Since 2022, sustainable finance has been experiencing a slowdown. Rising rates, geopolitical tensions and economic uncertainty have led to investors reviewing their ambitions. Despite this, sustainable finance has not disappeared; it has been normalised.
Grand statements have given way to more targeted and pragmatic commitments. Impact investing, which – beyond a financial performance – aims to generate a net social or environmental benefit that can be identified and measured, is a particularly good illustration of this development. Its promise is challenging: it requires investors’ intentions to be brought in line with a real-world transformation of the economy.
This demand explains the rationalisation that has been seen in recent years. The number of specialist funds has shrunk, and assets have become concentrated in the hands of players with more solid expertise. Sustainability-related acronyms and new initiatives have, consequently, become scarce, while investment policies and reporting have become more accurate.
Today, a more progressive growth cycle is getting under way, but this cycle is also more mature and selective. Recent inflows suggest an uptick in interest: in Europe, according to Morningstar, sustainable funds saw net inflows for two consecutive quarters in 2026, totalling some USD 3.5 billion in Q2, following on from USD 8.2 billion in Q1.
This resurgence in interest marks the start of a new phase for impact investing, which is now being driven by three underlying trends that could accelerate its growth.
First, asset managers have built up a considerable amount of experience. In the beginning, impact investing was sometimes seen as just another investment theme among many. This view underestimated its distinct qualities: the risks involved in deviating from traditional strategies, the difficulties of measuring results, and the need to link impact, return, risk and liquidity.
Since the end of the 2010s, risk management and investment teams have honed their methods: portfolio construction is more rigorous, eligibility criteria are better defined, and execution risks are now integrated into analyses.
Second, asset holders have, for their part, also specified their expectations. Pension funds, institutional investors and private clients are developing their own approaches and are more explicitly incorporating sustainable solutions into their investment policies.
Calls for tender have become more precise. Investors are asking what the aims are, how they will be measured and what the real contribution of their capital will be. In impact investing, a promise alone is no longer enough; you have to show the change that has been funded, recognise limits, and monitor it over the long term.
A third aspect is the increasing concentration in the equity markets. The four top names in the MSCI World represent more than 20% of the index; in emerging markets, the three largest capitalisations account for over 30%.
This concentration is pushing investors to seek out new sources of diversification, and impact investing can contribute to this as long as it is not presented as a miracle solution. By financing firms, projects or sectors that are underrepresented in the traditional indices, impact investing can grow the exposure to the real economy while responding to clearly defined social or environmental goals.
The advantage of Geneva’s ecosystem
The development of impact investing does not only depend on the availability of capital; it also requires an ecosystem that is capable of linking finance, the real economy, research, civil society and public authorities.
Switzerland – and Geneva in particular – has some rare advantages at its disposal: a long tradition of wealth management, strong institutional stability, and a concentrated international network.
This ecosystem offers more than just a reputational advantage; NGOs enable a better understanding of on-the-ground needs; researchers contribute to improving how impact is measured; firms identify financing needs; and public authorities set up the necessary frameworks. The announcement in August 2026 that a new office of the International Sustainability Standards Board (ISSB) would be set up in Geneva is testament to this, reinforcing the city’s role in setting international standards and its ability to bring together regulators, investors, companies and universities.
For asset managers, these interactions constitute a considerable source of knowledge and innovation, while the energy, social and technological transitions are reshaping the markets. It falls not only to the asset managers but also to firms, researchers and public decision-makers to turn this proximity into results. This is how impact investing will be able to move from being a convincing ambition to an asset allocation that is credible in the long term, all supporting future growth sectors.
Sustainable finance is thus a long way from having had its last word on the matter; it has simply grown out of a time of slogans and soundbites, and has moved on to one of proof. Impact investing can still be ambitious, as long as it accepts a new, disciplined framework: measurable goals, rigorous portfolio construction, and solid financial performance.
The opinions expressed herein are correct as at 2 November 2026 and are subject to change without notice. This information should not be relied upon by the reader as research or investment advice regarding any particular fund, strategy or security. Past performance is not a guide to current or future results. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.
The views and opinions expressed by fund managers (internal or external) may differ from the house view. They are shared for informational purposes and do not constitute investment advice or a recommendation.
