Impact investing is gaining popularity as organizations are dealing in responsible investments. The rising awareness of sustainability issues is bringing into the mainstream the role of ESG consulting firms who are assisting businesses in formulating better strategies and products to include in their portfolio.

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Impact Investing Market
Size Is $715 Billion: What
Is the Future of Our
Planet?
Shifting its path from being niche to mainstream, impact investing is
gaining popularity at an accelerated rate. The organizations that
specifically deal in responsible investment are broadening their
horizon to incorporate impact strategies aimed at providing
individuals and the planet with direct benefits. Institutional investors
are spearheading this initiative as they have become a significant
source of impact investment capital.

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The rising awareness of sustainability issues have led to the rapid
progress of impact investing. Due to this, investors have been
formulating better strategies and products to include in their
portfolio. Furthermore, companies are positioning themselves as
thought leaders before the investor network to emphasize on their
concerns regarding result and impact.
What is impact investing?
Impact investing involves financial investments that are specifically
focused on entities that create positive footprints on the environment
and society, and those who promote ESG efforts. In other words, such
investments are intended to generate valuable, quantifiable impact
on the environment and the society in addition to financial returns.
Several investors who are looking to address concerns like “my
money can do much more than just bring returns” are increasingly
starting to demand impact products. In contrast, there are many
institutional investors who have a different focus area and prefer to
examine their portfolios from a sustainability and risk management
standpoint. They want answers to questions like “What can we do to

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protect our assets in the long-term?” Traditional investment firms are
catering to both types of investor requirements.
The concept dates to 2008, when there was an emerging debate on
how to use capital differently. The Rockefeller Foundation first coined
the term impact investing. According to a report by JP Morgan,
impact investments are an emerging asset class with the potential
to offer, over the coming 10 years, a profit of $183–$667 billion and an
invested capital of $400 billion–$1 trillion.
In addition to impact investing, some other terms, such as
sustainable investment, conscious capitalism, and ethical
investment have also been introduced.

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Why is impact investing gaining
popularity?
Impact investing provides investors with the ability to generate
positive and measurable benefits for enhancing environmental and
social outcomes. While an ESG Consulting may help companies
identify which sector is performing better than their competitors in
conserving energy, handling potential risks and reducing costs,
impact investing may help fund the commercial rollout of a new
technology that supports more effective combat against climate
change .
Both strategies are aimed at enhancing environmental sustainability.
However, impact investing enables investors to make more concrete
and measurable contributions.
The world becomes a better place with impact investing
Investors who are inclined toward impact investing want their capital
to make a proactive contribution for the betterment of the world.
Therefore, they prefer investing their money into businesses that
share the same objectives. Several stakeholders are increasingly
recognizing the shortcomings associated with the current financial
systems. Impact investing creates revolutionary opportunities to
address the gaps of the current financial systems and fund powerful
solutions. It is also expected to encourage and promote broader
improvements in the financial markets. The 17 Social Development
Goals (SDGs) of the United Nations provides investors with clear and
strong guidance for impact investing. For example, Goal no. 6 is
“clean water and sanitation.” If investors are interested in utilizing

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their money to ensure that the planet has a better future, they can
invest in the shares of those companies that are actively contributing
in making water, safer and purer.
One doesn’t need to be ‘wealthy’ in order to create an
impact
Although it is true that only the major investors in a business have the
power to influence strategic choices and re-orient the business
toward profitability, private investors may, however, have an indirect
positive impact. They can invest in funds that are being handled by
managers who influence the decisions of a company, either through
supervisory board discussions or general meetings.

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Impact capital can be increased incrementally
Impact investing is primarily beneficial for private investors, as their
salary increases over a period. With a savings plan, they can invest a
small amount in an impact fund every month. One of its USPs is the
benefit that the monthly installment amount can be adjusted
anytime. The flexible approach of impact investing gives investors an
increased control over their investments, while the capital continues
to grow over time.
Capital grows steadily with impact investing
A large number of investors is now interested in the success of an
organization in the long term, rather than just a specific financial
year. The best part is that impact investing lays the groundwork for
consistent growth, and businesses that are already aligning
themselves with their sustainability goals will enjoy the benefits of
maintaining a competitive advantage in the future. Impact investors
are helping create leaders of tomorrow.
Impact investing has become mainstream
According to the 2020 survey by the Global Impact Investing Network
(GIIN), the global impact investing market size is $715 billion and is
expanding rapidly. Breaking its decade long record, the 2020 impact
investor survey represented the highest number of respondents in
the last 10 years – 294 global impact investors with a collective $404
billion worth of impact investing assets under management.

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In the survey, the respondents stated that an increase in the
sophistication of management practices and impact measurement
have primarily led to the market’s growth. Among the respondents,
57% of the respondents stated that the unprecedented situations
caused due to COVID-19 are unlikely to influence their decision on
their capital commitment to impact investments this year. Almost
50% of the respondents asserted that they will meet their
expectations in terms of impact performance.
Impact investing has witnessed an incredible growth over the past
decade. Despite challenges, the sophistication has increased, and
with several investors increasingly turning toward impact investing to
ensure their contribution to environmental and social solutions, the
sector is expected to gain more traction.

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The current state of the impact investing
market
Although many investors have been impact investing since many
years, a new collaborative effort at an international level has
emerged and is accelerating the development of markets that are
high-functioning and encourage impact investing. Even though this
market is still at a nascent stage, investors are optimistic about its
growth and expect greater sophistication and efficiency in the future.
Read more: The rise in ESG investing – a $30 Trillion
market story
Conclusion
Impact investing will continue to evolve rapidly in the coming
decades and is not just a trend. In simple words, individuals across
the world are realizing that our future depends on it. A philanthropic
approach to charity is no longer the only option for making a
difference and impact investing is being viewed as a fundamental
driver for positive change.
Diverse types of investors such as large financial institutions, private
wealth managers, pension funds, commercial banks, individuals,
family offices, foundations, and development finance institutions are
becoming increasingly interested in impact investing. To narrow
down the funding gap to achieve the SDGs by 2030, there is still a lot
of room for improvement in our efforts. It is necessary that we direct
our focus on impact investing so that the world does not suffer due
to irreversible consequences.