The UK: leading the way in impact investing

The world is facing a host of challenges—from climate change to social inequality, all within the context of an inflationary economy. Amid these pressures, the UK has emerged as a global leader in impact investing, transforming how capital is used to create a fairer, greener future.

Impact investing is where profit meets purpose. It’s about aligning financial returns with measurable social and environmental benefits. This approach is gaining traction as more investors recognise the power of capital to address critical global challenges.

Why the UK stands out

The UK’s impact investing sector is expanding rapidly, and here’s why:

• Clear mission: For years, successive governments have supported impact investing through policies that encourage investors, equip social enterprises with access to capital, and provide funding to the market.
• Knowledge and expertise: The UK ranks second globally in producing impact investing research, with nearly 30,000 articles published by institutions and academics to date.
• Scale: By the end of 2023, the UK impact investing market was worth £76.8 billion, growing at an impressive 10.1% annually since 2020, despite wider market stagnation.
• Leading talent: With over 800 impact investors rooted in the UK, alongside a financial and professional services sector that attracts global talent (40% of London’s FPS workforce comes from overseas), the UK boasts an unrivalled depth of expertise.
• Capacity building: Collaborative initiatives across the sector share best practices, attract top talent, and drive growth.

Why this matters

The UK represents 8% of the global impact investing market, but there is enormous potential for growth. Impact investing currently accounts for less than 1% of assets under management in the UK. As purpose-driven companies grow (projected to rise 27% by 2028), so does the opportunity to expand the impact economy.

Pension funds, family offices, and insurance firms are increasingly looking to participate, alongside social investors, private equity, and venture capital firms. The momentum is building, with a collective push toward aligning investments with sustainable development goals.