Updated with correction
Impact investing, traditionally associated with family offices and specialized foundations, is attracting more attention from pension funds and other large institutional investors as the approach goes mainstream.
"I think different large asset owners are coming around," said Hugh Lawson, head of ESG and impact investing for Goldman Sachs Asset Management in New York.
"They seek exposures to high-growth sectors where there is a strong business case, in things like renewable energy, and that just so happens to coincide with impact investing. There is a kind of overlap where the world is headed in terms of growth space," he said. "The real objective is providing capital for enterprises that you believe have a positive function overall."
While pension funds in Europe may be leading the impact investment movement, "that has come to the U.S.," he said. "Institutions now want to have a fairly granular understanding of what they own and how they do it."
Between institutional and high-net-worth investors, "we are seeing a lot of growth in new investors entering the market," said Amit Bouri, CEO of the Global Impact Investing Network in New York, a non-profit organization aimed at increasing the scale and effectiveness of impact investing around the globe.
The GIIN has seen 17% compound annual growth rate in global impact investment assets over the last four years. Its ninth Annual Impact Investor Survey released June 19 notched its largest number of respondents — 266 institutions including pension funds — and assets under management, $239 billion, with most respondents reporting that their investments met or exceeded expectations for both impact (98%) and financial (91%) performance. The increasing recognition of credibility and track records is giving institutions more comfort, and some benchmark studies "have demonstrated that market rates of return are achievable," Mr. Bouri said.