Capital Is Part Of The Solution
In today’s world, change and uncertainty will remain a constant presence. Let’s embrace that change and use our capital to be part of the solution — not the problem.
Worst case, we invest in a world with cleaner air, less pollution, better access to financial services and education. Best case, we accelerate the transition to a regenerative economy and set humanity up for success for centuries to come.
Frequently Asked Questions
How does impact investing drive change?
Impact investing drives change by channeling capital into businesses and projects that deliver measurable social and environmental benefits alongside financial returns. It shifts the role of investors from passive funders to active agents of progress. By aligning profit with purpose, it helps scale solutions to urgent global challenges like climate change, inequality, and access to healthcare. Ultimately, impact investing redefines success in finance—making positive change a core part of investment performance.
Can I generate alpha with impact investing?
A collaborative study by Schroders and Oxford Saïd finds that positive-impact equity portfolios—composed of companies addressing global challenges like climate, healthcare, and infrastructure—have delivered strong absolute and risk-adjusted returns, often outperforming traditional benchmarks. These portfolios tend to show lower volatility, reduced downside risk, and statistically significant alpha compared to standard indices ziggma.com. The research highlights that successful impact portfolios often include companies with high operational efficiency, active capital reinvestment, physical asset bases, and growth orientation. A case study on Schneider Electric reinforces the thesis, demonstrating that firms solving real-world problems can deliver both impact and solid financial performance
Through which kinds of asset classes can I invest for return and impact?
You can invest for both return and impact across a range of asset classes, depending on your goals and risk appetite. Public equities allow you to back mission-driven companies while maintaining liquidity, and fixed income offers options like green or social bonds that fund climate and community projects. Private equity and venture capital provide deeper impact potential by supporting early-stage solutions, though with higher risk and longer horizons. Real assets, such as sustainable infrastructure or regenerative agriculture, can deliver stable returns while addressing pressing environmental challenges.
Important Notice
This article is not investment advice.
We believe the information contained in this text to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions available data and are subject to change without notice. Please consider your full financial situation prior to making an investment decision.