Why Impact Investing Might Collapse and How to Stop It
By Ben Taylor, Zannatul Ferdous & Jason van Staden, Oct. 23, 2025
Impact investing is an opportunity for public and private money to support emerging markets that lack the capital needed for growth and poverty reduction, but the foundations are wobbling.
A collective delusion about the true impact of investments has the potential to undermine a vital instrument for global development.
The current paradigm of linear, simplistic cause-and-effect models for impact risks distorting markets and directing capital toward investments that may not be effective.
Applying a systems lens helps investors make better decisions related to sourcing, management, and measurement that lead to lasting positive impact.
The current paradigm of viewing impact in isolation from the systems surrounding investments is not sustainable.
Author's summary.
Impact investing faces challenges due to simplistic models and lack of systems approach.
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