How family offices are shifting from traditional wealth management to purposeful, impact-focused investing that delivers both returns and measurable environmental and social benefits

Family offices are experiencing a fundamental transformation in how they approach wealth management and investment strategy. According to Deloitte, there were over 8,000 single-family offices globally in 2024, managing $3.1 trillion in assets. By 2030, that number could approach 11,000, with $5.4 trillion under management. This growth coincides with a decisive shift toward impact investing, driven by next-generation values, regulatory changes, and the recognition that traditional investment approaches may not address the systemic challenges facing our world.

PwC estimates that 53% of global family offices are backing impact deals, spanning sectors such as health, education, climate, and regenerative agriculture. UBS adds that 46% of family offices now embed sustainability into their investment strategy, a number expected to rise. This represents a clear departure from purely financial considerations toward a more holistic approach that aligns capital with values and long-term sustainability.

The Great Transformation: Why Family Offices Are Embracing Impact Investing

Generational Shift Driving Change

The most significant catalyst for this transformation is generational succession. The biggest area of difference, identified by 68% of respondents, is investment in digital assets, while 52% highlight differences in ESG and impact investing. Many family offices are emerging as key players in responsible and ESG (environmental, social, and governance) investing because of the ascendance of the next generation within family dynasties. These emerging leaders, often driven by a deep-seated commitment to societal and environmental stewardship, are catalyzing a gradual but profound transformation in the priorities and strategies of family offices.

The data clearly illustrates this trend: 70% of the family offices that we're working with said that preparing the next generation and succession planning was a key concern and a key objective of their family office. However, challenges remain significant: 30% of family offices say they lack confidence that the next generation (Next Gen) of family leadership is prepared for succession within the family office, and 28% say that Next Gens are unqualified to take over.

Market Forces and Regulatory Tailwinds

Beyond generational preferences, several external factors are accelerating the adoption of impact investing:

Climate and Environmental Risks: Nearly one in two, or 44%, of family offices see warming temperatures caused by man-made greenhouse gas emissions as a major concern within the next five years. This growing recognition of climate risk as a material financial risk is pushing family offices to consider both mitigation and adaptation strategies.

ESG Regulatory Environment: "ESG will remain a key long-term wealth manager priority despite Trump re-election." According the UBS Global Family Office Report report from earlier in 2024, 50% of respondents polled said they were "very or somewhat likely to invest in green technologies over the next two to three years", and another 27% were unsure.

Access to Capital: The current macroeconomic climate, with higher interest rates and tighter credit, increases the importance of family offices stepping up to finance projects that banks or other funding sources may overlook.

Understanding the GIIN Five Dimensions of Impact Framework

For family offices venturing into impact investing, the Global Impact Investing Network (GIIN) has developed a comprehensive framework that provides structure and measurability to impact investments. The GIIN estimates that over 3,907 organizations currently manage $1.571 trillion USD in impact investing assets under management (AUM) worldwide, representing 21% compound annual growth (CAGR) of the total impact investing market since 2019.

The Five Dimensions Explained

The GIIN's framework, developed in partnership with the Impact Management Project, requires investors to evaluate impact across five critical dimensions:

1. WHAT - Understanding Outcomes Understanding the outcomes the enterprise is contributing to and how important the outcomes are to stakeholders. This dimension focuses on measuring the actual social or environmental changes being generated, such as:

• Energy savings from renewable energy projects

• Health completion intervention rates for healthcare investments

• Agricultural yield improvements for food security initiatives

• Greenhouse gas emission reductions

2. WHO - Identifying Stakeholders Understanding which stakeholders are experiencing the effect and how underserved they were prior to the enterprise's effect. This includes demographic, geographic, and socioeconomic characteristics of those being served, ensuring investments reach those who need them most.

3. HOW MUCH - Measuring Scale, Depth, and Duration Understanding how many stakeholders experienced the outcome, what degree of change they experienced, and how long they experienced the outcome for. This encompasses:

• Scale: Number of people or communities affected

• Depth: Degree of change experienced by stakeholders

• Duration: Time period over which benefits persist

4. CONTRIBUTION - Assessing Additionality Assessing whether an enterprise's and/or investor's efforts resulted in outcomes that were likely better than what would have occurred otherwise. This critical dimension helps distinguish between impact investments that create genuine additional benefit versus those that would have happened anyway.

5. RISK - Managing Impact Risk Assessing the likelihood that impact will be different than expected. This includes various risk factors such as evidence risk, execution risk, and stakeholder participation risk.

Integrating KPIs and Measurable Outcomes

The optimal impact measures and key performance indicators (KPIs) will vary depending on the industry. If you're considering an investment in renewable energy, you're likely to look at KPIs like installed capacity and the kind of energy that the renewable generation will replace. In healthcare, you'll likely look at the extent to which the business's activities are delivering better health outcomes.

For family offices, developing robust measurement frameworks involves:

• Industry-Specific Metrics: Tailoring KPIs to sector-specific outcomes

• Baseline Establishment: Understanding pre-investment conditions

• Third-Party Verification: Ensuring credible impact reporting

• Continuous Monitoring: Regular assessment and adjustment of impact strategies

High-Impact Asset Classes and Investment Opportunities

Climate Solutions and Clean Technology

Climate change and sustainability-related investments across a broad spectrum of themes are increasingly being regarded as long-term investment opportunities by family offices, according to research from UBS. A survey for the investment bank's 2024 Global Family Office Report shows that 50% of family offices polled said they were very or somewhat likely to invest in green technologies over the next two to three years, while a further 27% were unsure.

Key Investment Areas:

• Renewable energy infrastructure (solar, wind, storage)

• Clean transportation and electrification

• Energy efficiency and smart grid technologies

• Carbon capture and removal solutions

• Climate adaptation and resilience infrastructure

Biodiversity and Natural Capital

Biodiversity and natural capital is an important theme for a growing minority of survey respondents, though one where investment opportunities are still more limited than other areas of impact investing. "Overall, we think that climate adaptation and biodiversity will become increasingly prominent in sustainable and impact investing conversations," Sariyska said.

Emerging Opportunities:

• Regenerative agriculture and sustainable food systems

• Forest conservation and restoration projects

• Marine and ocean health initiatives

• Sustainable water management systems

• Ecosystem service markets and nature-based solutions

Healthcare and Social Infrastructure

Focus Areas:

• Affordable healthcare delivery in underserved communities

• Digital health and telemedicine platforms

• Mental health and wellness solutions

• Educational technology and access

• Financial inclusion and fintech solutions

Due Diligence Best Practices for Impact Investments

Building Robust Assessment Frameworks

This closely mirrors the approach often taken with traditional investments – further underlining that there's less difference than people often assume between due diligence processes focused on the impact and financial perspectives.

Core Due Diligence Components:

1. Impact Thesis Validation

   • Theory of change assessment

   • Evidence base for claimed outcomes

   • Stakeholder voice and participation

2. Financial and Impact Integration

   • Business model sustainability

   • Revenue alignment with impact goals

   • Financial projections and impact scaling

3. Management Team Assessment

   • Impact expertise and track record

   • Governance and accountability structures

   • Stakeholder engagement capabilities

4. Market and Scalability Analysis

   • Total addressable market for impact

   • Competitive landscape evaluation

   • Regulatory environment assessment

Avoiding Greenwashing and Impact Washing

The risk of "greenwashing" – companies or funds claiming impact credentials that they don't actually merit – is a key concern in impact investing. Avoiding this risk requires rigorous measurement and reporting of tangible impacts, ideally supported by independent verification.

Red Flags to Watch For:

• Lack of clear impact metrics or measurement

• Absence of stakeholder engagement

• Inconsistent reporting or data gaps

• No evidence of additionality or contribution

• Misalignment between business model and stated impact

Governance Structures and Family Alignment

Establishing Impact Investment Governance

With millennials and Gen Z taking a more active role in family offices, governance structures need to adapt to accommodate their tech-savvy preferences and their focus on family office impact investing, ESG considerations and aligning investments with family values.

Key Governance Elements:

1. Family Values Articulation The family values statement will be your compass in guiding investment decisions, because it provides a basis for identifying the impact theme or themes to focus on – be it clean water, climate change, education, clean energy or something else.

2. Decision-Making Frameworks

   • Clear roles and responsibilities

   • Investment committee structures

   • Next-generation participation mechanisms

3. Impact Oversight and Reporting

   • Regular impact assessment processes

   • Family reporting and communication

   • External accountability measures

Managing Generational Differences

Survey data shows that generational differences are most pronounced in three areas: digital assets, private markets, and ESG investing.

Strategies for Alignment:

• Regular family meetings focused on values and priorities

• Education programs for different generations

• Gradual portfolio transition approaches

• Pilot investment programs to build confidence

Succession Planning for Impact-Focused Family Offices

Preparing the Next Generation

Today's generation, born and brought up in a digital-first world, consider themselves digital natives showing higher inclination towards riskier investments. As per a study by the fund administrator Ocorian, 66% of family office professionals highlighted that the next gen is more interested in digital assets compared to current family principals. A similar trend can be seen for private market investments 46% and impact investing 42%.

Next-Generation Preparation Elements:

• Impact investing education and training

• Hands-on experience with portfolio companies

• Mentorship and leadership development

• Technology and digital asset literacy

Governance Evolution for Impact

There is no one-size-fits-all governance structure to define shared family values and mission. Each family office needs a tailored approach that fits the specific needs and circumstances of the family it serves.

Critical Success Factors:

• Clear communication channels between generations

• Formal succession planning documentation

• Regular governance structure reviews

• Technology integration for transparency and reporting

Case Studies: Successful Impact Investment Strategies

Climate Technology Investment Success

Case Study: Adirondack Capital Managers 'We're giving up a little bit of return for a lot of impact,' Adirondack Capital Managers managing director Caitlin Haught told NPM. This family office has developed sophisticated benchmarking approaches for climate investments, demonstrating how family offices can maintain financial discipline while achieving significant impact outcomes.

Key Success Factors:

• Clear impact-return trade-off frameworks

• Rigorous measurement and benchmarking

• Long-term investment horizons

• Active portfolio engagement

Biodiversity and Nature-Based Solutions

Case Study: VP Capital's Integrated Approach In 2024, we accelerated the transition towards regenerative, circular, bio-based, toxicity-free, net-zero, and inclusive solutions. These six solutions guide both our investment decisions and engagement strategies.

Results Achieved:

• 54% of our capital (outside our direct participations) is now aligned with one or more of our six solutions.

• 89% of roadmap goals and actions were completed by our direct participations– exceeding our 80% target.

• We actively engage with 97% of our investments (beyond target of 90%).

Market Outlook and Future Trends

Growing Market Scale and Sophistication

Steady growth in impact investing assets: At 14% CAGR over the past five years, there is continuous growth in the assets allocated to impact investing strategies. This growth trajectory suggests that impact investing is moving from niche to mainstream within family office portfolios.

Key Trends Shaping the Future:

1. Technology Integration: The digitalisation of investments, including blockchain-driven tools to gain direct access to private markets and the use of artificial intelligence in asset allocation and selection, review and reporting processes are some of the innovations in wealth management and financial planning that will be most impactful for family offices by 2025.

2. Geographic Expansion: Family offices are increasingly extending their global influence, particularly in regions such as the Middle East and Asia-Pacific (APAC). This trend is primarily driven by the rise in family wealth and the burgeoning demand for diversified investment opportunities.

3. Asset Class Diversification: The rise of equity-like debt and public asset classes: Investors are leveraging the unique features of these asset classes to derive value, indicating a strategic shift in how capital is deployed.

Challenges and Opportunities Ahead

Key Challenges:

• Data availability and impact measurement are identified as a key challenge by 37% of family offices, according to UBS.

• Many remain under-professionalised, lacking dedicated impact talent, formal due diligence processes, or robust measurement systems.

• Scale mismatch between family office check sizes and emerging manager needs

Emerging Opportunities:

• Industry initiatives such as the Taskforce for Nature-related Financial Disclosures (TNFD), as well as an increased focus on measurement and data standardization are likely to enable innovation across the financial industry, leading to a rise in viable investment opportunities in future.

Practical Implementation Roadmap

Phase 1: Foundation Building (Months 1-6)

1. Family Values Alignment

   • Conduct family values workshops

   • Develop impact investment policy

   • Establish governance frameworks

2. Capacity Building

   • Staff training and education

   • External advisor selection

   • Technology platform evaluation

Phase 2: Portfolio Development (Months 6-18)

1. Initial Allocations

   • Building a portfolio that delivers the targeted impact may take several iterative actions to get from where you are today to where you want to be. You might start – for example – by making an investment in a fund linked to a purpose-based index, or in some specific impact funds.

2. Due Diligence Implementation

   • Establish assessment frameworks

   • Conduct pilot investments

   • Develop measurement systems

Phase 3: Scaling and Optimization (Months 18+)

1. Portfolio Expansion

   • Direct investment capabilities

   • Co-investment opportunities

   • Fund development partnerships

2. Impact Enhancement

   • Active ownership strategies

   • Ecosystem building activities

   • Knowledge sharing initiatives

Conclusion: Leading the Future of Purposeful Capital

The transformation of family offices toward impact investing represents more than just a trend—it signals a fundamental shift in how ultra-high-net-worth families view their role in society and their responsibility for future generations. This positioning means impact investing touches all asset classes. To fit it into an existing portfolio, a family office might decide to start with a tranche of assets or a particular money manager.

As we look toward the future, family offices are uniquely positioned to drive systemic change through their patient capital, long-term investment horizons, and flexibility to invest across the risk-return spectrum. With patient capital, deep networks, and strategic independence, they often move early, act decisively, and back what others overlook.

The families and family offices that successfully navigate this transition will not only preserve and grow their wealth but will also create lasting positive change in the world—building a legacy that extends far beyond financial returns to encompass meaningful impact on society and the environment.

For family offices ready to begin this journey, the key is to start with clear values, build robust frameworks, and maintain a long-term perspective that aligns financial success with positive impact outcomes. The future of wealth management is impact-driven, and family offices are leading the way.

Regional Trends and Geographic Opportunities

Asia-Pacific: The Rising Powerhouse

From Hong Kong's skyscrapers to Singapore's finance district and Dubai's rising wealth hubs, Asia's family offices are entering a new era defined by evolving leadership and modern practices. The region is experiencing rapid growth in family office establishment and sophistication.

Tax rules introduced in 2022 now require Singapore-based family offices to invest at least 10% (or S$10 million) of their assets locally, aligning with government goals to channel wealth into the domestic economy. This regulatory requirement is creating new opportunities for local impact investments.

Key Regional Focus Areas:

• Climate adaptation and resilience for vulnerable coastal regions

• Sustainable infrastructure development

• Healthcare access and technology solutions

• Educational equity and workforce development

Europe: Leading in ESG Integration

Europe is leading the charge with 57% of family offices now engaged in sustainable investing (up from 45% in 2021), followed by Asia Pacific with 52%. European family offices are benefiting from:

• Advanced ESG regulatory frameworks

• Established impact measurement standards

• Strong government incentives for sustainable investments

• Access to mature impact investment markets

North America: Navigating Political Transitions

Meanwhile, family offices in North America have been scaling back, as just 26% now engage in sustainable investing, down from 34% in 2021. However, this trend may be temporary, as:

• State-level climate initiatives continue regardless of federal policy

• Corporate sustainability commitments remain strong

• Next-generation leaders push for greater ESG integration

Technology Integration and Digital Transformation

AI and Data Analytics in Impact Measurement

A Citi Private Bank report found that 53% of family offices have built portfolio exposure to Generative AI through public equities, private equity funds or direct private equity. And another 26% are considering adding AI to their investment portfolios.

Applications in Impact Investing:

• Automated ESG scoring and risk assessment

• Real-time impact monitoring and reporting

• Predictive analytics for impact outcomes

• Streamlined due diligence processes

Blockchain and Transparency

Blockchain technology is enabling new levels of transparency and accountability in impact investing:

• Immutable impact data recording

• Smart contracts for outcome-based payments

• Enhanced supply chain traceability

• Reduced intermediary costs

Risk Management in Impact Investing

Portfolio Construction and Diversification

The average portfolio targets a return of about 11%, and maintains a 45% allocation to alternative investments, including private equity, real estate, venture capital and hedge funds.

Impact Investment Allocation Strategies:

• Conservative Approach: 5-10% of portfolio in impact investments

• Balanced Approach: 15-25% allocation across asset classes

• Impact-First Approach: 30%+ dedicated to impact strategies

Managing Liquidity and Time Horizons

Family offices have unique advantages in impact investing due to their:

• Patient Capital: Longer investment horizons than institutional investors

• Flexible Structures: Ability to invest across the risk-return spectrum

• Direct Investment Capability: Can bypass traditional fund structures

Measurement and Reporting Frameworks

Beyond Financial Returns: Impact Metrics

Key shifts in measurement and management of impact results: Investors are experiencing fragmentation in the choice of frameworks and metrics for measuring impact, likely influenced by evolving regulatory environments.

Essential Measurement Components:

1. Input Metrics: Capital deployed, resources allocated

2. Output Metrics: Products delivered, services provided

3. Outcome Metrics: Changes in beneficiary well-being

4. Impact Metrics: Long-term systemic change

Standardization and Comparability

Despite this, over two-thirds of investors are incorporating impact criteria into their investment governance documents, signalling a significant shift towards formalising impact considerations in decision-making processes.

Emerging Standards:

• IRIS+ metrics catalog

• UN Sustainable Development Goals alignment

• Impact Management Project frameworks

• B Corp certification requirements

Building Internal Capabilities

Talent Acquisition and Development

Our respondents report spending an average of $3.2 million annually to run their family offices, with recruiting and retaining talent a primary focus.

Key Roles for Impact Investing:

• Chief Impact Officer: Strategic oversight and family alignment

• Impact Investment Manager: Deal sourcing and execution

• ESG Analyst: Due diligence and monitoring

• Data and Technology Specialist: Measurement and reporting

External Partnership Strategies

As with any hot topic, many people have a view on impact investing. If you were seeking any other kind of investment adviser, you would naturally carry out due diligence around their robustness, track record, sector knowledge and client base. You should apply just as much rigour with impact investing advisers.

Partnership Models:

• Fund-of-Funds Approach: Diversified exposure through specialized managers

• Co-Investment Platforms: Direct deals alongside other family offices

• Advisory Relationships: Strategic guidance from impact specialists

• Outsourced CIO Models: Comprehensive impact investment management

Regulatory Landscape and Compliance

Global Regulatory Developments

European Union:

• Sustainable Finance Disclosure Regulation (SFDR)

• EU Taxonomy for sustainable activities

• Corporate Sustainability Reporting Directive (CSRD)

United States:

• SEC Climate Disclosure Rules

• Department of Labor ESG guidance

• State-level sustainability requirements

Asia-Pacific:

• Singapore's family office investment requirements

• Hong Kong's green finance initiatives

• Japan's stewardship code requirements

Future Outlook: The Next Decade of Impact Investing

Market Size Projections

Currently, family offices hold an AUM of US$3.1 trillion, a figure projected to increase by 73 per cent to US$5.4 trillion by 2030. This growth will significantly expand the capital available for impact investments.

Emerging Investment Themes

Climate Adaptation and Resilience:

• Infrastructure hardening against extreme weather

• Water security and management systems

• Sustainable agriculture and food systems

• Climate migration and urban planning

Health and Social Equity:

• Healthcare access in underserved communities

• Mental health and wellness solutions

• Education technology and access

• Affordable housing development

Technology for Good:

• Artificial intelligence for social benefit

• Digital inclusion and accessibility

• Cybersecurity for critical infrastructure

• Clean technology and energy transition

Action Steps for Getting Started

Immediate Actions (30 Days)

1. Conduct Family Values Assessment

   • Survey family members on priorities

   • Identify shared impact themes

   • Establish preliminary allocation targets

2. Baseline Current Portfolio

   • Assess existing ESG integration

   • Identify impact-aligned investments

   • Evaluate measurement capabilities

Short-Term Implementation (3-6 Months)

1. Develop Impact Investment Policy

   • Define investment criteria and exclusions

   • Establish measurement frameworks

   • Create governance structures

2. Build Advisory Team

   • Select impact investment advisors

   • Engage specialized service providers

   • Establish peer network connections

Long-Term Strategy (12-24 Months)

1. Scale Investment Program

   • Expand direct investment capabilities

   • Develop co-investment partnerships

   • Launch family-specific impact funds

2. Enhance Measurement and Reporting

   • Implement technology solutions

   • Establish third-party verification

   • Create stakeholder communication plans

This comprehensive guide provides family offices with the framework, tools, and insights needed to successfully integrate impact investing into their portfolios. The transformation toward purposeful investing is not just a financial strategy—it's a generational imperative that aligns wealth with values while creating lasting positive change in the world.

About Council Fire: As a global change agency specializing in climate resilience, sustainable business transformation, and stakeholder engagement, Council Fire helps family offices navigate the complex landscape of impact investing. Our expertise in translating ESG commitments into measurable outcomes makes us the ideal partner for families ready to align their capital with their values.