Inves­ting with Posi­tive Impact: Still Rele­vant in a Shif­ting World?

In an era of geopolitical turbulence and the erosion of long-standing institutions, one question looms large: Is investing for positive impact — for people and planet — still relevant today? The answer is not only “yes,” but “more than ever.” Despite shifting political winds, policy backlashes, and market volatility, the case for embedding impact alongside risk and return has never been stronger. If anything, the urgency has grown. To chart the path forward, we must reflect on where this movement began, understand today’s fractured landscape, and reimagine the strategies that can guide us toward a more sustainable and inclusive future.

The Origins of Impact: From Risk and Return to a Third Dimension

Historically, the foundations of investing have been built on two dimensions: risk and return. After the 1929 Wall Street crash, financial credibility became a core focus, leading to the rise of standardized accounting. From the 1970s onward, risk modelling became increasingly sophisticated, supported by the rise of computing power.

But about 20 years ago, something shifted. A third dimension — impact — began to take shape in global finance. Sparked by initiatives like the Rockefeller Foundation’s early work in 2007 and the creation of the Global Impact Investing Network (GIIN) in 2009, a growing movement began to question the purpose of capital. Was finance simply an end in itself, or a means to support the real economy and address societal needs?

This questioning emerged as a counter-reaction to financialisation — the increasing dominance of speculative financial activity disconnected from the real economy. As financial assets became concentrated in fewer hands, and non-productive financial activities came to represent up to 80% of global assets, the consequences became clear: short-termism, inequality, and systemic risk.

At the same time, we were (and still are) hitting planetary and societal boundaries. Clean air, biodiversity loss, water scarcity — once considered externalities — are now visible and measurable risks. Some, like environmental risks, are well-defined and addressed in regulation, such as the EU taxonomy. Others, like social inequality, are harder to define, and still lack a clear policy framework.

Nonetheless, the conclusion is clear: impact is not a luxury; it is a necessity. It is both a rational and a moral choice. If we do not integrate impact by design, we may be left with impact by disaster.

For more information we refer to a previous article published on bfw ‘Investings with positive impact for people and planet still relevant in today’s geopolitical and economic context.’

Where is impact in today’s context? Some observations

The current impact landscape is marked by deep contradictions. While political rhetoric increasingly questions the importance of sustainability, economic reality often tells a more nuanced, different story. These are highly uncertain times, with each day bringing new developments, making it difficult to draw definitive conclusions.

At first glance, however, serious headwinds and setbacks are evident. Several major U.S. banks have left the Net-Zero Banking Alliance, and the Net-Zero Insurance Alliance was disbanded and replaced by a body with more flexible rules regarding climate commitments. Global sustainable funds experienced a record net outflow of $8.6 billion in the first quarter of 2025, a sharp reversal from $18.1 billion in inflows during the final quarter of 2024. The U.S. alone accounted for $6.1 billion of these withdrawals, while Europe recorded its first-ever quarterly ESG fund outflow, totaling around $1.2 billion.

Political developments have added further uncertainty. In the United States, President Donald Trump issued an executive order that effectively froze over $300 billion in federal funding under the Inflation Reduction Act, halting disbursements for green infrastructure and clean energy projects. USAID faced near abolition. In Europe, defence spending dominates the political agenda, with sustainability no longer among the Commission’s top three priorities. Yet, despite these challenges, impact initiatives have not disappeared.

In the U.S., states such as California and New York continue to invest heavily in renewable energy, with California experiencing a boom in battery technology. Texas, traditionally associated with fossil fuels, has also maintained significant investments in wind and solar power, striving to secure a leadership position in renewable energy. Across the Pacific, China, despite being the world’s largest emitter of CO₂, has become the global leader in renewable energy capacity, investment, and technology manufacturing, from solar and wind to batteries.

Europe presents a similarly complex picture. While the EU’s political priorities—defence, economic competitiveness, and democratic governance—may overshadow sustainability in the headlines, substantial resources remain available for green initiatives. The €100 billion Clean Industrial Deal demonstrates that funding follows strategy: sustainability objectives tied to energy independence, affordable energy, or circular economy initiatives can still attract significant investment. Meanwhile, the European Commission has reaffirmed its legally binding 2030 and 2050 net-zero targets, and national governments, including Belgium and Flanders, continue to prioritize innovation, circular economy projects, and social housing.

The financial sector shows comparable resilience. Dutch pension funds such as ABP and PGGM and insurers like Achmea remain committed to impact investing, dedicating a significant portion of their portfolios to initiatives aligned with ESG principles. Even when market pressures encourage short-term gains in energy or defence sectors, these institutions continue to divest from companies that fail to meet governance or sustainability criteria. Similarly, the Norwegian Sovereign Wealth Fund—managing €1.5 trillion—maintains its ESG strategy, emphasizing that sustainability is essential for long-term financial value.

Amid these developments, a notable distinction emerges between social (“people”) and environmental (“planet”) impact initiatives. Social issues are often more culturally oriented, while green initiatives tend to align more closely with economic and political priorities. Initiatives linked to government priorities—such as re-skilling, affordable healthcare, or efforts to combat misinformation—gain traction and visibility. Conversely, social objectives that are less directly tied to competitiveness, innovation, or economic growth—such as poverty reduction, promoting inclusivity, biodiversity preservation, or mental healthcare—receive less attention. Short-term budgetary shifts toward defence further exacerbate this discrepancy.

Nevertheless, social and environmental objectives are ultimately interconnected. Public actors, despite limited resources, can act as catalysts, mobilizing dormant assets to unlock private capital. At the same time, private concessional capital should recognize the opportunity presented by these gaps and step up engagement, often through blended finance structures that combine different types of capital to maximize impact.

In short, while political headlines and market turbulence create uncertainty, the green and impact economy continues to advance. Financing for sustainable initiatives persists, albeit at a slower pace than some would hope. Companies and governments are beginning to recognize that green business is not only ethically necessary but good business: falling behind in sustainability carries real competitive risk. Perhaps most importantly, the shift toward impact represents a cultural transformation as much as an economic one, gradually embedding sustainability and long-term value creation into the way decisions are made.

Is there alpha in sustainable and impact investing?

Recent research increasingly suggests that impact and financial performance are not mutually exclusive. On the contrary, under the right conditions, impact itself can be a driver of financial outperformance, raising the question of whether there is alpha in sustainable and impact investing.

A notable example comes from a study conducted in April 2025 by Schroders in collaboration with Oxford Saïd Business School, which analysed 257 listed “impact” companies. The study found that impact investing can deliver strong risk-adjusted returns, with several key insights. First, these companies exhibited statistically significant alpha, meaning they generated risk-adjusted excess returns above benchmark indices. Second, their share prices demonstrated lower volatility compared with peers. Third, firms with higher impact materiality—where revenue is closely tied to social or environmental outcomes—tended to achieve stronger returns.

These findings are supported by broader market research. A Q4 2024 survey of 413 investment professionals across the UK, including asset managers and asset owners, examined barriers to integrating sustainability and impact investing into standard investment processes. While the full results of the study are not yet publicly available, early conclusions indicate that roughly half of investors agree sustainable investments generate better financial returns over the medium term.

It is important to note that certain impact areas may still require investors to forgo financial return deliberately. High-risk ventures, such as early-stage social enterprises or companies in sectors without established track records, may prioritize impact over short-term financial performance. Historical examples, like Tesla, illustrate that early-stage companies can rely on substantial public support while developing a sustainable business model, ultimately generating both impact and financial return over time.

So, while trade-offs between impact and return exist in specific contexts, growing evidence indicates that sustainable and impact investments can deliver competitive financial performance. For investors willing to adopt a deliberate, long-term approach, impact does not come at the expense of returns and may, in fact, enhance them.

Different Strategies for Long-Term Positive Impact

Incorporating impact into investment decisions can stem from two complementary perspectives. On one hand, it may be risk-driven, addressing legal, business, or reputational considerations—a reactive approach often described as single materiality, where the focus is on the risks climate change or other ESG factors pose to the company. On the other hand, impact can be value-driven, seeking to create positive outcomes proactively through new business models, innovation, or the scaling of existing solutions.

These approaches can be illustrated through environmental strategies:

•  A defensive, risk-based approach might focus on avoiding CO₂ emissions, reducing exposure to oil and gas, or mitigating potential stranded asset risk.
• A proactive, opportunity-based strategy, by contrast, emphasizes creating access to affordable alternative energy. This could involve actively investing in proven business models like wind farms, scrutinizing the carbon footprint of production processes, or exploring new models such as energy management systems or providing underserved populations with energy access.

Each approach offers distinct value. The current challenge lies in moving beyond compliance or “box-ticking” exercises and embedding impact by design into investment strategy, ensuring that positive outcomes are intentionally generated alongside financial returns.

Conclusion: The future, we design today

Fifteen years ago, few imagined a world where solar and wind energy would be cheaper than fossil fuels. And yet, here we are. Thanks to a combination of policy, innovation, and persistent capital, what was once idealistic is now economic common sense.

So let us imagine today the world we want to live in by 2035 or 2040 — and begin investing accordingly. That means designing for long-term resilience, supporting innovation that addresses real-world problems, and measuring success not just by quarterly returns, but by the value we create for future generations.

If we fail to act, we risk ending up in impact by disaster. But if we succeed — through courage, coordination, and commitment — we can make impact an equal dimension alongside risk and return in every financial decision.

That’s not just an investment strategy. It’s a vision for a better future.