Impact investing first entered our lexicon in 2007 and more than a decade later, the practice is at a crossroads.

Demand is growing. For many people, “money is a way to express themselves,” said David Bohigian, executive vice president of the Overseas Private Investment Corporation (OPIC), at the Milken Institute Global Conference.

Yet, clear standards and a lack of appropriate capital across the risk/return spectrum exists.

With a wide range of players working in the impact investing space, from financial institutions to private foundations, experts says infrastructure and education are the necessary next steps.

How Did We Get Here?

Impact investing no longer requires the cheerleading it once did. It has reached a fever pitch of its own these days, thanks largely to millennials and women.

“In addition to the $30 trillion wealth transfer to millennials, we’ve already seen $11 trillion in the U.S. transferred to the hands of women in terms of being primary decision-makers,” said John Streur, president and CEO at Calvert Research and Management.

According to John Buley, professor of the Practice of Business Management at Duke University, Fuqua School of Business, millennials are pushing back on older people, institutions and governments to affect social change.

“The millennial generation has already had a significant impact by catalyzing their parents and their employers,” said Buley.

And financial institutions are heeding the call. For example, pension fund management firm APG Asset Management integrates responsible investing across the spectrum and aligns its investments with the UN’s Sustainable Development Goals (SDGs).

It’s an increasingly common strategy (60 percent of investors say they use the SDGs to track financial performance or plan to do so soon), but long-term vision is required. Ann-Marie Griffith, managing director of U.S. Fixed Income for APG Asset Management U.S., noted that it’s important to provide robust financial returns without introducing additional risks to younger groups that are more exposed to longer-term investments.

“What might look good today might not look good in 10 or 15 years,” she said. “That’s incumbent on us as investors and assets managers to pay close attention to those risks.”

Creating Infrastructure and Protections

But while the first step of creating robust demand has been taken, experts at the Milken Institute Global Conference said investors and managers alike need to have a common idea of what successful impact investing looks like.

“One of the critical aspects of the infrastructure that we need across all of these structures are standards,” said Streur. “To develop these markets and to scale these markets, we need sets of standards and we need sets of well-accepted metrics so investors from this diverse set of backgrounds can come together and have devices to measure impact.”

According to Buley, traditional innovators in the financial sector are, for once, behind the government and other corporations in understanding this “new” investment vehicle. This might be most evident with professional credential requirements.

“[CFA Institute] is just really getting with it in terms of creating segments of the CFA exam that relate to understanding the critical role businesses play in informing social and environmental outcomes,” Streur said.

And like any industry, there can be bad actors. The sector will need to look out for potential pitfalls like greenwashing, the practice of using deceptive marketing to create an environmentally-friendly image to encourage investor interest.

Next Steps: Impact Investing Education

The experts agree that impact investing is here to stay, a sentiment widely echoed throughout the four-day conference. The concept has even won over some high-ranking military brass – retired Gen. David Petraeus explicitly noted a new impact investing fund being raised at private equity firm KKR, where he serves as chairman of its Global Institute.

But if it sounds like the Wild West, investors can take heart knowing the sector recognizes the need for increased education around what it is and how it works. In addition to on-the-job learning, “academic institutions are now creating learning tracks and degree programs to train people about these issues,” Streur noted.

Although there are clear growing pains occurring in the sector, it’s not stopping people from investing with their heart. More than $100 billion in impact investing assets are under management in the U.S., and more capital leads to more data and opportunity to learn.

New to impact investing? Learn more:

Impact Investing Basics
Myths of Impact Investing