Impact is Not at Odds with Profit
Why purpose-driven investments are becoming an economic necessity
Impact Investing is often considered a moral add-on — a nice-to-have for idealists willing to trade financial returns for social impact. But this view is not only outdated, it was never correct. Numerous studies confirm: impact and economic success are not mutually exclusive — on the contrary, they reinforce each other.
The market for Impact Investing is growing rapidly. According to GIIN (Global Impact Investing Network), the industry now manages over 1.2 trillion US dollars — with an upward trend. Large institutional investors, family offices, and fund managers are discovering this segment not out of philanthropic interest, but because they recognize opportunities for returns and risk diversification. Impact is no longer a handicap — it’s becoming a competitive advantage.
We address investors who want to understand impact not as an abstraction, but as an economic factor. To all who want to know what’s behind the studies showing that impact portfolios not only keep pace with traditional investments but, in many cases, outperform them. To business angels, VCs, and institutional investors who aren’t satisfied with ESG rhetoric but seek reliable data to invest more intelligently.
Our central thesis: Impact investments are more performant, resilient, and sustainable in the long term than purely return-driven capital investments. Those who ignore impact risk not only their social influence — but also miss economic opportunities.
We want to show how strong the market for Impact Investing really is — and why more and more capital is flowing in this direction.
The Market for Impact Investing — From Niche Phenomenon to Growth Engine
What was considered an ethical niche just a few years ago is developing into an integral part of global capital markets. Impact investing is no longer the domain of individual social entrepreneurs or specialized foundations — today it stands at the center of strategic allocations by large institutional investors, such as the Dutch pension fund PGGM, the Swiss pension fund Publica, or the University of California Investment Office, which deliberately direct capital into climate tech, social infrastructure, and health equity funds.
According to the Global Impact Investing Network (GIIN), globally managed impact assets amounted to over 1.3 trillion US dollars in 2024 — another increase compared to the previous year, underscoring the growing importance of this segment. The current survey “GIIN’s Sizing the Impact Investing Market 2024” [1] clearly shows: The growth is not just numbers-driven, but structural. More and more funds, family offices, pension funds, and even sovereign wealth funds are integrating impact as a permanent component of their investment strategies.
From Idealism to Investment Logic
What’s striking is the increasing professionalization of the field. Impact investing has evolved from a morally motivated experiment to a strategically managed sector with clear impact and financial metrics. New standards like IRIS+, independent impact ratings, and improved data availability provide transparency and comparability — two central prerequisites for institutional capital to flow on a large scale.
Family offices and pension funds, in particular, are taking a pioneering role. On one hand, because they are increasingly under societal pressure to invest responsibly. On the other hand, because impact portfolios often prove to be more resilient and show stronger long-term growth than traditional vehicles.
What we are observing is not a short-term trend, but a gradual structural change: capital markets recognize that social and ecological impact is an economic variable — and not just a moral bonus point. Impact investing is becoming the blueprint for future-proof capital management.
Structural Change as Growth Opportunity — Despite Political Headwinds
Impact investing currently exists in a field of tension: While technological innovations and changing consumer needs open up clear growth opportunities, political and regulatory tailwinds are increasingly under pressure. Worldwide geopolitical tensions and domestic political shifts — for example in the USA or Europe — are leading to sustainability regulations being partially slowed down or weakened. Nevertheless, the long-term structural change towards more sustainable business models and investment approaches remains intact.
Regulation as a Continuing Formative Force:
Despite political uncertainties, regulations such as the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR), and the Corporate Sustainability Reporting Directive (CSRD) are already having a noticeable effect today. Capital flows must become more transparent, sustainable investments are systematically preferred [2]. Even if the dynamics are politically slowed, market mechanisms have been set in motion that are difficult to reverse.
Consumer Behavior as a Stable Driver:
Despite geopolitical uncertainties, the demand for sustainable products remains high. According to the EY Future Consumer Index 2024 [3], around 60% of consumers want companies to take greater responsibility for the environment and society. Millennials and Gen Z in particular increasingly expect impact — not as an add-on, but as a matter of course. This social pressure often works more strongly and sustainably than political regulations.
Technological Innovation as a Lever:
At the same time, new technologies are opening up possibilities to implement sustainable solutions faster and more scalably. Areas such as Climate Tech, EdTech, and Bioeconomy are growing dynamically. According to PwC [4], the investment volume in climate tech startups reached around 80 billion US dollars in 2023, despite macroeconomic uncertainties [4].
Impact investing is therefore not a phase-out model despite political backward movements — but remains a structural megatrend that continues to develop through innovation, demand, and market mechanisms.
Economic Performance: Fact Check
The stubborn prejudice still persists that you can’t make money with impact. Impact is good for the conscience — but bad for the portfolio. Yet precisely this narrative is beginning to crumble. A growing number of reliable studies show: Investments in companies with positive social and ecological impact bring not only comparable, but often even better financial results than traditional investments.
The reason for this is obvious: Impact-oriented companies are often more robust, more future-proof, and better positioned for structural changes in markets and regulations. They act counter-cyclically in an increasingly volatile environment — and invest in long-term value creation instead of short-term profit maximization.
Additionally, there is demographic change on the investor side. From millennials to family offices with NextGen leadership — this increases pressure on capital markets to deliver sustainable returns in the literal sense. And this is exactly where impact investing comes in: as a strategy for economic success that goes hand in hand with social progress.
The data here also shows that impact investments are not only ethically motivated but can also deliver solid financial results:
- According to the Global Impact Investing Network, about 74% of impact investors aim for market-rate returns. This figure underscores that impact investments aim not only for social or ecological impact but also keep financial performance in mind.
- An analysis by the Morgan Stanley Institute for Sustainable Investing [5] found that sustainable funds performed on par or better than traditional funds in 7 out of 9 years. This study shows that ESG funds are not only ethical but also financially competitive.
- According to MSCI [6], companies with high ESG ratings showed consistently better risk-adjusted returns over 1-, 3-, and 5-year periods than their less sustainably operating competitors. This suggests that strong ESG practices correlate with financial outperformance in the long term.
Resilience Beats Return Forecasts — Why Impact Investments Weather Crises Better
Impact investors talk about long-term thinking — but how reliable is this promise when markets collapse, supply chains break down, or geopolitical risks escalate? The answer emerges where it counts: in real performance under stress. Unlike many classically oriented VC portfolios or growth funds, impact-oriented investments not only show stable returns but also a significantly lower risk profile — not despite, but precisely because of their focus on sustainability and system resilience.
Meta-analytical studies show that sustainably positioned investment portfolios tend to perform more stably in volatile market phases. A comprehensive analysis by the NYU Stern School of Business [7] concludes: Companies with strong ESG performance typically exhibit a better risk profile — and benefit particularly in times of crisis from lower volatility and more stable capital flows. This is partly because they bring more resilient supply chains, stronger governance structures, and higher social acceptance.
This risk-dampening effect is also evident in the capital strategy of institutional investors: According to the current MSCI report “2025 Sustainability & Climate Trends to Watch” [8], more and more investors are using ESG and climate data not only to assess risks but to strategically realign entire portfolios. Particularly relevant: Companies with weak sustainability performance are increasingly considered structurally underinvested — not only for reputational reasons but because they are more frequently affected by regulatory interventions, transition risks, and physical climate impacts. At the same time, the report shows that companies with high ESG resilience respond better to macroeconomic shocks and are significantly less often confronted with reputational and legal risks. In short: ESG is not an ethical filter, but an early indicator of corporate resilience — and thus becomes an integral component of modern risk management and capital allocation.
This connection is also evident in the startup context. A study in the Journal of Small Business Strategy [9] on the performance of social and impact startups during the COVID-19 pandemic indicates that impact-driven companies responded faster to external shocks — not because they were better funded, but because they operated closer to the needs of their stakeholders and exhibited a higher degree of adaptivity. Many used the opportunity for targeted realignment rather than freezing in shock.
Perhaps the most underestimated advantage lies in the ability of impact-oriented investors to recognize systemic risks earlier. Through their metrics and due diligence methods — from Scope 3 analyses to social risk indicators — they identify potential vulnerabilities long before they materialize as operational damage. Those who recognize early that water scarcity, resource instability, or social tensions are not just external factors but central business risks invest differently — and more future-proof.
Those who really want to manage risk must not only calculate retrospectively but must think ahead. Impact is not idealism in this context, but an information advantage — which pays off especially when things get uncomfortable.
Beyond Returns: How Impact Investing Redefines the Logic of Diversification
Traditional diversification usually means: spreading across asset classes, regions, and sectors. But in an increasingly interconnected and crisis-prone world, this approach falls short. Impact investing opens up a new dimension of diversification — not just through geographical or sectoral distribution, but through access to structurally different fields of innovation. Those who invest today in regenerative agriculture, circular production processes, or alternative proteins are not only tapping into new markets but also different thought models: business models that don’t ignore systemic risks but address them.
That’s exactly what makes impact investments a strategic portfolio component — not as a “green add-on,” but as an independent driver of growth and resilience. Their greatest added value lies in anticipating long-term trends before they enter the mainstream. Technologies such as Direct Air Capture, Precision Fermentation, or sustainable battery storage often emerge at the intersection of science, regulation, and societal pressure. Those who invest early here diversify not only along economic lines but along future relevance.
Moreover, impact investments complement classic portfolio positions like Consumer Tech or SaaS not just thematically, but structurally: Many of the new impact sectors are capital-intensive, longer-term oriented, and less market-driven — meaning they correlate less with short-term cycles. This reduces overall volatility and brings stability through distinctiveness — a quality rarely considered in conventional diversification strategies but increasingly relevant in uncertain markets.
The true diversification effect of impact lies not in the industry, but in the attitude: Investors who deliberately focus on regenerative business models today gain access to more resilient ecosystems — and thus to a quality that pure return promises cannot offer.
From Morality to Mathematics: Why Impact Investing is the Smarter Economic Choice
The data is clear — and it challenges a widespread prejudice: that impact investing might be good for the conscience, but bad for the portfolio. Studies from GIIN, MSCI, and Morgan Stanley show the opposite: Impact-oriented investments not only achieve comparable returns, but in many cases even above-average returns. At the same time, they show a more stable risk profile and open up markets that traditional investment strategies overlook.
Yet perhaps the most important reason why impact investing isn’t idealism: It helps identify systemic risks early — from climate change to social instability to regulatory upheavals. Companies that operate regeneratively today not only anticipate these risks, but build models that offer solutions precisely where others must hedge. Impact is therefore not just a moral compass, but an early warning system and a strategic lever for future-proofing.
This doesn’t just affect specialized funds or family offices. Institutional investors and business angels are also called upon to question their allocation logic. Those who continue to bet on short-term, linearly growing models are investing past the problem — and risk being overtaken by structural market changes. Impact investing is thus not an ethical side issue, but a rational imperative for the next generation of successful capital strategies.
Investors who consistently consider impact today gain access not only to more relevant markets, but also to more resilient business models. Impact should no longer be viewed as a separate asset class, but as a fundamental attitude for intelligent investing in a changing world. Not despite, but because of its objectives, impact is the performance lever of the future.
Sources:
[1] https://thegiin.org/publication/research/sizing-the-impact-investing-market-2024/
[2] https://finance.ec.europa.eu/sustainable-finance_en
[3] https://www.ey.com/en_gl/newsroom/2023/11/ey-future-consumer-index-consumers-learning-to-live-with-less-as-climate-change-and-cost-of-living-reality-hits-home
[4] https://www.pwc.com/gx/en/issues/esg/state-of-climate-tech-2023-investment.html
[5] https://www.morganstanley.com/content/dam/msdotcom/en/assets/pdfs/3190436-20-09-15_Sustainable-Reality-2020-update_Final-Revised.pdf
[6] https://www.msci.com/www/blog-posts/esg-factor-returns-2022-in/03701563813
