Sustainability Blueprint: who’s behind the growth in impact investing?

The third article in my series on Climate & Sustainability explores how interest in impact investing varies across different asset owners, and the role governance plays in effective implementation.

In my first blog of this series, I shared a standout finding from Mercer's 2025 Large Asset Owner Barometer: when institutional investors were asked which asset classes they plan to allocate to over the next 12 months, impact strategies ranked third in terms of net expected allocations—trailing only private credit and infrastructure.[1]

This is building on impressive momentum already, with more than 3,900 organisations now managing over $1.57 trillion USD in impact investing assets globally, marking a 21% compound annual growth rate since 2019, according to the Global Impact Investing Network (GIIN).[2]

This arguably signals a material shift in investor behaviour, one that recognises that sustainable returns and real-world outcomes are not mutually exclusive. However, this is not a uniform trend across all asset owners. Some are able to explore impact investment more than others, owing to key distinctions in terms of their investment horizon, overarching mission or simply a natural inclination to give back to local communities.

The asset owners driving impact investment industry forward

At Mercer, some of the areas we’re seeing the strongest interest in impact investing are sovereign wealth funds, family offices and endowments & foundations, with these asset owners all being uniquely positioned to potentially lead in this area. Each of these groups can bring structural advantages: governance agility, long-term capital horizons, and crucially the intrinsic motivation to align investments with broader societal priorities.

Sovereign wealth funds, for example, often carry a dual mandate: preserving intergenerational wealth whist advancing strategic national interests. Their ability to commit patient capital enables them to invest in systemic solutions, from infrastructure resilience to climate adaptation, in line with domestic development goals.

Family offices are also emerging as a potential leader in this space, as wealth transitions to a younger generation who may tend to be more purpose oriented. For many, values-aligned investing can be a natural evolution of philanthropic activity, moving beyond grants toward full portfolio alignment with personal and community values. While endowments & foundations by nature have always been mission-oriented in their grant making, many are now looking at how their wider asset allocation can be more closely aligned with their overarching mission, without sacrificing long-term returns.

What ultimately could set these asset owners apart is the freedom to think long-term without the quarterly pressures typical of other institutional investors such as listed entities or corporate pension funds, but implementing strategies like these requires more than conviction – it demands clarity.

The role of governance in effective values-aligned investing

For asset owners looking to pursue investments with an impact-oriented objective, a potential starting point is to codify the organisation’s beliefs and articulate their impact priorities. One of the critical components of this process is effective governance. An effective structure can define the responsibilities of all parties involved and establish regular monitoring and reporting protocols. The goal is to ensure that everyone is aligned with the organization’s mission and how that mission is reflected and implemented in the portfolio.

Key questions, such as “what values are most important to reflect in the portfolio?” and “how closely should the portfolio align with these themes?,” can support the refinement of an organization’s investment policy statement. Stakeholders’ views can be critical to the process of balancing mission alignment with the need for financial sustainability.

Another step is to translate policy into portfolio design, building portfolios across both public and private markets that deliver measurable impact. Through our impact advisory and sustainability frameworks, we help clients design investment strategies that aim to reinforce, rather than sit apart from, their core mandates. We work closely with clients to build that foundation, using tools such as our climate risk ratings, custom sustainability integration models, and our RITE framework (Robust, Integrated, Targeted and Evidence-based) to embed these principles across asset classes.  Doing so, helps ensure that values-aligned investing is systematic, scalable, and measurable – not simply reactive.

Of course, as more capital enters this space, the risk of fragmentation or ‘scattergun’ investing could increase. Without a cohesive framework, impact strategies can underperform, which is why we place an emphasis on clear thematic focus, impact measurement and integration into broader governance structures as key drivers of successful implementation.

The future role of private capital in impact

There is arguably a clear recognition that governments alone cannot address global challenges related to climate and societal issues. Our collaboration with British International Investment reflects this commitment, combining public and private capital to drive high-impact solutions in emerging markets.[3] It’s just one example of how institutional capital, when guided by purpose, can deliver transformative change. And shows that sovereign wealth funds, family offices and endowments & foundations are potentially uniquely placed to lead with their capital being long-term, unconstrained and increasingly value-driven.

Important notices. References to Mercer shall be construed to include Mercer (US) LLC and/or its associated companies. Mercer provides investment solutions and services to a wide range of clients across geographies, regardless of political, social, or religious viewpoints. Mercer has a range of tools and solutions available to help clients meet their particular investment objectives, which may be informed by regulatory requirements and market practices that vary across geographies and investor types. To provide a broad education on topics, including environmental, social, governance (ESG), values aligned and sustainable investing, Mercer does not artificially limit or intentionally target educational content to readers based on the circumstances of a particular audience. The ESG, values aligned, or sustainable investing concepts mentioned herein may not be suitable or appropriate for all investors or in all geographical areas. For more information on whether and how Mercer’s services or products incorporate any of these concepts, please refer to product specific disclosures and/or please contact a member of your local Mercer team. © 2025 Mercer (US) LLC. All rights reserved. Please read here: Important notices (mercer.com)

 [1] All responses are sourced from the Large Asset Owners Barometer survey conducted between October 1, 2024, and January 15, 2025. Responses were provided by 74 respondents. It is important to note that the respondents did not receive any form of compensation. It is important to recognize that survey results are subject to inherent limitations and uncertainties. The survey results may not capture all relevant factors or market conditions. These results should not be construed as personalized investment advice. 

[2] Sizing the Impact Investing Market 2024 - The GIIN

[3] https://www.mercer.com/insights/investments/portfolio-strategies/scaling-up-climate-finance-in-emerging-economies/