HNW Investors Plan to Double Impact Allocation by 2025

High-net-worth investors are planning on doubling their allocations to impacting investing opportunities by 2025, according to new research by Barclays Private Bank.

The survey – carried out in collaboration with London-headquartered Campden Wealth and consultancy company Global Impact Solutions Today – found that the average investor’s allocation to impact investing strategies was set to increase from 20% in 2019 to 35% by 2025.

The proportion of wealthy investors allocating more than 20% of their portfolio to impact investing was set to increase from 27% to 39% as soon as 2021, while a quarter expected to be allocating more than half by 2025.

The sentiment corresponds with  research from Morningstar in the summer, which showed that investors were still keen to support socially responsible investment strategies despite the challenges presented by the Covid-19 pandemic.

“Investors are being challenged to safely pilot their family’s lives and their portfolios through the disruptions of 2020, and it means they are having more discussions about the future,” said Barclays Private Bank’s head of sustainable and impact investing Damian Payiatakis.

“We see that investors want to make this shift… to access high-quality opportunities that can deliver financially and with positive outcomes.”

Rebecca Gooch, director of research at Campden Wealth, added: “Wealth holders see the challenging state of the world, and the risks and vulnerabilities both individuals and businesses face due to Covid-19 and climate change, and they want to act.

“Here is where smart investment and deep pockets can make a real difference in impact and ESG investment. For many, responsible investing is not only the ethical thing to do, but it is simply good business practice.”

The survey, an annual project now in its seventh year, looked at individuals and family offices with an average net worth of $876 million to determine their intentions and why they were planning to increase these allocations so markedly.

While environmental concerns were found to be a big driver of this increase in impact investing commitment (with 87% confirming climate change was influencing their current investment choices), 24% revealed that they saw this approach as leading to better returns.

At the same time, Covid-19 was found to have affected the investment and economic views of seven out of 10 (or 69%) of respondents.

Impact investing – a strategy that aims for a tangible non-financial result as well as a financial return – has been growing in popularity in recent years, particularly in Europe.