Impact Insights #8

Welcome back to the ESGI Horizon Newsletter! Today, we’ll dive into Impact Europe’s The Size of Impact report. Then we’ll look at News & Trends on EV trends, climate anomalies and coal phase-out. We’ll finish with the latest impact deals.

Focus Article The Size of Impact:

The European Impact Investing Consortium has released a report that examines the size and growth of the impact investing market in Europe. The key findings of the report include:

• The European private impact investing market is estimated at €190 billion. This represents 2.5% of the €7.6 trillion in total assets under management considered to be eligible for impact investing in Europe. The European public impact investing market is estimated at €40 billion.

• The private impact investing market has shown notable growth in recent years, with investments in unlisted assets increasing from €80 billion to €190 billion over the past two years. The growth observed shows that impact investing is increasingly considered as a tool to develop new solutions that operate at scale.

• The impact investing market in Europe is currently led by the United Kingdom, the Netherlands, and France, which hold the largest shares in terms of assets under management. These markets have well-established impact investing ecosystems, supported by robust regulatory environments, active investor communities, and a high degree of institutional engagement.

• Venture capital and private equity (VC/PE) impact fund managers represent the dominant category of impact investors in Europe. They represent 44.8% of the investors included in this study and hold 39.1% of direct assets under management in unlisted assets.

• Private equity has emerged as the leading asset class in unlisted markets for impact investors. This is likely due to private equity's adaptability to high-impact projects that benefit from long-term investment horizons.

• Institutional investors, including pension funds and insurance companies, have become the primary contributors to impact investments in private, unlisted markets. They represent 28% of the total capital made available to impact investors. Banking institutions continue to be a major pillar of funding made available to impact investors, constituting 22% of the capital impact investors receive to invest, in turn, directly, into organisations that contribute to social and environmental solutions.

• 45% of European impact capital flows outside of Europe. The regional distribution of those investments has shifted in recent years, with a pronounced focus on Africa (18%), followed by Asia (12%) and Latin America (8%). Decent Work and Economic Growth (62%), Reduced Inequality (55%) and Climate Action (46%) are the three most targeted SDGs.

• The report also highlights the importance of investor additionality, which refers to an investment's positive contribution that would not have happened without the investment itself. The report finds that 62% of the capital captured in unlisted assets has some element of investor additionality, up from 48% in the previous report.

Read the full report.

Read our insightful discussion with Gianluca Gaggiotti from Impact Europe, co-author of this report.

News & Trends

• 🚗 In 2025, the demand for electric vehicles (EVs) slowed down in Europe with the market share for EVs predicted to be limited at 21% against a forecast of 27%. Germany's decision to cut EV subsidies led to a 29% decline in EV volumes in 2025, while France plans to reduce subsidies by up to 50% next year. This slowdown is forcing automakers to revise production plans and consider job cuts. In the meantime, China's EV market is booming, with EVs achieving price parity with petrol vehicles. European car makers cannot compete with the state-subsidised industry, hence, EU member states agreed to impose tariffs of up to 45 per cent on imports of Chinese electric vehicles. While it may protect European manufacturers and jobs, it will lead to higher prices for consumers, potentially dampening demand for EVs even further and hindering the transition to cleaner transportation.

  

   

  

• 🌡️ 2024 is on track to be the warmest year on record and the first above 1.5C. It does not yet officially represent a breach of the Paris Agreement threshold of 1.5C, which refers to a long-term average measured over decades. This alarming trend is the result of the relentless greenhouse gases released from the burning of fossil fuels and is manifesting in significant climate anomalies that can be observed all over the globe. The FT has compiled a selection of these events in a table that is searchable by month and region, which you can find here.
  November was no exception with the sea surface being unusually high above the Pacific, leading to more rainfall and flooding, among others (see below).

  

  Selected significant climate anomalies and events around the world in November 2024

• 💰 Insurance losses from natural catastrophes are on track to exceed $135bn this year. Two-thirds of global losses were in the US after two devastating hurricanes. This is the fifth consecutive year that natural catastrophe losses have passed $100bn. It was the third-costliest year for flooding globally and the second-costliest for Europe which had insured losses of approximately $10bn. “While the total number of tropical cyclones this season was unremarkable, what stands out is the rapid intensification of severe storms, characterised by extreme rainfall,” said Munich Re.
  

  

• ​Indonesia aims to phase out all coal-fired and fossil fuel power plants by 2040 pairing the goal with a target to build over 75 GW of renewable energy capacity over the same period. This brings forward Indonesia’s goal of retiring coal-fired power plants from 2056 to 2040. As the world’s sixth largest CO2 emitter, Indonesia’s promise to transition completely away from coal could be a pivotal step towards global decarbonization if implemented as planned. However, Indonesia has nearly 10GW of new coal-fired capacity already under construction, a further 5GW in various early stages of development, although Indonesia had previously committed in 2021 to stop building new coal-fired power plants after 2023.

  

Latest Impact Deals

• The Asian Development Bank (ADB) and Mastercard Impact Fund have launched a partnership to support micro, small, and medium-sized enterprises (MSMEs) in Asia and the Pacific. With a $5 million grant, the initiative will focus on empowering women-led MSMEs and promoting climate finance. The grant aims to support up to $1 billion in ADB financing over four years, addressing the $2.5 trillion financing gap facing MSMEs in this region.

• Blue Earth Capital, a Switzerland-based impact investor, said its first impact private credit strategy fund has had its first close for investors, after raising $113million (€108m). The fund, which focuses on private credit investments across developed and emerging markets, attracted a select group of investors, including family offices and pension funds.

• BRAC raised $32 million to mobilise capital for microfinance institutions in Tanzania, Uganda, Liberia, and Sierra Leone, enabling them to expand financial services to rural and hard-to-reach areas within their countries, and financially empowering millions of women in Africa.

  

  Hanenga Kikopa, a resident of Dar es Salaam, Tanzania, used her loan from BRAC to purchase stock for her small provision store.