Impact investing has grown rapidly in recent years as more investors seek to generate social and environmental impact alongside financial returns. Major trends driving growth include rising interest in ESG investing, growth of sustainable and responsible investing assets, and increasing numbers of millennials and women investors who care about impact. Key players leading the field include leading private equity and venture capital firms focused on impact like TPG Rise Fund, Bain Capital Double Impact, and KKR Global Impact, as well as wealth managers like UBS, Morgan Stanley, and Goldman Sachs.
Large private equity firms are launching dedicated impact investing funds
Many mainstream private equity firms like TPG, Bain Capital, and KKR have launched multi-billion dollar impact investing platforms, bringing significant capital and expertise to the space. For example, TPG’s Rise Funds manage over $8 billion in assets and focus on education, healthcare, financial services and other areas. Bain Capital Double Impact has over $1.2 billion in assets under management financing companies providing basic services. These large private equity firms have the resources and track record to scale up successful impact companies.
Wealth managers are catering to younger investors interested in impact
Major wealth managers are offering more impact investment products and services to cater to shifting investor preferences. Millennial women are twice as likely to invest in companies with social or environmental impact than boomer men, according to Morgan Stanley. In response, Morgan Stanley, UBS, Goldman Sachs and others now offer values-based investing platforms, facilitate impact investments in private markets, and provide portfolio screening tools for clients.
Impact-focused venture capital and private equity firms are proliferating
Dozens of small and mid-sized impact investing firms have launched over the past decade specializing in areas like clean technology, sustainable consumer products, microfinance and financial inclusion. These include firms like Base10, Closed Loop Partners, Acumen Fund, and Elevar Equity which target market-rate or near market-rate returns while delivering outsized social impact. Many impact funds utilize blended finance models combining philanthropic and commercial capital.
Major asset owners are incorporating impact across portfolios
Pension funds, endowments, foundations and sovereign wealth funds collectively control trillions in assets under management and are increasingly deploying institutional capital into impact strategies. For example, asset owners like Caisse de dépôt et placement du Québec (one of Canada’s largest institutional investors), The Ford Foundation, and Norway’s sovereign wealth fund incorporate ESG factors widely into public and private market investments.
Impact investing is entering mainstream finance with major private equity firms, wealth managers, specialty impact funds and asset owners catering to investor demand for strategies that deliver social and environmental good alongside financial performance. With tens of trillions in assets expected to shift towards sustainable strategies in coming years, top impact investing firms are well positioned to channel significant capital towards meeting pressing global challenges.