School is winding down for the summer, but for advisors wanting to get smarter on impact investing, it’s a good time to revisit the basics.
The learning curve for impact investing can feel steep at first. New terminology, evolving product offerings, and a wide range of impact areas can seem complex and intimidating. Getting a handle on the most foundational topics around impact investing can go a long way toward helping advisors to gain confidence and get started.
For advisors, the goal is not to become an impact expert overnight. It is to build enough fluency to recognize client interest, ask better questions, evaluate opportunities with the same discipline applied to any investment, and know where impact investing may fit within a broader portfolio.
Think of this as a summer refresher: six common questions advisors ask when they’re getting started in impact investing, along with the answers that can help with building knowledge and engaging in client conversations.
1. What is impact investing?
The Global Impact Investing Network, or GIIN, defines impact investing as “investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return.”
That intentionality is what distinguishes impact investing from broader sustainable investing approaches. Rather than simply screening out certain companies or evaluating environmental, social and governance (ESG) factors, impact investors seek to direct capital toward solutions that address specific challenges, such as affordable housing, climate resilience, healthcare access, education, financial inclusion and community development.
Importantly, impact investing is not philanthropy. Investors expect that capital may be returned and, in many cases, aim for market-rate financial performance.
For advisors, impact investing can be viewed as another tool for helping clients align their portfolios with both their financial goals and the outcomes they hope to support in the world.
2. Is there demand for impact investing?
Investor interest in impact investing is strong — and growing. Morgan Stanley’s 2026 Sustainable Signals survey found that 92% of global investors are interested in sustainable investing,up from 88% the year before. Among younger investors, interest is even higher, reaching 99% of Gen Z investors and 97% of Millennials.
According to the GIIN’s Sizing the Impact Investing Market 2024 report, more than 3,900 organizations now manage an estimated $1.57 trillion in impact investing assets globally, representing a 21% compound annual growth rate since 2019.
The growth reflects increasing participation from institutional investors, foundations, family offices, and wealth advisors. For advisors, the market’s continued expansion means there is more manager experience, product availability, and performance history than ever before.
3. How do advisors think about financial performance in impact investing?
The impact investing market includes investments targeting a range of financial outcomes, from market-rate returns to concessionary ones. According to the GIIN’s State of the Market research for 2025, more than half of impact investors target risk-adjusted market-rate returns.
As with any investment opportunity, expected returns vary based on asset class, liquidity profile, geography and other factors. A climate venture fund will have a different risk-return profile than a green bond strategy or an affordable housing debt fund.
The advisor’s role remains the same: Evaluate opportunities based on client objectives, risk tolerance, and portfolio construction needs.
For a deeper dive on the relationship between financial performance and impact outcomes, see our recent article on the spectrum of impact returns.
4. What types of investments can clients use to pursue impact?
Impact strategies can be implemented across every asset class including public equity, venture capital, private credit, real assets and direct investment.
The diversity of product types allows advisors to find areas where impact aligns naturally with a client’s financial goals, liquidity needs, and risk profile and incorporate impact opportunities within existing portfolio frameworks rather than treating impact investing as a standalone allocation.
5. How do investors know whether impact is actually happening?
Impact reporting is the process of measuring and communicating the social or environmental outcomes associated with an investment.
It begins with defining the intended impact of a strategy — whether that’s increasing affordable housing, expanding healthcare access, supporting small businesses, or reducing carbon emissions — and identifying the metrics that will be used to track progress. Managers then collect data from portfolio companies, projects, or borrowers and report on results over time. Many managers align with established industry frameworks and seek independent verification of their impact management practices.
For advisors, the key question is whether a manager has a credible process for setting impact goals, measuring relevant outcomes, and reporting results in a way that helps clients understand the difference their capital is making. Connecting with the real-world results and stories behind their investments is often a highlight of the process for clients.
6. Why should advisors add impact investing to their toolkits?
Clients increasingly express interest in themes such as climate resilience, affordable housing, healthcare access, community development, education and economic opportunity. While they may not always use the term “impact investing,” they often want to understand how their capital can contribute to outcomes they care about.
Impact investing provides a framework for connecting those priorities to investment decisions.
It can also help advisors engage clients in deeper conversations about values, legacy, and long-term financial planning.
Class dismissed
The advisors who build fluency now will be better prepared to guide clients as interest grows. Impact investing gives advisors another way to connect capital with purpose, while still anchoring the conversation in disciplined due diligence and long-term financial objectives.
Understanding these core concepts provide the foundation for the next level of learning: understanding the opportunities available in the market and helping clients put their values into action through their portfolios.
Haley Aubuchon-Jones is the director of marketing at CapShift.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
Advisors’ Corner is a content partnership between ImpactAlpha and CapShift. CapShift’s impact investing platform empowers financial and philanthropic institutions — and their clients — to invest in their vision for a better tomorrow. All content is solely for informational purposes and should not be used as the basis for investment decisions.
