Musings on Markets: The Impact of Impact Investing

This article critically examines impact investing's effectiveness in addressing social problems, particularly climate change, arguing that despite $1.16 trillion invested globally and significant divestment from fossil fuels, the movement has failed to meaningfully shift global energy production away from fossil fuels. The author contends that impact investing's unintended consequences—including capital misallocation, migration of assets to private equity, and reduced pressure for regulatory change—may make it counterproductive, and proposes more pragmatic, transparent approaches grounded in profit motives rather than virtue signaling.