Impact Investing Market Expected to Reach $5986.5 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Impact Investing Market," The impact investing market was valued at $2.5 trillion in 2021, and is estimated to reach $5986.5 billion by 2031, growing at a CAGR of 9.5% from 2022 to 2031.

The impact investing market has witnessed significant growth over the years, driven by several key trends and growth factors. One major trend is the surge in demand for social impact investing, which offer both financial returns and positive social or environmental outcomes. Another impact investing market trends is the investors are increasingly prioritizing investments that address climate change and other environmental challenges, such as renewable energy, sustainable agriculture, and green infrastructure. In addition, technology is playing an increasingly important role in impact finance, with investors using data and analytics to measure the social and environmental impact of their investments and identify new investment opportunities. Overall, the impact investing market is evolving rapidly, driven by a range of social, environmental, and economic trends. 

Furthermore, major market players are undertaking various strategies to increase the competition and offer enhanced services to their customers. For instance, in November 2022, Morgan Stanley Investment Management (MSIM) launched 1GT growth-oriented private equity platform focused on companies aiming to mitigate climate change. The platform will focus on companies that will cooperatively "avoid or remove" one gigaton of carbon dioxide-equivalent emissions from the atmosphere of Earth by 2050 to achieve net zero targets.

Moreover, in December 2022, Manulife Investment Management announced the launch of Manulife Forest Climate Fund, LP1 (FCF or the fund), which is a closed-end fund providing qualified U.S. investors with the opportunity to promote climate change mitigation through sustainably managed forests where carbon sequestration is prioritized over timber production. The fund, which along with its affiliated offshore vehicles is targeting US$500 million in committed capital, will be invested in a globally diversified portfolio of sustainably managed forestland assets. Therefore, such strategies adopted by the market players are increasing the market competition and leading the growth of the global impact investing industry.

In 2021, the energy sector witnessed the highest growth segment in the impact investing market size. This growth can be attributed to the increasing focus on renewable energy and sustainable infrastructure, as well as the adoption of new technologies in the sector. Impact investors are increasingly looking for opportunities to invest in renewable energy projects that have a positive impact on the environment while generating attractive returns. On the other hand, the education sector is forecasted to be the fastest-growing segment during the forecast period. This can be attributed to the increasing demand for quality education and the need to address the education gap in underserved communities. Impact investors are increasingly interested in investing in innovative education technologies and programs that have a positive impact on student outcomes, particularly in low-income and marginalized communities. Moreover, the education sector presents a significant opportunity for impact investors to make a difference while generating meaningful social and environmental returns.

The impact investing market witnessed significant growth in North America in 2021, making it the highest growth region for the year 2021. This growth can be attributed to the increasing interest among investors to align their investments with their social and environmental values. On the other hand, the Asia-Pacific region is forecasted to be the fastest-growing region during the forecast period. This can be attributed to the region's increasing focus on sustainable development and social impact, along with the growth of impact-driven enterprises. The region's large and rapidly expanding population, along with its growing middle class, presents a significant opportunity for impact investors looking to make a difference while generating returns.

The COVID-19 pandemic had a positive impact on the impact investing market. The pandemic has highlighted the urgent need for investment in areas such as healthcare, education, and food security. This has created new opportunities for impact investors to support businesses and projects that are addressing these needs. Moreover, investors were looking to understand the social and environmental impacts of their investments in wake of the pandemic, which has boosted demand for impact investment. COVID-19 accelerated the growth of digital and tech-enabled solutions, such as telemedicine, online education, and e-commerce, which has created new opportunities for impact investors to support businesses that are driving innovation and transformation in these areas. Overall, the pandemic has created new opportunities and momentum for impact investing, accelerating existing trends and creating new areas of focus.

Key Findings of the Study

• By sector, the energy segment led the impact investing market growth in terms of revenue in 2021.
• By investor, the institutional investor segment accounted for the highest Impact investing market share in 2021.
• By region, North America generated the highest revenue in 2021.

The report analyzes the profiles of key players operating in the Impact investing market analysis such as Morgan Stanley, Leapfrog Investments, Omidyar Network, Bridges Fund Management Ltd., Vital Capital, blueorchard finance ltd, Manulife Investment Management., Reinvestment Fund, Goldman Sachs and Bain Capital. These players have adopted various strategies to increase their market penetration and strengthen their position in the impact investing market.