Genuine impact investment funds – those that generate verified financial and non-financial results – continue to grow their assets, winning new customers and expanding their missions.  This stands in contrast to funds marketed as sustainable and ESG funds which, according to Morningstar, have shrunk during 15 of the last 16 quarters. Indeed, for four years running, redemptions and closures have kept ESG/ sustainable fund asset growth negative or well below the market overall. In particular, US investors continue to flee so-called sustainable or ESG investment funds, while in Europe, Article 8 funds have faced the most significant headwinds. 

Is it the tale of two cities - the best of times and the worst of times? In some ways, yes. 

On one hand, the desire for one’s investments to do well and do good undeniably continues unabated. According to trends which the Morgan Stanley Institute for Sustainable Investing have been citing for years, a majority of high-net-worth investors want their capital to earn decent returns and generate positive environmental and social outcomes. Increasingly, however, asset owners want those desired investment impact and returns to be tangibly measured and independently verified. The conclusion for impact asset managers is clear: if you seek meaningful opportunities for growth, use a trusted third party to authenticate the good you are doing and the returns you are likely to generate. The converse is also true, of course: reject transparency and independent authentication of your financial returns and impact, and don’t expect to find new investors.  

It is precisely this type of transparency which differentiates our work at The Impact Evaluation Lab.

According to our data sources, in the first half of 2026 alone, impact funds and firms on IEL’s Navigator raised more than $18 billion in new investment capital. This is $30 billion more than all of the non-indexed investment funds in Morningstar’s global sustainable investment universe over the same period. 

Conclusion: real impact and real returns matter.

Moreover, demand for real impact and verification of outcomes among investors is broad, not isolated. From January to June 2026, new impact investment capital was committed by every single one of the ten investor segments IEL targets. This includes foundations and endowments, family offices, independent wealth advisors, public and private pension plans, donor-advised funds, insurance companies, impact fund-of-funds, sovereign wealth funds, government-sponsored development funds, and independent asset managers. IEL tracks the geographic locations of active impact investors across more than three dozen countries, with the US and Europe accounting for 45% and 40% of all net new capital, respectively. In terms of geographic locations where newly raised impact capital will be committed, 42% was multi-region, 22% European, 16% North American, 8% Latin America, 8% African and 4% Asian.

As in 2025, the vast majority of new impact fund capital is being raised in private debt and equity market categories - though IEL expects this may change as public equity market managers find new, verifiable ways to promote human flourishing, increase living wages and expand employee stock ownership. Of the $240 billion in new impact investment capital that firms and funds on IEL’s Navigator have raised over the past five years, 35% was for diversified strategies (including growth equity), 31% for private equity, 13% for infrastructure, 11% for private credit, 4% for public equity and 4% for real estate.

Years of green-washing combined with broad market underperformance have clearly soured investor attitudes toward funds marketed as ESG and sustainable investment funds – but the desire for one’s investment capital to improve social and environmental outcomes while generating attractive risk-adjusted returns remains strong. Impact funds that are highly transparent about their genuine impact and financial performance are raising capital among all client segments around the globe.  

Transparency builds trust – and trust is essential for growth.

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1 - New impact investment capital in funds on IEL’s Navigator during H-1 2026 originated from the following countries, in order: the US, UK, France, Canada, the Netherlands, Japan, Denmark, Italy, Switzerland, Germany, Australia, Sweden, Finland, Norway, Luxembourg, South Africa, South Korea, Singapore, Brazil, Hong Kong, Belgium, Austria, New Zealand, Saudi Arabia, UAE, Kenya, Cote d’Ivoire, Guersey, Philippines, China, Venezuela, Monaco, Mexico, Taiwan, Iceland, Nigeria, the Channel Islands and Israel.