A new report from Impact Europe estimates that the European impact investing market now has around €190bn of AUM — just 2.5% of the €7.6trn that the NGO estimates could be eligible for the movement.
According to the report, The Size of Impact: Main Takeaways from the European Impact Investing Market Sizing Exercise, public impact investing — which it counts as separate due to several factor including differing processes and investees — is now estimated at €40bn.
Regardless of the small amounts, Impact Europe states that the private impact investing market has shown ‘notable growth’, given that has increased from €80bn in the past two years.
The authors of the report wrote: “The total direct investments in unlisted assets under management rose by 20% between 2022 and 2023, closely matching the 26% growth recorded in the previous period (2020-2021) and the 21% annual growth rate reported by the GIIN in their latest study.”
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There were a number of factors in this growth, writes Impact Europe. These include a growth in direct AUM, the inclusion of indirect investment in this year’s estimates, and a better understanding of market nuances through reinforced collaboration.
Not all, however, was rosy.
They added: “Progress towards achieving the [Sustainable Development Goals] is, unfortunately, far off track, with only about 17% on track to be achieved. However, the growth observed shows that impact investing is increasingly considered as a tool to develop new solutions that operate at scale.”
Even so, Impact Europe said impact investors can contribute to the SDGs. It also said more than half (55%) of AUM was targeted towards Europe, with a further 18% targeted towards Africa, 12% towards Asia, and 8% to Latin America and the Caribbean. Only 7% of AUM, however, was targeted towards North America.
It wrote: “Impact investors still have [the upper hand] in investing in solutions for poverty, inequality, gender health, and education. But impact capital is increasingly flowing towards climate action and innovation.”
While the UK, France, and the Netherlands remain the epicentre of impact investing within Europe, the NGO sees ‘promising growth potential’ within Turkey, Portugal, and Greece, saying that the three countries are ‘gradually building the foundations for future expansion’.
