Impact Investing Gains Momentum – Yet Scaling Remains the Key Challenge

Many market participants now regard impact investing as a credible investment approach. More than 70 percent of surveyed investors expect market-rate returns or higher. Many achieve or exceed both their financial (64 percent) and impact-related goals (79 percent). These findings suggest that impact investing is increasingly perceived as an approach that combines societal impact with economic viability, rather than as a trade-off between the two.

Despite these positive developments, impact investments still account for only a small share of total assets under management (AuM). The survey captured approximately EUR 12.5 billion in impact AuM, representing around 0.85 percent of total reported assets. Investments are distributed across a range of asset classes. Private Equity remains the largest category at 28 percent, followed by Venture Capital, Private Debt and Infrastructure investments. The survey also highlights an important limitation: large institutional investors, such as pension funds and insurance companies, and development finance institutions are underrepresented in the sample. Actual impact investments in Germany are therefore likely to exceed the reported figures.

The market’s growth potential is also reflected in the fact that two thirds of respondents plan to increase their impact allocations over the next five years. Acceptance of the approach is growing, even though scaling remains slow. To anchor impact investing more firmly within capital markets, respondents point to the need for greater transparency, reliable data and stronger participation by institutional investors. However, beyond access to finance, impact-driven enterprises also require networks, strategic support and market access.

Respondents identify the lack of standardisation in Impact Measurement and Management (IMM), limited availability of impact data and regulatory uncertainty as key challenges for the further development of the market. For active impact investors, these issues primarily affect implementation and scaling. The picture is different for organisations that have not yet entered the market. They point above all to unclear definitions and a lack of standards as barriers to entry. More than half of respondents consider the lack of conceptual clarity around impact investing to be a significant obstacle to market participation.

The findings therefore suggest that the market faces two distinct challenges. New entrants need greater orientation and clarity. Existing impact investors need better data, standards and enabling conditions to scale their activities. Many market participants are therefore closely following discussions on the future of European sustainable finance regulation. SFDR 2.0 is widely seen as an opportunity to provide clearer definitions and greater guidance for investors, particularly regarding the distinction between impact investing and other sustainable investment approaches.

The findings underline that the future development of the market will depend on clear regulatory frameworks, stronger standardisation of impact measurement and management, and broader participation by institutional investors. BVII intends to advance these topics together with actors from finance, policymaking and civil society while strengthening exchange around common standards and market practices.

Bertelsmann Stiftung has been supporting the development of impact investing for many years. By co-funding the survey, it contributes to greater transparency regarding market practices, developments and challenges, while strengthening the knowledge base for the further development of the German impact investing market. In addition, together with BVII and other partners, Bertelsmann Stiftung supports the IMMPACT Guide, a practical reference framework for impact that aims to provide guidance to investors and other actors within the entrepreneurial and impact ecosystem.