The impact investing market is expected to exceed $1 trillion in value by 2028, growing at a rate of nearly 18% per year over that time, according to the Business Research Company’s Impact Investing Global Market Report 2024.
Despite facing some political headwinds, the impact investing market is expected to reach $550 billion by the end of this year, a 15% increase from $478 billion in 2023, the report found.
The report, released this month, said that growth in previous years can be attributed to “rising social and environmental awareness, shifting investor values, the development of impact metrics, the growth of social enterprises, the preferences of millennials and Gen Z and increased commitment from institutional investors.”
For the rest of the decade, the anticipated growth will be driven by factors such as “the shift toward renewable energy, initiatives for racial and gender equity, global resilience planning, the rise of circular economy practices and a focus on education and skill development,” according to the report.
The growing number of millennial investors is expected to be the biggest force in the impact investing market.
“Unlike traditional stock-focused investors, millennials are increasingly engaging in sustainable investments to foster positive social and environmental change while building wealth. They view impact investing as a more effective means of contributing to social progress and achieving lasting positive change in society, compared to conventional philanthropy,” the report said.
The desires of millennials is not going unnoticed in investment circles.
“Key companies in the impact investing market are introducing new investment services to enhance their profitability. Impact investing services include financial products and offerings designed to deliver positive social and environmental outcomes alongside financial gains,” the report said.
The report also notes that impact investing has gotten better at delivering competitive returns, with financial gains from alternative investments has closed the gap with traditional instruments. That is also expected to propel growth in impact investing overall.
The biggest impact investing sectors over the next few years will be education, health care, housing, agriculture, environment, clean energy access and climate change, the report said, putting a particular emphasis on education as investments in both public and private opportunities attract capital.
The Business Research Company defines impact investing as a broad strategy that enables investors to allocate funds with the goal of producing positive, measurable social and environmental impacts. The company, with main offices in the U.S., U.K. and India, employs a network of researchers in 28 other countries.
Read more: Save the Children aims to raise $1 billion in innovative impact funding
