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Institutional Investors, with Total Assets of Over $20 Trillion, Demonstrate that Investing for Positive Social Impact Can Align with Generating Financial Returns

A new report released today by InSight at Pacific Community Ventures and the Initiative for Responsible Investment at Harvard University, and funded by The Rockefeller Foundation, examines the practices of the largest U.S. investors in investing for both financial return and positive social and environmental impact.

The report, Impact at Scale: Policy Innovation for Institutional Investment with Social and Environmental Benefit, explores the extensive role of public policy in shaping how institutional investors channel capital. The research reveals numerous government strategies that catalyze private investment for public good, including laws in 20 states that allow or encourage “economically targeted investments” where a public pension system invests in its home state to support local economic growth while also targeting a financial return to the fund.

“Institutional investors, such as pension funds, insurers and endowments, with over $20 trillion in assets, are critical to the growth and strength of the impact investing sector,” said Dr. Judith Rodin, president of The Rockefeller Foundation. “This new report clearly demonstrates that Institutional Investments that have social and environmental value are also earning a competitive rate of financial return, allowing institutions to maintain their fiduciary duty while simultaneously having a social impact. Policy makers can now only build on this track record and provide institutions with even more opportunities to invest for positive social impact in addition to market rate financial return.”

These anchor investors play a fundamental role in U.S. and world capital markets, and sometimes leverage their investments to address crucial social needs. Among the examples cited in the report:

  • The $230 billion California Public Employees Retirement System has invested over $1 billion in the “California Initiative,” a program of private equity investments targeted to companies in underserved communities in California.
  • The $80 billion State of Wisconsin Investment Board has invested over $350 million in its
  • Private Loan Program, which lends capital to companies headquartered or operating in Wisconsin.
  • The $45 billion State of Michigan Retirement Systems has invested $35 million alongside Dow Chemical and the U.S. Small Business Administration in the InvestMichigan! Mezzanine Fund, which will invest in small businesses in underserved areas of Michigan.

“As we examined how institutional investors are responding to critical challenges of our time like climate change, urbanization and demographic shifts,” noted David Wood, director of the Initiative for Responsible Investment, “we saw that the diversity of investor activity in this area, and of government policy, demonstrates that financial intermediaries are acquiring the expertise to use mainstream capital markets as a tool to create social and environmental impacts.”

Impact at Scale outlines public policies that build on institutions’ increased willingness and capacity to seek social impact through their investments. Among the policies highlighted are government subsidies like the new markets tax credit and low income housing tax credit, both of which aim to create vibrant and competitive markets for affordable housing and other real estate projects providing social and environmental benefits.

The report articulates three strategies for government support of “impact investing” by institutional asset owners. An “enabling” strategy—focused directly on the asset owners—providing greater flexibility for institutions to mitigate the real or perceived risks of investing for social and environmental impact in addition to financial return. An “integrative” strategy—focused on financial intermediaries—bringing social impact to conventional investment vehicles, using tools such as tax credits and embedding performance standards into sub-markets. Lastly, a “developmental” strategy—focused on market infrastructure—supporting the application of research and development as well as technical assistance programs toward an effort to foster under-developed markets, for example in education or health care, so they may become suitable for the deployment of larger amounts of capital.

“It is evident that institutions are already investing for social impact. And by supporting initiatives such as the U.N. Principles for Responsible Investment and the Investor Network on Climate Risk, these large investors have demonstrated that they care deeply about the social and environmental challenges affecting their beneficiaries,” said Ben Thornley, director of InSight and a report coauthor. “Their commitment provides a great foundation for government to identify where barriers to impact investing remain, and to address them.”

InSight is the thought leadership and advisory practice at Pacific Community Ventures, a U.S. Community Development Financial Institution and nonprofit organization. InSight provides research on community development and impact investing to clients including The Rockefeller Foundation, Annie E. Casey Foundation, and The California Endowment. InSight also evaluates the social and economic performance of more than $1 billion of targeted private equity investments by pension funds including the $230 billion California Public Employees Retirement System (CalPERS), investment managers including Hamilton Lane, and foundations including the Northwest Area

Foundation, and of $18 billion invested by CalPERS in California across asset classes. For more on InSight’s work visit


The Initiative for Responsible Investment (IRI), a project of the Hauser Center for Nonprofit Organizations at Harvard University, promotes the development of the theory and practice of responsible investment through research and dialogue. The IRI encourages the development of responsible investment theory and practice across asset classes, builds communities of practice around innovative responsible investment strategies, and catalyzes new opportunities and concepts in responsible investment. For more on the IRI’s work see


The Rockefeller Foundation’s mission to promote the well-being of people throughout the world has remained unchanged since its founding in 1913. Today, that mission is applied to an era of rapid globalization. Our vision is that this century will be one in which globalization’s benefits are more widely shared and its challenges are more easily weathered. To realize this vision, the Foundation seeks to achieve two fundamental goals in our work. First, we seek to build resilience that enhances individual, community and institutional capacity to survive, adapt, and grow in the face of acute crises and chronic stresses. Second, we seek to promote growth with equity in which the poor and vulnerable have more access to opportunities that improve their lives. In order to achieve these goals, the Foundation constructs its work into time-bound initiatives that have defined objectives and strategies for impact. These initiatives address challenges that lie either within or at the intersections of five issue areas: basic survival safeguards, global health, environment and climate change, urbanization, mand social and economic security. For more information, please visit

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