In the first of a series of reflective pieces by guest contributors in 2025, we are delighted to bring you this article by our friends at the Global Impact Investing Network. In a letter to GIIN members, GIIN CEO and Co-founder Amit Bouri outlines the seven key trends in impact investing we should to look out for this year.
If there’s one thing that’s certain about the year ahead, it’s that it will be a year of change. Voters around the world have rejected incumbent governments and demanded something different in the US, Germany, Botswana, the UK, Japan and beyond.
Times of upheaval are also times of opportunity, and I believe private capital will play an increasing role and find new avenues to improve lives and protect our planet. Here are seven trends to watch out for as we enter 2025.
1. A renewed focus on the working class and poor
Governments around the world are under pressure to deliver for their constituents. People are demanding access to quality jobs, economic opportunities and a liveable environment. Building widespread financial stability will be a critical goal, and will involve improving access to financing, increasing the affordability of basic needs like housing, and building wealth through structures like worker-owned businesses. Improving quality of life will also mean breaking down historic inequities, from urban to rural environments, and giving people the means and opportunity for a better life. While many impact investors have already been actively investing towards these goals, governments will be looking to mobilise more private capital for these solutions.
2. Emerging market investing getting more global attention
Many countries from Indonesia to Brazil to Nigeria still have their growth stories ahead of them. The development of these economies is critical, and must happen in a way that ensures social equality and a healthy planet. There’s a massive opportunity for investors in these transitions: they can invest in businesses and industries while using impact goals to help ensure a stable social and environmental future.
We’re already seeing interest in those opportunities grow. 43% of investors planned to increase their allocations to emerging markets, according to the GIIN’s State of the Market 2024 research.
Moreover, as developed country governments focus on domestic inequality in response to voter pressure, there could be a diversion of resources away from international aid and a greater emphasis on mobilising investment. Impact investors can step in to bridge that gap, and get money to the places where it’s needed most.
3. A growing demand and supply for catalytic capital
Ambitious goals like promoting lasting, sustainable, inclusive growth will require innovative financial strategies to see success. We are seeing an expansion of investors, particularly high net worth families, who are committed to solving problems and are looking to use different types of capital to address them. More investors are signalling an interest in using catalytic capital to take bold steps to achieve their goals, in areas including economic revitalisation, gender equity, climate solutions, regenerative agriculture and food systems, and beyond. Catalytic capital is precious, and 2025 will open a window of opportunity to mobilise it as the world looks to private sources to step up to address global issues.
4. Continued interest in blended finance
I also expect to see continued interest in blended finance, as investors have made progress in using catalytic capital to unlock much larger and more impactful opportunities than were previously available. These strategies involve pairing patient, risk-tolerant capital with capital from investors seeking market-rate returns. Experienced impact investors expanding to new markets and models are increasingly looking to blended finance to de-risk investments. While some of the long-standing challenges to blended finance remain, the progress last year has energised interest and given investors some new models to build from. I expect particular interest in blended finance from investors looking to mobilise capital to specific strategies and geographies.
5. An expanding impact investing market in Asia
This is a particularly exciting time for impact investing in Asia, due to growing activity from institutional and individual investors alike. We are also seeing governments support the development of the market.
There’s increasing interest from investors headquartered in Asia, and others investing heavily in Asia, to pair investments with positive outcomes. The GIIN’s recent report, In Focus: Impact Investing in Asia in 2024, found that out of 68 Asia-focused investors managing over $38 billion USD in impact AUM, 89% said their financial returns were in-line with or exceeded their expectations. This signals the development of an accelerating impact investing market, which could take off in 2025. Realising that potential will mean developing connectivity across global markets and taking every opportunity for leadership.
In his letter to GIIN members, Amit Bouri goes on to expand on two more trends: 6. Climate solutions rising on the agenda and 7. The need to nail the narrative. Click below to find out more.
6. Climate solutions rising on the agenda
As investors’ approaches to climate finance evolve, I expect to see more interest in climate solutions investing.
7. The need to nail the narrative
With strong growth over its 15-year history, the impact investing industry is in a formidable place with buy-in from a broad set of investors and stakeholders.
The Global Impact Investing Network (GIIN) is the global champion of impact investing, dedicated to increasing its scale and effectiveness around the world.