A nine-year study from Toniic’s T100 Project has revealed a shift in how impact investors are approaching portfolio construction. The project conducts a longitudinal study, with a new comprehensive report to be released next month, of investment portfolios 100% activated towards deeper positive net impact in every asset class. The study draws from more than 100 portfolios, including 1,600 impactful investments.
While conventional wisdom has long dictated that financial returns should drive investment decisions, a new paradigm is emerging – one where the potential for positive change takes center stage.
Purpose and profit
Traditional portfolio theory suggests a careful balance of risk and return, often achieved through a conventional 60/40 split between equities and other assets. However, impact investors are crafting a different story. While maintaining similar broad allocations, they’re pivoting toward private markets, particularly private equity. This isn’t merely a coincidence – it reflects a deliberate strategy to pursue deeper, more meaningful impact.
Why are impact investors so drawn to private markets? The answer lies in the unprecedented opportunity these markets provide to address the United Nations Sustainable Development Goals (SDGs). Private equity, in particular, has emerged as the preferred asset class for impact, offering the most diverse range of SDG-aligned investments and the highest concentration of what the Impact Management Project calls “contribute to solutions” opportunities.
Beyond passive investment
What truly sets these impact investors apart is their multifaceted approach to creating change. Rather than simply allocating capital, they’re employing a sophisticated blend of strategies – from values alignment to shareholder engagement – to amplify their impact. Private equity leads the charge here too, offering investors the broadest canvas for implementing these varied approaches.
Even in public markets, impact investors are rewriting the rules of engagement. Although it can be a difficult asset class to find “deep” enterprise impact, only 22% of assets allocated in public equities in the data set are labeled as “does or may cause harm.”
Even that portion may be strategic: Many investors are specifically seeking out opportunities where they can leverage shareholder activism to drive positive change from within, demonstrating that impact investing isn’t just about where you put your money, but how you use your influence.
Long-term resilience
Perhaps the most striking finding from the T100 study is that 64% of portfolios in the study contain at least some catalytic investments, and on average, 19% of the investment capital in studied portfolios is allocated toward catalytic capital. This finding suggests a meaningful number of impact investors are embracing subcommercial investments in the context of a broader commercial strategy. This revelation challenges the long-held assumption that financial returns must always take precedence. Instead, these pioneers are demonstrating that impact investing exists on a spectrum, where sometimes the potential for positive change can outweigh pure financial considerations.
“Over the years, it has become increasingly clear to us that the current metacrisis calls for financial structures that are still in the making – ones that move beyond capital preservation and accumulation, toward capital circulation, regenerative wealth distribution, and deeper relational accountability,” says Anne Rimmi of Be The Earth Foundation. At Be The Earth Foundation, says Rimmi, “we are embracing the complexity of this shift, knowing that the financial models needed for the future are still emerging, being tested, and co-created in collaboration with communities, movement leaders, and aligned partners.”
The London-based foundation embraces flexibility in capital deployment, allowing its financial tools to adapt to the specific needs of regenerative projects, rather than imposing rigid return expectations. “We prioritize wealth circulation over accumulation, stewarding resources in a way that fosters systemic transformation,” says Rimmi. While the foundation often uses revenue-based finance and other innovative funding mechanisms, its core focus remains on catalyzing regenerative economies, not just attracting more capital, but ensuring that capital flows in service of life.
“Be The Earth is committed to being part of the solution, not perpetuating the challenges of extractive financial models,” says Rimmi. We know there are better ways — ways that honor relationships, ecosystems, and long-term resilience over short-term returns. And we are actively working to bring them to life.”
This shift doesn’t mean impact investors are abandoning financial prudence. Rather, they’re crafting sophisticated portfolios that balance commercial returns with catalytic investments—those capable of sparking transformative change. It’s a nuanced approach that defies the traditional either/or mentality of investing.
The road ahead
While there’s no universal template for building an impact portfolio, the T100 study makes one thing clear: the future of investing is being shaped by those who dare to look beyond conventional metrics. As we await next month’s detailed report, one thing is certain — the potential to drive positive impact is no longer just a consideration in asset allocation; it’s becoming the driving force.
This evolution in investment thinking isn’t just changing portfolios — it’s redefining what it means to be a successful investor in today’s world. The question is no longer simply “What returns can we generate?” but rather “What positive change can we create while generating returns?”
Melody Jensen is the manager of the T100 Project at Toniic.
