Pension funds, along with insurance companies, have become the primary contributors to impact investments in private, unlisted markets, a new report has found.

The European Impact Investing Consortium’s The size of the market report found that pension funds and insurance companies represent 28 per cent of the total capital made available to impact investments.

“Institutional investors are traditionally conservative actors, often favouring investments with stable returns and proven track records. Their shift toward impact investing reflects an increasing alignment with fiduciary duties and a growing confidence in the sector’s ability to deliver measurable, positive social and environmental outcomes alongside financial returns, which is further supported by recent research from Pensions for Purpose,” the report stated.

However, despite this, they show limited involvement in direct impact investing. Instead, the report found their contribution to the private impact investing ecosystem is mainly indirect.

Overall, the European private impact investing market — comprising both direct and indirect investments in unlisted assets — is estimated at €190bn, 2.5 per cent of the €7.6trn, which is the total assets under management (AUM) the consortium considers eligible for impact investing in Europe.

Furthermore, the report found a promising growth of total direct investments in unlisted assets under management, of 20 per cent between 2022 and 2023.

The impact investing market in Europe is currently led by the UK, the Netherlands and France, which hold the largest shares in terms of AUM.

“These markets have well-established impact investing ecosystems, supported by a robust regulatory environment, active investor communities and a high degree of institutional engagement. Several other western European countries — including Italy, Denmark, Belgium, and Spain — are making notable contributions to the impact investing sector. Meanwhile, Türkiye, Portugal and Greece, are emerging as nascent markets with promising growth potential,” the report noted.

Commenting on the findings, Impact Europe CEO, Roberta Bosurgi, said: “Notable growth in the market reflects the increase in private market impact investors, and the increased coverage of this is due directly to the collaboration of the consortium members. More needs to be done to solve social and environmental challenges, however, and it can only be done with institutional and catalytic capital (public and philanthropic) going hand in hand.”

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