Impact investments are ones that aim to produce both a beneficial, quantifiable social and environmental benefit and a financial return. Impact investments can be done in both emerging and mature economies, and depending on the strategic objectives of the investor, they can aim for returns that range from below market to market rate. Impact investors assess their success in terms of both their financial gains and the favourable social or environmental consequences they contribute to.
The demand from investors seeking both financial returns and social or environmental impact is increasing, which is a major factor driving the market for impact investments. For example, investing in renewable energy can help reduce greenhouse gas emissions and mitigate climate change, while investing in affordable housing can help address the problem of homelessness. Also, a significant barrier to the growth of the impact investing business is the general public's and investors' low awareness of impact investing. On the other hand, it is anticipated that an increase in demand for impact investment products from high-net-worth individuals and institutional investors would create significant, lucrative potential for the market's expansion.
ATTRIBUTE | DETAILS |
Study period | 2020-2029 |
Base year | 2021 |
Estimated year | 2022 |
Forecasted year | 2022-2029 |
Historical period | 2018-2020 |
Unit | Value (USD TRILLION). |
Segmentation | By Sector, By Investor, By Region |
By Sector |
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By Investor |
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By Region |
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Impact investing has been more popular in recent years as a result of an increase in investor desire for both financial returns and social or environmental effect. As a means of balancing their principles and financial objectives, impact investing is growing in popularity. Investments in community development projects, sustainable agriculture, affordable housing, and renewable energy projects are just a few examples of the numerous ways that impact investments can be made. These characteristics have influenced the market for impact investing's rising popularity and rising demand.
Impact investing can be difficult to achieve both financial returns and social or environmental effect since it entails juggling the requirement for profitability with the goal to provide beneficial social or environmental consequences. Products must be able to fulfil a variety of institutional needs, such as the capacity to take on sizable capital pools, sufficient liquidity, and strong risk management procedures, while also producing quantifiable returns and impact, in order for impact investing to scale. The social or environmental impact of an investment is also challenging to quantify, and impact measurement and reporting practices may not be uniform. As a result, one of the main factors impeding the expansion of the impact investing sector is the difficulties associated with generating both financial returns and social or environmental impact.
In recent years, high-net-worth individuals and institutional investors have increased their demand for impact investment products. Several variables, including the desire to link investments with values and impressions, the knowledge that impact investing has the ability to generate competitive financial returns, and the expanding accessibility of impact investment products and services, all contribute to this. High-net-worth individuals are also becoming more and more interested in impact investing due to they have the financial means to make sizable commitments and are frequently driven by the desire to have a positive social or environmental impact. Furthermore, due to they have a long-term investment horizon and a focus on sustainable and responsible investment methods, institutional investors like pension funds and endowments have been particularly active in impact finance. As a result, the rising demand for impact investment products from institutional investors and high-net-worth people is a good trend that will likely allow impact investing to be scaled up and lead to favourable social and environmental results.
The COVID-19 epidemic has had a substantial effect on the market for impact investing. On the one hand, the pandemic has made it clear how important it is to fund social and environmental initiatives, and it has increased interest in impact investing among investors looking to aid in the response to and recovery from the pandemic. Overall, the full effects of COVID-19 on the market for impact investing are still unknown, but they have undoubtedly presented opportunities and problems for these investors.
The impact investing market is expected to grow at 9.5% CAGR from 2022 to 2029. It is expected to reach above USD 5.17 Trillion by 2029 from USD 2.5 Trillion in 2020.
North America held more than 35% of the impact investing market revenue share in 2021 and will witness expansion in the forecast period.
Impact investing has been more popular in recent years as a result of an increase in investor desire for both financial returns and social or environmental effect. As a means of balancing their principles and financial objectives, impact investing is growing in popularity. Investments in community development projects, sustainable agriculture, affordable housing, and renewable energy projects are just a few examples of the numerous ways that impact investments can be made.
The impact investing market key players includes Acumen Fund, Inc., Intellecap Advisory Services Pvt. Ltd., LAVCA, Leapfrog Investments, Omidyar Network, Revolution Foods, Sarona Asset Management Inc, Triodos Bank N.V., Unitus, Vasham, Vestergaard Frandsen S.A., Waterhealth International.
Education, agriculture, healthcare, energy, and housing are some specific sectors that are frequently taken into account in the impact investment market, which can be split by industry. Investments in businesses or initiatives that priorities expanding educational opportunities, raising educational attainment levels, and enhancing educational quality often fall under the category of impact investing in the education sector.
North America had the impact investing market's greatest growth rate by region in 2021, thanks to growing investor interest in aligning their investments with social and environmental principles. The area has an established network of middlemen, impact investors, and businesses that are driven by social or environmental effect.
The impact investing market is segmented based on sector, investor and region. Education, agriculture, healthcare, energy, and housing are some specific sectors that are frequently taken into account in the impact investment market, which can be split by industry. Investments in businesses or initiatives that priorities expanding educational opportunities, raising educational attainment levels, and enhancing educational quality often fall under the category of impact investing in the education sector.
According to investor, the market for impact investment saw the highest growth sector in 2021 among institutional investors. Its development can be linked to institutional investors' growing desire to devote a portion of their holdings such as pension funds and endowments—to impact investments. Institutional investors are becoming more aware of the significance of social and environmental considerations when making investment decisions, and impact investments offer a means of generating both financial returns and social and environmental advantages.
[caption id="attachment_21362" align="aligncenter" width="1920"]The impact investing market key players includes Acumen Fund, Inc., Intellecap Advisory Services Pvt. Ltd., LAVCA, Leapfrog Investments, Omidyar Network, Revolution Foods, Sarona Asset Management Inc, Triodos Bank N.V., Unitus, Vasham, Vestergaard Frandsen S.A., Waterhealth International.
Industry News: 16 December 2022: Regional Media Print Coverage of Intellecap and Transform Rural India Foundation’s launched the Climate Action Platform on 13th Dec with support of Jharkhand State Government 09 August 2022: Intellecap and Transform Rural India Foundation (TRIF) on Monday announced the launch of a national platform that will help Indian smallholder farmers leverage climate/carbon finance for sustainable agro-forestry, climate smart agriculture and other activities that can result in carbon sequestration and mitigation.The impact investing market by region includes North America, Asia-Pacific (APAC), Europe, South America, and Middle East & Africa (MEA).
North America had the impact investing market's greatest growth rate by region in 2021, thanks to growing investor interest in aligning their investments with social and environmental principles. The area has an established network of middlemen, impact investors, and businesses that are driven by social or environmental effect. On the other hand, it is anticipated that during the projected period, the Asia-Pacific area will have the fastest growth.
Given the enormous and quickly growing population, expanding middle class, and considerable development difficulties in the region, the Asia-Pacific region offers impact investors a significant potential to make a difference while earning excellent profits. As a result, in the years to come, impact investors are anticipated to concentrate more on the Asia-Pacific region.
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