SINGAPORE (June 17): Climate change, extreme poverty and all the world’s other big problems will be expensive to solve. The United Nations estimates that its 17 Sustainable Development Goals — a list of initiatives ranging from zero hunger to clean energy — will require annual commitments of private capital from US$5 trillion ($6.8 trillion) to US$7 trillion globally over the next decade. This daunting task has inspired a growing number of investors to put their money to work.

Impact investing, which aims to overcome environmental and social challenges while making a financial return, is one of Wall Street’s fastest-growing asset classes. Since the term “impact investing” was coined in 2007, US$502 billion has been invested globally in assets deemed to be making a difference, according to a first-of-its-kind attempt to measure them done in April by the Global Impact Investing Network. The investing style has garnered a cult-like following among the wealthy elite, who see it as an alternative to philanthropy and government initiatives.

Capitalism, they say, can solve some of these problems faster by harnessing the power of the markets. Well-intentioned as these investors may be, their efforts have yet to make a significant dent in any major problems.

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