Social impact investing steps into the limelight

Social impact investing steps into the limelight

For many years, climate has been at the center of impact investing, and arguably for good reason. Extreme weather events, energy security concerns, and the exponential growth of data centers powering artificial intelligence (AI) have kept environmental issues as a top priority. As such, the social side of the coin has received less attention, partly because social outcomes are harder to quantify and are generally less supported by standardized taxonomies. With aging populations and a widening wealth gap, this topic has become more urgent and has started to come more into focus among investors.

We believe there are a few big forces. First, the world is facing demographic challenges. People are living longer, which means governments are faced with the question of how to ensure they age healthier. On top of that, the baby boomer generation is retiring, and while that itself doesn’t come as a surprise, the scale of it is becoming a reality. Large parts of the workforce are leaving at the same time, and many Western nations are struggling with how to finance pensions and healthcare systems over the longer term. This means preventive healthcare, better diagnostics, digital health tools, and remote monitoring may become more important, especially with AI and today’s technology. This opens up the potential for interesting business opportunities.

Second, the wealth gap has grown following the post-pandemic inflation spike. Wealth creation has happened at the very top, while many households are feeling squeezed and grappling with an affordability crisis, especially for essentials. Inequality is now viewed as one of the most interconnected global risks as it amplifies economic instability, political polarization, and social fragmentation, according to the World Economic Forum’s Global Risks Report 2026¹. Recent work by Trammell and Patel² argues that historically, capital accumulation has often been partly self correcting because additional capital tended to lower its own returns and raise wages, but that advanced AI could break this balance and allow capital owners to capture a persistently higher share of income, potentially entrenching extreme inequality. The AI rollout has accelerated the K-shaped economy as it restructures wealth, labor, and corporate power. We believe deliberate policy intervention would be needed to avoid the increasing divergence of the upward and downward arm of the K-shaped economy. 

We believe scalable business models that expand access to healthcare, financial services, education, and essential infrastructure are positioned at the intersection of societal need and structural demand, and that the following areas may be poised to play an important role going forward:

Health: moving focus from treatment to prevention

More than half of the world’s population are not fully covered by essential health services³. At the same time, chronic diseases and aging societies are driving healthcare expenditure higher across developed and emerging markets alike. Since 2020, system inefficiencies and workforce shortages have become more apparent, highlighting reforms are urgently needed. Healthcare systems are gradually moving from reactive treatment toward prevention and early diagnosis, as well as digital consultations and outpatient care. Faster diagnostics, improved drug development and data-driven research can materially reduce long-term healthcare costs while also improving outcomes for patients.

The opportunity lies in scalable solutions that allow populations to age more healthily. Diagnostic tools, preventive screening, digital monitoring, and AI-enabled research can reduce treatment intensity later in life. As societies grow older, the economic case for keeping people healthier for longer becomes more compelling. As prevention becomes an economic necessity, companies that improve efficiency and access within healthcare systems are structurally supported. Companies such as Thermo Fisher Scientific provide core infrastructure for pharmaceutical and biotechnology research, supporting drug development from early discovery through clinical trials and manufacturing. Its increasing integration of digital tools and data systems aims to improve development efficiency and shorten timelines. Quest Diagnostics plays a key role in expanding access to diagnostic testing, enabling earlier detection and more effective disease management.

Vitality and well-being: enabling healthy longevity

Poor dietary habits are a major contributor to chronic disease prevalence, which in turn drives healthcare expenditure and reduces productivity. As populations age, preventive health measures, including nutrition and lifestyle, become more important. Healthier aging not only improves quality of life but also supports labor participation and reduces fiscal strain. Policymakers are responding through labelling reforms, public health campaigns, and incentives for healthier product formulations.

Companies positioned along the broader health and wellness value chain are benefiting from this shift. Planet Fitness, for example, contributes to preventive health by providing accessible fitness infrastructure at scale, encouraging healthier lifestyles across broad income groups. As prevention-focused strategies gain prominence, nutrition and lifestyle solutions sit at the intersection of demographic change, public health policy and long-term consumer demand.

Access to education: investing in human capital

Access to quality education and reliable information remains one of the most powerful drivers of economic mobility and productivity. Yet disparities in educational access persist globally. The World Economic Forum’s Global Risks Report 2026 mentioned earlier also highlights mounting concern about the implications of AI over the coming decade amid a widening gap between technological advancement and workforce preparedness. The pace of digitalization and AI is increasing the premium on continuous learning and specialized knowledge. This means that human capital development is no longer limited to formal schooling; access to research, data, and professional information is central to workforce participation and innovation. It is therefore central to social cohesion and economic competitiveness.

RELX is one company that provides analytics and professional information services supporting research, legal systems, and risk management globally. Informa, on the other hand, operates in academic publishing and specialist knowledge platforms, facilitating the dissemination of research and industry expertise. As labor markets become more knowledge-intensive, scalable access to information infrastructure is both socially essential and economically strategic.

Financial inclusion: building economic resilience

Despite technological advances, access to formal financial services is still unequal. Large segments of the global population lack affordable credit, savings mechanisms, and insurance coverage. Recent inflation shocks have made this gap even more visible, exposing how vulnerable households are when they don’t have financial cushions to fall back on. The Global Risks Report 2026 also points to economic downturns and cost-of-living pressures as growing short-term risks, which shows how quickly financial stress can spill over into social vulnerability. At the same time, wealth accumulation at the very top has accelerated. This widening discrepancy fuels political pressure and strengthens the case for building more inclusive financial systems. Financial inclusion enables individuals and small businesses to manage risk, invest in housing and education, and build long-term security.

Institutions such as HDFC Bank show how scalable banking models can drive financial inclusion by improving access to credit and banking services for underserved communities, including rural areas, and supporting financing for home ownership, small and medium enterprises (SMEs), and microfinance. Global institutions like Standard Chartered play an important role in channeling capital into emerging markets, supporting cross-border trade, and developing sustainable financial products like social deposits. As responsibility for retirement provision and financial planning increasingly shifts to individuals, inclusive and transparent financial systems are becoming more structurally important.

Housing and connectivity: foundations of participation

Affordable housing and reliable connectivity are fundamental to both social stability and economic participation. As cities grow and demographics change, demand for housing continues to rise, yet affordability is still a challenge in both developed and emerging markets. At the same time, digital connectivity increasingly determines access to employment, education, and financial services. Mobile broadband is hence no longer just a discretionary service.

As more economic activity moves online, unequal digital access risks deepening existing social inequalities. Companies that expand reliable communication infrastructure in emerging and underserved markets directly help bridge this divide and enable participation and inclusion. Telecommunications providers such as Airtel extend digital access to large populations. Infrastructure operators like American Tower provide the physical backbone (cell towers and related assets) that make widespread network coverage and data access possible. As participation in modern economies increasingly depends on both physical and digital access, companies strengthening this connectivity contribute directly to social resilience.

Measuring social impact

In a more disciplined and pragmatic ESG environment, investors are placing greater emphasis on transparency and evidence of progress rather than broad commitments. Clear impact objectives, consistent reporting, and alignment between business models and societal outcomes are essential to distinguishing durable social solutions from niche exposure.

Unlike carbon emissions, social outcomes cannot be captured in a single, comparable metric. A credible framework therefore needs to combine outcome-based indicators, such as expanded access to healthcare or financial services, with activity-based measures including services delivered, policies implemented, or capital allocated. Depending on the business model, relevant metrics may include the number of patients treated, underbanked individuals served, loans provided to SMEs or female entrepreneurs, educational resources accessed, or communication sites installed in emerging markets. Some indicators are company-specific, while others allow for comparisons across sectors. Striking the balance between granular transparency and meaningful aggregation remains key.

Why now?

Aging populations are accelerating demand for healthcare. Governments face constrained budgets, labor markets require continuous reskilling, and households are taking on greater financial responsibility. These pressures are intensifying. At the same time, global risk perceptions are deteriorating, with experts warning of heightened economic volatility, social fragmentation, and institutional strain. These pressures are structural and compounding, and social impact investing can provide answers to those structural demographic and fiscal realities.

It does not come as a surprise that investor interest in social themes has grown in response. Many allocators are looking for broader impact strategies that go beyond environmental themes and are incorporating broader social dimensions into their portfolios. A report by Morgan Stanley highlights that, among the top five outcomes investors most want to achieve through their investments, both environmental and social goals rank highly. Specifically, outcomes ranked No. 2 and No. 3 in North America were improving access to healthcare and improving food security and access, respectively. With limited public resources, scalable private-sector solutions are likely to play an increasingly important role in delivering health, access, and resilience. For investors, allocating capital to companies addressing these structural challenges aligns with societal needs and is also grounded in economic logic, as it comes with a financial opportunity from investing in companies that provide solutions to such societal challenges. In a portfolio context, adding the social dimension also has the potential to help strengthen resilience as it increases diversification and reduces concentration risk. In our view, the case for social impact investing is timely and compelling.