Scaling Impact Investing: Barriers and Solutions

On Thursday 22 January, UK Private Capital and Investec hosted a discussion on the current barriers to scaling impact investing and potential solutions to drive expansion.

During the event, which was chaired by Isobel Clarke (Director of Policy, UK Private Capital), speakers highlighted the magnitude of the opportunity for private capital, market sizing and growth, current trends and predictions for 2026 and beyond. 
 

Impact investing is growing, with private capital playing a key role

Sarah Teacher (Co-CEO, Impact Investing Institute) gave an overview of the impact investing market size and the Institute’s ambitions for future market growth. Sarah told the audience that the impact investing market reached £76.8 billion in 2023, growing at a 10% compound growth rate from 2021-2023. In a challenging geopolitical moment, there was significant market optimism for impact investing in the UK.

The participation of private capital in the Impact Economy is substantial; based on the GIIN annual impact investor survey, private equity represents 43% of assets under management, the single largest asset class for impact investing. 
 

Impact is on the Government agenda

Poppy Bramford (Policy Manager, UK Private Capital) provided an update on recent developments in the Government’s policy agenda, emphasising how a tight fiscal environment, a focus on delivering government missions and a personal interest from Cabinet Ministers is crystalising to supercharge political will and policy momentum regarding impact investing.

This can be seen in a series of significant policy announcements from the Labour Government since taking office. Last year the Government announced the Better Futures Fund, a £500m social impact investment vehicle and the largest social outcomes partnership in the world. This was followed by the announcement of the new Office for the Impact Economy, creating a “single front door” for impact investors, philanthropy and purpose-driven businesses to partner with the government.
 

UK Private Capital’s new taskforce: scaling investing with impact

UK Private Capital has worked closely with its long-standing Impact Investing Advisory Group (IIAG) and with government to showcase the current and potential future role of private capital in impact investing.

This has been set out in The UK: A Centre of Excellence in Impact Investing (October 2024) and more recently, in our report Delivering Government missions using impact-led venture capital and private equity (March 2025).

Harriet Assem (Head of Sustainability, UK Private Capital) highlighted how that under the Association’s new Sustainability Committee, chaired by Lucie Mills of NorthEdge, a new Impact Investing Taskforce is bringing together senior members to take forward the agenda set out in these reports.
 

Pressing challenges and competitive returns

Marc Khan (Chief Strategy and Sustainability Officer, Investec) gave an overview of the global geo-political environment and how this has interacted with sustainability and impact investing. Marc outlined the interplay between generating market value and the pursuit of “virtue”, exploring the power of demand for climate solutions within a market economy. He emphasised that when commercial incentives and societal expectations reinforce one another, sustainability can be both a moral imperative and a source of competitive advantage.
 

Impact investments can be made in markets at any stage of growth.

Building on his significant involvement in the SIIAG, a time limited taskforce set up to advise government on how to effectively mobilise social impact capital, Jonny Page (Director of Social and Impact Investment, Esme Fairbairn Foundation) outlined a new powerful framework - the “Staircase model of impact capital” - which was published in the SIIAG’s final report.

The model was produced to address the need for a common framework and shared language to facilitate strategic discussion on impact investing between government and industry. The staircase model of impact capital maps the stage of an organisation with expected outcomes, risk appetite, return expectations, potential financial instruments, participants and relevant government support. This mapping allows industry and policy makers to identify who is most appropriate at each stage of investment and what levers are necessary to facilitate flows of capital.

Jonny highlighted that the key opportunities for private capital emerge from the initial “plant” stage for impact venture capital, right through to the “grow” and “mature” stages for private equity firms with impact funds.
 

Looking to the future

The session finished with Sarah Teacher sharing her predictions for trends that will take hold in 2026:

• Place-based impact investing is accelerating, enabled by Mansion House reforms and growing LGPS participation. Recent commitments by M&G (£1bn over the next 3-5 years) and Legal and General (£1bn by 2030) attest to this: housing, regeneration and infrastructure show what is now possible at scale.
• Impact as resilience is becoming a dominant lens for global institutions — strategically focused on long-term financial, social and environmental stability in volatile markets.
• Endowments and family capital are increasingly shaping expectations — moving from small carveouts to whole portfolio approaches and shifting the conversation around risk, return and catalytic capital.

More information on UK Private Capital’s work on impact investing can be found here.

The composition of the new Impact Investing Taskforce, that will be chaired by Maggie Loo, Partner at Bridges Fund Management, can be found here. 

If you are interested in attending a similar policy briefing breakfast event, more information is available here.

Authored by Poppy Bramford, 
Policy Manager, Sustainability & Diversity, UK Private Capital