Global capital markets amount to approximately 288 trillion USD according to aggregated data from the World Federation of Exchanges, the Bank for International Settlements, and S&P Global Market Intelligence, as reflected for example in the BIS Global Debt Statistics. Around 275 trillion USD, or roughly 95 %, is invested in public markets, primarily listed equities and bonds. The remaining approximately 13 trillion USD, or about 5 %, is invested in private markets. Despite their smaller share of overall capital, private markets play a structurally important role in financing companies, assets, and projects that are not well served by public markets, including long-term infrastructure, private companies, and illiquid assets.
Over the past decade, impact investing has positioned itself as a mechanism to mobilize private capital toward investments aligned with the Sustainable Development Goals and global climate objectives, particularly in Emerging Markets and Developing Economies. Despite sustained efforts by impact practitioners, development finance institutions, policymakers, and asset managers, the expected large-scale increase of private institutional capital into SDG- and climate-related impact investments in EMDEs has not occurred. The question is not whether capital exists globally, but why only a marginal share of it is deployed as impact capital in EMDEs.
Global capital markets and the role of private markets
Within private markets, capital is unevenly distributed across asset classes. Approximately 6.5 trillion USD, or 50 % of private market capital, is invested in private equity, as documented in the Bain Global Private Equity Report 2024. Private credit accounts for around 1.6 trillion USD, or 12 %, based on data compiled by Preqin. Real estate represents approximately 1.2 trillion USD, or 9 %, while infrastructure accounts for around 1.0 trillion USD, or 8 %, consistent with the McKinsey Global Private Markets Review 2024. Venture capital represents approximately 700 billion USD, or 5 %. The remaining approximately 2.1 trillion USD, or 16 %, falls into other private market strategies.
From the total 13 trillion USD in global private markets, approximately 1 trillion USD flows into EMDEs, corresponding to around 8 % of private market capital, according to World Bank and IMF estimates on private capital flows. Infrastructure has the highest relative exposure, with around 20 % of global private infrastructure capital invested in EMDEs. Venture capital allocates approximately 14 %. Real estate allocates around 8 %. Private equity allocates approximately 6 %, corresponding to around 400 billion USD, while private credit allocates approximately 9 %, or around 150 billion USD. Other strategies allocate around 2 %, consistent with OECD and PitchBook EMDE analyses.
Impact investments in EMDEs within private markets
Only a subset of the capital flowing into EMDEs qualifies as impact investments. Impact investments are defined as investments made with the explicit intention to generate positive, measurable social or environmental impact alongside a financial return, following the definition of the Global Impact Investing Network. From the total 13 trillion USD in global private markets, approximately 230 billion USD flows into EMDEs as impact investments, based on GIIN’s Impact Investing Market Size 2024. This corresponds to around 1.8 % of total private market capital and roughly 23 % of private market capital allocated to EMDEs.
Across asset classes, impact allocations remain marginal. In private equity, approximately 80 billion USD out of 6.5 trillion USD globally is invested as impact capital in EMDEs, corresponding to around 1.2 %, according to GIIN and Preqin cross-referenced data. In private credit, approximately 37.5 billion USD out of 1.6 trillion USD is allocated to impact investments in EMDEs, corresponding to around 2.3 %. Infrastructure shows a higher relative share, with around 6 % allocated as impact investments in EMDEs, while venture capital allocates approximately 5 %. Real estate and other private market strategies allocate less than 1 %, at approximately 0.8 % and 0.4 % respectively, consistent with Convergence blended finance datasets.
Investor composition and implications for scaling impact capital
The approximately 230 billion USD of impact investment capital in EMDEs is predominantly provided by public or publicly backed investors. Approximately 127 billion USD, or around 55 %, originates from development finance institutions, international financial institutions, multilateral development banks, government-backed investment vehicles, and sovereign funds, as estimated by GIIN and OECD Development Finance Statistics. Approximately 103 billion USD, or around 45 %, originates from private and institutional investors.
When placed in the context of global capital markets, two observations follow. Out of the approximately 288 trillion USD in total global capital markets, only around 0.04 % represents private or institutional capital invested as impact investments in EMDEs. Out of the approximately 13 trillion USD in total global private capital markets, only around 0.8 % represents private or institutional capital invested as impact investments in EMDEs.
These figures indicate that the limited participation of private institutional investors is not primarily a function of capital scarcity. It reflects structural misalignment between institutional investment requirements and the way impact investment opportunities in EMDEs are currently structured, packaged, and distributed.
Risk must be reallocated through blended finance structures where public or concessional capital absorbs specific downside risks, including first-loss positions, guarantees, and political risk coverage, as documented in OECD and Convergence analyses. These mechanisms must be standardized and repeatable rather than bespoke. Investment products must be designed at sufficient scale, aligned with institutional portfolio construction constraints, and embedded in familiar asset class formats such as private credit and infrastructure rather than niche structures.
Data and transparency constraints must be reduced through harmonized impact measurement frameworks, comparable reporting standards, and verifiable performance data across market cycles. Institutional investors require evidence of risk-adjusted performance relative to non-impact benchmarks, not narrative alignment with impact objectives.
Access and distribution remain binding constraints. Institutional capital is mobilized through established distribution channels, standardized fund structures, and regulatory-compatible vehicles. Impact investment products that require bilateral structuring, extensive customization, or non-standard governance remain structurally inaccessible to most institutional investors.
Public capital deployed into impact investing must prioritize the mobilization of private capital rather than isolated deployment volumes. Governance and fee structures must reward scale, durability, and performance rather than activity. Regulatory and fiduciary clarity must support the classification of well-structured impact investments as compatible with institutional mandates.
The data indicates that increasing private institutional capital in impact investments in EMDEs is an execution and structuring problem. Capital exists. The constraint lies in converting impact investment from a specialized activity into an institutional-grade asset allocation category.
