Is Impact Investing a Dominant Theme for Family Offices?

During several impact advisory projects and impact events with leading family offices, we have learned that there are multiple reasons to invest with impact that are different for each single family:

1. Preserving Wealth for Future Generations

• Intergenerational purpose: Many family offices operate with a multi-generational mindset. Impact investing aligns with the values of younger family members who often seek both financial returns and societal contribution.
• Legacy building: Investing in positive change reinforces the family's long-term legacy.

2. Future-Proofing the Portfolio

• Sustainability as a risk mitigator: Exposure to ESG-aligned and future-oriented sectors (e.g., renewable energy, sustainable agriculture) helps reduce long-term risks from climate change, regulation, and resource scarcity.

3. Access to New Trends and Innovation

• First-mover advantage: Impact sectors are often innovation-driven, offering early access to promising new technologies and markets (e.g., green tech, circular economy).
• Thematic investing: Enables alignment with megatrends such as decarbonization, water security, or health equity.

4. Diversification

• Non-correlated assets: Many impact investments, especially in private markets (e.g., green infrastructure, microfinance), offer low correlation to traditional asset classes.
• Geographic and sector diversification: Often includes exposure to emerging markets and sectors that might be underrepresented in traditional portfolios.

5. Potential for Growth and Competitive Returns

• Financial outperformance: While not guaranteed, research shows that many impact funds deliver competitive—sometimes even superior—risk-adjusted returns.
• Long-term value creation: Companies that score well on ESG factors often demonstrate better operational performance and lower cost of capital.

6. Inflation Hedge

• Real assets focus: Impact investments often include inflation-resistant assets such as renewable energy infrastructure, sustainable real estate, farmland and forestry, and agriculture.

7. Reputation and Stakeholder Engagement

• Brand and social capital: Aligning wealth with values can enhance the family’s reputation, especially if they're philanthropic or public facing.
• Alignment with foundation/philanthropy goals: For families with charitable arms, impact investing bridges mission and market-rate returns.

We have seen different kind of approaches, of which below are some leading examples:

In our experience there are a couple of situational circumstances that are impacting the approach.

The major difference is between first and multi-generation families. 

The first-generation wealth creators are mostly entrepreneurs that have made their own fortune and are accustomed to making decisions independently, and don’t feel the need to formalize how their family office will function. This factor, together with the relatively small size of first- and second-generation families may explain why only approximately 40 percent of European family offices have a mission statement or family council.

In case the family wealth is already preserved for multiple generations, there is often a generation shift where the older generations, and often the family office principals are reluctant to change (too quick), and the next gens are fully committed to impact investing but don’t have decision power yet. The multi-generation family offices tend to be “heavy” on governance structures and documentation.

In both situations there is also a big difference if the wealth is still locked up in their primary business, which either generates a steady stream of cashflow or might need further investments. Moreover, the type of business also has an impact on allocations. For example, highly polluting shipping business probably want to compensate for CO2 emissions.

Every approach requires a different set of solutions and needs to be carefully considered before starting.