Impact investing, much like the world around us, is facing a period of prolonged turbulence. The interconnected shocks of 2024 — including the escalating climate and biodiversity crises, rising food insecurity, and mounting global health challenges — are exposing vulnerabilities in our societies like never before. These issues are compounded by rising geopolitical tension, a populist backlash against globalisation, and political turbulence and instability, along with the ongoing social and economic impacts of the recent pandemic.
These challenges are felt daily by communities around the world, from coastal developing states bracing against natural disasters, to low-income countries whose underfunded health systems are struggling to respond to disease outbreaks, and indeed to nations where war has upended daily life entirely. The prospects for resolving any of these global issues — already dim — seem to have gotten even dimmer as the year has progressed, raising doubts about whether solutions will be found in time.
Impact investing’s promise is to offer financial returns alongside tangible social and environmental benefits. But as the global economy grapples with multiple generational challenges, coupled with a cross-sectoral demand for long-term investment, the industry finds itself at a crossroads. The question is no longer whether impact investing can scale; it must, and eventually will. The questions are: How can it scale quickly, and will it be fast enough to make a difference?
Through my own journey in the impact investing community — from being a Managing Partner at Bamboo Capital Partners and Managing Director at Palladium to co-founding climate resilience initiatives like Resilienture — I have seen first-hand how the sector has grown. And I’ve seen how it can be a powerful force for good, creating meaningful change while delivering solid financial returns. As I start with enthusiasm my new role as a Managing Partner at KOIS, a global leader in innovative “caring finance,” I am focusing on the practicalities of scaling solutions and unlocking positive impact. And as I look at the events of the past year and their implications for 2025 and beyond, I’m struck by how many of the world’s ongoing series of shocks and crises actually represent valuable opportunities to drive systemic change through innovative impact investment. Far from being an impossible task, the need to solve these global crises may ultimately become the impetus for true scale in the industry.
The Effects of Global Crises on Impact Investing
Economic pressures continue to weigh heavily on investors, with inflation and high interest rates, and tightening credit and liquidity around the globe. Disrupted supply chains, particularly in emerging markets, have created further volatility, making it increasingly difficult to attract the kind of long-term capital that impact investments require.
Compounding these economic challenges are shifting geopolitical realities — ranging from the invasion of Ukraine, to populist movements, protectionist policies such as E.U. tariffs on Chinese electric vehicles and the blanket tariffs proposed by the incoming Trump administration — along with expected cuts to U.S. government funding. These issues are all contributing to a more fragmented global landscape, creating higher risks for projects that depend on cross-border cooperation and public-private synergies, as many impact investments do.
In this environment, many private investors have grown cautious. A growing appetite for liquidity has led to an emphasis on short-term returns, leaving less room for the patient capital that is so crucial to the success of impact investments. Investors may prefer the quick wins offered by stock markets and established sectors, but the long-term cost of this short-term focus cannot be overstated. It risks sidelining the transformative, scalable solutions needed to address the systemic crises the world is facing.
Meanwhile, the demand for these solutions has never been greater, with the UNCTAD estimating that, since the COVID-19 pandemic, the annual investment gap needed to meet the UN Sustainable Development Goals has widened from $2.5 trillion to more than $4 trillion. As climate resilience, food security, and education and healthcare access have become global priorities, stakeholders increasingly recognise the intersections between these sectors, creating an opportunity for solutions that address multiple dimensions of a problem rather than working in isolation.
How Impact Investors Can Rise to the Challenge
Impact investors are well-placed to address this growing need for holistic approaches. For instance, with more than half the global population at high risk of experiencing an extreme weather event due to climate change, we must reimagine how we finance solutions to protect communities and ecosystems. My work at Resilienture exemplifies one approach: using nature-based solutions to mitigate climate risks while safeguarding critical infrastructure. Whether it’s restoring mangroves to buffer rising seas or deploying renewable energy systems to ensure energy security in remote areas, innovative environmental finance is becoming a lifeline for vulnerable communities.
Similarly, around half of the world’s population still lacks access to essential healthcare services. At KOIS, we are blending and deploying public and private capital to close this gap, as part of our mission to turn projects with high societal and environmental impact into tangible investment propositions. By aligning the strengths of the public and private sectors, we can create healthcare solutions which are not just effective but also affordable and sustainable, especially in regions where public systems are under-developed and under-funded.
We’re also mobilising capital to address the challenge of global hunger, which has been exacerbated by disrupted supply chains and extreme weather events, leaving millions without reliable access to nutrition. By partnering with smallholder farmers and local organisations, we aim to create food systems that are resilient to both economic shocks and environmental changes. These efforts address immediate needs while also laying the groundwork for long-term sustainable agricultural practices.
A similarly forward-looking approach is necessary to address the challenge of unemployment. Automation is set to displace around 400 million workers by 2030, a number that could grow to as much as 800 million under some projections. As a result, the need for inclusive education and training has become urgent. Many young people face an uncertain future without the skills required to adapt. Investing in education is not just about preparing these individuals, it is about strengthening entire communities and economies.
These challenges are deeply interconnected. Food security cannot be addressed without considering climate resilience; global health cannot be improved without stable, sustainable food systems; education cannot prepare the workforce of the future without also tackling economic inequality. The solutions we develop must necessarily be holistic, leveraging insights from across sectors to create impact at scale.
Causes for Concern — and Reasons for Optimism
We know that the incoming Trump administration in the U.S. is giving many in the impact investing community cause for concern, due to issues ranging from the potential economic impact of proposed tariffs, to the potential human impact of reductions in government funding for social and global development programs. However, one of the most surprising lessons from the first Trump presidency was the catalytic effect that the threat of reduced government funding had on the impact sector — something I witnessed in my own work as an impact investor during those years.
When Trump proposed to cut a third of UN diplomacy and aid budgets, the unintended consequence of this disruption was to drive organisations traditionally reliant on public funding to seek new partnerships with private capital. This helped bridge the longstanding divide between development aid and private investment, opening doors for the private sector to step into roles previously dominated by multilateral and philanthropic actors. What initially seemed like a crisis created opportunities for the private sector to step up, bringing innovative, market-driven solutions that otherwise might not have emerged.
This convergence of aid funding and private capital shifted the focus from temporary poverty alleviation to sustainable economic empowerment for the recipients of these funds. As new potential geopolitical disturbances seem poised to disrupt traditional funding once again in the second Trump term, we can expect this pattern to repeat, opening the door for a new wave of private-sector leadership in impact investing.
Constraints can in fact drive creativity and collaboration — necessity is the mother of invention, after all. While populism and geopolitical tensions pose risks, they also highlight the benefits of impact investing. They remind us why it is so important that investments generate outcomes beyond what traditional capital would achieve.
The long-term view provided by patient capital is key. In global markets dominated by short-termism, impact investing offers a counterweight. It prioritises systemic change over quick wins, enabling us to tackle the root causes of global crises, all while offering sustainable financial returns.
The new year, and the years and decades to come, will be full of challenges and opportunities for the industry. To unlock the full potential of impact investing, we must strengthen collaboration between the public, private and civil society sectors. As it happens, that’s the goal of this week’s “Building Bridges” conference, an annual event launched during the first Trump administration to strengthen ties between international organisations and private financial institutions. Grassroots solutions need to take centre stage in these discussions, as local communities often have the most effective insights for driving change in a way that is sustainable on the ground.
Mobilising public and private capital for education, healthcare and climate resilience will require intentional efforts to address the needs of both people and the planet. Investing in these overlapping sectors is mutually reinforcing and leads to an amplified impact. These are critical problems, yet at the same time they are opportunities to innovate, collaborate and transform. At KOIS we are focused on impact and financial returns from investments in these sectors, overlaid with a gender lens. By aligning the interests of investors, corporations, NGOs and communities, we aim to create value that extends far beyond the bottom line.
As we reflect on 2024 and look ahead to the challenges of 2025, I am optimistic that impact investing will grow and help create a more resilient and inclusive world. By deploying the power of blended public and private capital, particularly in the key education, health and climate sectors, we can leverage today’s crises to create measurable positive impact. Against a backdrop of political uncertainty, now is the time for courage and collaboration. By working together, we can build a world where financial and impact returns go hand-in-hand, aligning with my personal motto: “impact lives, share profits.”
Florian Kemmerich is a Managing Partner at KOIS.
Photo credit: Johannes Plenio.
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