Impact Dispatch - January 2025

In this newsletter, I am going to focus on the first of my seven trends to watch in 2025, catalytic capital.

Combining a desire to affect positive change with access to capital creates powerful potential to make a real difference in people’s lives. That’s why I believe impact investors are perfectly situated to tackle big problems. Impact investors can work toward solutions like: 

• Creating financial access in low- and middle-income countries 
• Powering the innovation that will deliver climate solutions
• Transitioning farms to regenerative practices that are better for people and the land
• Growing businesses owned by and serving people who have been historically overlooked
• Building a better future for us all

Catalytic Capital in Action

One vital tool for addressing these challenges is catalytic capital — a strategy for driving change by investing in high-impact opportunities that others may perceive as too risky. Catalytic capital is specifically defined as “investments that are more patient, risk-tolerant, concessionary and flexible than conventional capital,” according to the Catalytic Capital Consortium. These opportunities could include promising but unproven technologies or overlooked geographies. To me, the investors using this tool represent the bold thinking our industry needs to achieve a better world. 

Often we see catalytic capital used by family offices and foundations — but others can use it as well. GIIN member Acumen, an organization dedicated to addressing poverty with patient capital, invested in Greenway, a company in India that makes fuel efficient stoves. These stoves have a proven track record of lowering climate-warming emissions and improving the health of their customers, outcomes made possible by Acumen’s patient capital investment. 

Another example is the Dutch Good Growth Fund, managed by GIIN member Triple Jump. It is funded by the Netherlands’ Ministry for Foreign Affairs and supports small and medium enterprises (SMEs) in emerging markets. They invest in overlooked SMEs and have supported more than 65,000 new jobs, financed at least 11,268 companies and reached 53 countries using this approach. One of their impactful investments was in mPharma, a start-up in Ghana aiming to make prescription drugs more affordable and accessible. During the COVID-19 pandemic, mPharma “imported 400,000 COVID-19 tests…launched virtual consultation services for patients…[and] converted private labs into COVID-19 testing centers,” according to the latest impact report. 

Catalytic capital can also be a tool to drive further investment from outside parties, often through blended finance structures. One initiative launched in 2021 was the Africa Conservation and Communities Tourism Fund, managed by GIIN member ThirdWay Partners. This fund supports sustainable conservation tourism in countries including Kenya, South Africa, Zambia and others. A first-loss tranche funding from KfW on behalf of the German Federal Ministry for Economic Cooperation and Development derisked the opportunity for investors including The Nature Conservancy, IFC, Ceniarth and others, allowing the fund to raise $70 million USD. So far the fund has retained or generated 5,300 jobs and supported 535,000 square kilometers of natural landscapes by centering investments which preserve conservation tourism. 

What’s next? 

These are all examples of investors thinking big and deploying capital strategically to make the greatest impact. If you’re interested in learning more, check out the GIIN’s recent research on how catalytic capital investments in infrastructure can support climate mitigation. I’m encouraged to see this kind of innovation as the impact investing market grows and matures. I look forward to the year ahead, and to seeing the creativity of dedicated investors in solving big problems. 

• In a new piece for the Financial Times, Sarah Murray highlights the way impact investing has grown to become mainstream, even making its way into traditional business school courses at NYU Stern, the Wharton School of Business and others. Murray writes, "As impact investing funding flows have increased, so has the appetite among MBA students to learn how to engage in the market." 74% of impact investors seek market-rate returns, according to GIIN research, meaning these students will be ready to apply their impact investing skills in a range of financial contexts. 
• A majority of impact investors fail to track the outcomes of their investments, according to a paper published in the Journal of Business Ethics. This means many investors are missing out on two core characteristics of impact investing: using evidence and impact data in investment design and managing impact performance. 
• The horrific wildfires in Los Angeles are a tragic indicator of the increasingly dangerous conditions created by climate change around the world. ImpactAlpha reports on what’s next for home insurance after the fires, and proposed policy ideas to ensure that homeowners in increasingly risky areas can receive coverage. 
• In 2024 the EU generated more electricity from solar than coal, marking another major milestone in the energy transition. 
• In a recent article for the Morningstar Sustainable Investing, Hilary Wiek, CFA, CAIA highlights a key challenge many investors face: translating the broad, aspirational Sustainable Development Goals (SDGs) into actionable, investment-ready strategies. The piece spotlights the tools that empower investors to build a better future and underscores how IRIS+ transforms purpose into practice, offering fund managers a clear pathway to connect their investments to meaningful outcomes.
• To transform food systems and achieve climate targets, roughly $350 billion USD needs to be invested by 2030, according to Morgan Stanley. Working with smallholder farmers to bring innovative and sustainable solutions to their work is a vital part of a healthy and resilient agricultural future.

• The GIIN’s annual Impact Investor Survey is now live! To channel more capital towards impact investing to mobilize funding for solving the world’s most pressing challenges, we need deeper insights into market performance, trends and activities. The GIIN provides this knowledge through our research — powered by the annual Impact Investor Survey now open until the end of February. 
• The GIIN West Coast Impact Forum and Investor Training on April 15 - 16 in San Francisco is set to explore key trends and innovative strategies shaping the future of impact investing with a particular focus on North, Central and South America. Over two days, attendees can participate in a full-day training workshop to hone their impact investing skills followed the next day by a full-day of panels, keynotes and networking. Agenda highlights include financing affordable housing, investing in sustainable and regenerative agriculture, venture capital in impact investing and much more. Sign up for one or both days today. 
• Three million fuel efficient stoves, 15 million people impacted and more than 10 million tons of greenhouse gases avoided. These are the incredible measured outcomes of Greenway, a company that makes cleaner cooking stoves in India. Learn all about how an impact investment from GIIN member Acumen helped make this possible in our latest case study. 
• In case you missed it, we recently published seven impact investing trends to watch for the year ahead. 
• In December eight new members joined the GIIN: AJL Foundation, Angelini Ventures, Financiera de Desarrollo Naciona, FPM SA, Kartesia Management SARL, Kartesia Management SARL, Nordea Asset Management Holding AB and Reckitt.