Impact investing has grown rapidly over the past 15 years, with key themes having emerged according to James Gifford, Credit Suisse’s head of sustainable and impact advisory.

‘When the term was coined in 2007, it focused on developing countries and poverty alleviation, but it now includes substantial climate, education, healthcare and agricultural technology,’ he says.

Decarbonisation is a particularly ‘unstoppable’ theme, due to tighter regulations and clean technology development, and is more than just renewable energy.

‘It includes electric mobility, industrial process transformation, technology for smart buildings and cities, and anything increasing productivity and reducing environmental impacts in agriculture,’ Gifford adds.

According to the Global Impact Investing Network, there are currently $1.16tn (CHF 1.09tn) in assets managed by 3,349 organisations in such areas.

However, this is still relatively tiny in comparison to the broader sustainable investing sector, which is a $35.3tn industry, according to the Global Sustainable Investment Alliance.

Impact investing may be smaller, but it’s growing as measuring the effectiveness of projects has become crucial, according to Rosa Sangiorgio, global head of ESG at Pictet Wealth Management.

‘It’s no longer enough to say you have the intention of doing good; you also have to demonstrate it,’ she says. ‘Measures are increasingly needed to differentiate intention from action.’

The goal is to ensure investments have a positive effect on society. ‘Companies want to monitor and show their impact, while investors require transparency to make informed decisions.’

In addition, the regulatory crackdown on greenwashing, which targets companies deceiving customers into believing their products have a positive impact, may benefit the sector.

‘This greenwashing wave is probably what was needed to help clarify the situation, and foster awareness about the complexity of ESG and positive impact,’ Sangiorgio says.

She says climate change remains a dominant theme, including renewable energy, carbon capture, and technologies to help reduce energy consumption.

‘We’re also seeing a lot happening in health, particularly mental health, following the past couple of difficult years,’ she says. ‘There’s also a lot of interest in biodiversity.’

This is seen as a theme for the future.

‘We’re still at an early stage in discovering ways to invest in biodiversity and how to measure the impact of those initiatives. However, there are a lot of upcoming conversations on this topic with different stakeholders, from universities to regulators.’

Patrick Brechbühl, head of equities and alternative investments at Swiss Life Asset Managers, agrees that biodiversity issues such as water are becoming increasingly important.

‘We are convinced of the potential of impact investing, and we have launched an impact fund range addressing climate, biodiversity and urbanisation,’ he says.

In particular, he hopes that COP15, the UN Biodiversity Conference taking place in Canada in December, will see governments agree on goals to halt and reverse nature loss.

‘The key themes within impact investing at the moment are technologies to enable climate change mitigation and the adaptation to a warmer world,’ he says.

Brechbühl believes there is an increasing awareness that nature loss represents a ‘significant risk to corporate and financial sustainability’. This will see a greater focus on the UN’s Sustainable Development Goals (SDGs).

‘Only one-third of the SDGs are currently financed by public policies,’ he says. ‘According to UNCTAD, the gap is $2.5tn per year, which can be seen as an opportunity for investors.’

Elsewhere, financial inclusion is a key area of focus for Philipp Mueller, chief executive of Swiss-based BlueOrchard, the impact investment manager.

‘A large part of the rural population doesn’t have access to financial services,’ he says. ‘If you don't have a passport and an electricity bill, it’s really hard to get a loan or a bank account.’

However, inclusion goes beyond just banking services. Diversifying sources of income is another key strand, giving entrepreneurs access to much-needed cash.

‘Financial inclusion is one of the most powerful levers to help people lift themselves out of poverty,’ Mueller says. ‘There are also more focused strategies, such as those on gender, diversity and inclusion, where it’s difficult for women or indigenous populations to access financial services equally.’

Mueller predicts a rapid digitalisation in growth markets. This will enable people to learn and transact, while indirectly reducing greenhouse gas emissions with less travelling required.

‘While about 80% of the population are estimated to have a smartphone, only about 60% have access to the internet,’ he says. ‘That’s why it’s important to build critical digital infrastructure.’

Mueller says many impact investing projects are private market strategies, which often prevent people from investing due to regulatory constraints.

This is where he believes blended finance could help. ‘It’s a unique opportunity to solve the risk-return requirements and crowd institutional capital into impactful strategies,’ he says.

In the meantime, fund managers continuing to launch impact funds will help support the sector’s growth, according to Credit Suisse’s Gifford.

‘This will then bring in institutional capital into the space, enhance the professionalism of the impact measurement and metrics challenge, and grow the space overall.’