• Spain's impact investing has witnessed a 135% growth since 2020.
• Institutional investors remain underrepresented in the country's market.

A recent study executed by SpainNAB and the Esade Center for Social Impact (Esade) shows that Spain's impact investment market reached €3.34 billion in 2023, including bank financing and investments.

Direct impact investments saw a 26% spike, reaching over €1.52 billion, driven by private equity funds and other investors. Also, assets under management increased by 32% in the wake of new entrants.

The Spanish government, meanwhile, launched a €400 million social impact fund, expected to encourage private investors.

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Foundation investments also increased, though at a smaller scale (€260m), and are showing interest in impact investing with a 10% growth rate. They are open to lower financial returns in exchange for social impact.

That said, while the growth prospects are promising, there are also barriers in the form of greenwashing and a lack of definite standards for measuring impact. Some investors are still vague about the expectations for financial and social returns.

Impact investment can achieve further growth through more partnerships, increased regulation, and heightened awareness among investors. SpainNAB (the Spanish National Advisory Board) is working to enrich these efforts at national and European levels.

Read more: What’s The Difference Between SRI, ESG, And Impact Investing?

Marta González Labián, head of impact and sustainable investing at SpainNAB, said: "It not only brings important capital flows, becoming an increasingly important actor in the Spanish impact investing market but also provides trust and volume to the impact investment vehicles, both characteristics needed to attract other private investors.

"However, in order to unlock its catalytic potential and attract private investors, it is crucial that [the public sector offers] concessional capital, assume higher risks and provide guarantees, etc."

To learn more about the study, click here.

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Source: Impact investor