The Next 10 Years of Impact Investment

Just over 10 years ago, JPMorgan and the Rockefeller Foundation, together with the Global Impact Investing Network (GIIN), published a report claiming that impact investment was an emerging asset class that would reach between $400 billion and $1 trillion in assets under management by 2020. At the time, this prediction seemed like a very ambitious forecast to us as authors of the paper and to the people who read it.

Our doubts were misplaced. In 2020, the market reached roughly $715 billion in assets under management, according to GIIN. The International Finance Corporation (IFC) put the estimate even higher: $2.1 trillion. With such remarkable growth over the last 10 years, we wondered how far impact investment might advance from 2020 to 2030.

To answer this question, we need to step back to note a few important trends. For one, we know that the climate crisis, economic inequality, gender disparity, racial injustice, and other crises—prime targets of solutions supported by impact investments—were already posing deep challenges to governments around the world at the start of this decade. We know there is a $2.5 trillion annual gap in the funds needed to deliver the Sustainable Development Goals (SDGs) by 2030. And we all know that the COVID-19 pandemic has devastated and disrupted the lives of people around the world; it has also made it even harder to achieve the SDGs as governments shift resources and take on new levels of debt to survive the threats of the disease, including the exacerbation of inequalities.

Source: Stanford Social Innovation Review (SSIR)
Authors: Yasemin Saltuk Lamy, Christina Leijonhufvud & Nick O’Donohoe