Scaling Impact Investing and Breaking Barriers: Interview with Cliff Prior

As someone with vast experience in leadership roles, could you share an overview of your professional journey and what you’re focusing on now?

As you know, I recently left GSG Impact after four and a half years of my three-year contract—you can figure that out! I ended up staying longer than I had initially intended. Before GSG, I was at Big Society Capital, now Better Society Capital, and before that, I worked with UnLtd for social entrepreneurs. There’s also Rethink, where I worked on initiatives for people affected by severe mental illness. These roles represent a wide range of impactful opportunities I’ve been fortunate to contribute to, often with some side projects along the way. Currently, I’m juggling a variety of opportunities, all sitting at the intersection of impact, entrepreneurship, and health. Health is where I started my career—I was in healthcare for nearly 20 years—so it feels like coming full circle.

Cliff, can I ask why you decided to leave GSG?

I was at GSG for four and a half years, even though it was initially a three-year contract. That itself says a lot. When I started, there was a team of seven working with a few countries. By the time I left, we were active in over 60 countries with a small but mighty team of 21—and 2,000 people in those countries contributing to the mission. 

The GSG is a value-based network with no legal or financial ties. It works because everyone is aligned on the same goal—that’s its magic. For example, Zambia, a country with limited resources, has thrived in impact investing because the network allows for problem-solving collaboration. That’s a unique achievement.

With Elizabeth Boggs Davidsen stepping in as CEO, I’m excited about the future. She’s fantastic and a long-time collaborator with GSG. One key initiative we started during COVID was an informal huddle with leaders of major impact organizations. This informal collaboration has sparked new ideas and deeper partnerships, which I believe is the next step in driving impactful change.

The GSG thrives because it’s a value-based network. It shows what’s possible when people collaborate towards a shared goal without financial or legal ties.

From your perspective, what are the biggest barriers to scaling impact investing globally?

The biggest challenge is scale. We must think about scale urgently because of the immediacy of the crisis. We’re already seeing the effects of surpassing 1.5 degrees Celsius—a threshold once anticipated for 2050. It’s happening now.

Let me give you a couple of striking examples: In recent years, one-third of Pakistan has been submerged underwater, while simultaneously, one-third of northern China has faced massive flooding, reversing river flows and introducing saltwater into farmlands, which has destroyed crops. These are catastrophic, fast-moving changes. So yes, scale—it’s absolutely critical.

Looking at the broader timeline of impact investing, we’ve seen an evolution. Initially, it was all about SMEs, startups, and social entrepreneurs. That was vibrant and innovative, and it still is. These smaller players generate exciting ideas and drive innovation. But around 2016–2017, we saw a shift—mainstream asset managers, pension funds, and similar institutions began engaging with impact investing. This was a significant development. Today, approximately $2 trillion in assets under management are categorized as impact investments, with a significant portion coming from these larger organizations.

That doesn’t mean the smaller scale has become irrelevant. On the contrary, it’s still crucial. However, engaging larger players allows us to tackle massive challenges—like the UK’s push for electrification—on a much broader scale.

We’re entering a phase where impact regulation and reporting requirements are emerging. About a dozen countries, including the EU bloc, are mandating measurement and management practices. While not full-scale impact investing yet, it’s a critical step forward. The next logical phase will likely involve impact accounting frameworks—such as those proposed by the ISSB—and, hopefully, impact valuation. Each stage builds on the previous one; none cancels the others out.

To truly achieve scale, we must reflect on the progress of technologies like solar panels. It took two decades for solar energy to reach a scale that made it cheaper than oil and gas. That was transformative—but we don’t have 20 years this time. We need to accelerate the scaling process now.

The biggest barriers to scaling impact investing are a lack of speed, integration across sectors, and cohesive global frameworks. We need every part of the impact ecosystem working together, even the aspects we’re sometimes skeptical about. Scale is non-negotiable. Without it, we can’t address the global crises we’re facing.

We don’t have 20 years. We need to accelerate the scaling process now. (…) Each stage builds on the previous one; none cancels the others out. We need every part of the impact ecosystem working together.

You mentioned impact accounting. Do you think the ISSB focuses more on sustainability accounting rather than impact?

Yes, it’s more sustainability-focused, and frankly, I don’t care as long as it achieves results. Labels matter for investors, but in the grand scheme of addressing the climate crisis, we need all the tools—impact, sustainability, ESG—working together.

Measuring impact is complex. How can we ensure that social and environmental outcomes are effectively tracked and measured across different markets and sectors?

We’ve set ourselves an incredibly high standard—almost a perfectionist approach—but we also need scale. Personally, and this is my perspective, not necessarily that of the GSG, I believe we need to strike a balance. We must be more efficient and tolerant of imperfection because we need volume. In many areas, perfectionism is stifling action.

For instance, if you apply rigorous impact measurement and management (IMM) to a modest-sized investment in sub-Saharan Africa, you have to ask: what level of capability do the people managing that investment realistically have? Can they handle our complex requirements, such as detailed reporting and metrics? I recently spoke with an experienced impact investor who visited projects in that region. He shared a compelling example: in one investment, the impact measurement results could vary drastically from morning to evening, depending on factors like rainfall and crop conditions.

This highlights a critical point—we need to be pragmatic. The goal isn’t to compromise standards deliberately but to find the right balance between robust impact measurement and delivering actual value, especially in low-income countries. Excessive reporting requirements can create an undue burden, even driving small farmers out of business in favor of larger organizations better equipped to manage IMM.

That’s not the outcome we intended, but in some cases, it’s exactly what’s happening. So yes, we need precise standards where they’re essential, but we also need to consider whether we’re unintentionally placing an unmanageable load on those who can’t meet these demands. The key is to ensure we’re not hindering the people and communities we’re trying to help.

We need precise standards where they’re essential, but we must ensure (…) we’re not unintentionally hindering the very communities we aim to help.

Excessive reporting requirements can create an undue burden, even driving small farmers out of business in favor of larger organizations better equipped to manage IMM.

There’s debate about ESG versus impact investing. Where do you draw the line?

ESG and impact investing are distinct frameworks. ESG started as a way to manage corporate risks but has evolved to include footprints and sustainability goals. Impact investing, on the other hand, is about intentionality and measurable outcomes. They’re complementary but different.

So, are you saying there’s no real connection between impact investing and ESG?

They’re different frameworks. Think of them as choices. Personally, I’d love to see the ESG framework split into two distinct categories because of its different components – reducing risk for the company, versus that plus reducing risks externally by the company. Another key difference is the scale of impact. Currently, there are about $2 trillion in assets under management (AUM) for impact investing, but ESG has $40 trillion. Even if ESG-framed investments were just one-tenth as effective as impact investing, their scale would mean twice the total impact.

We need to think big: It’s not about perfection in a $2 trillion market, but about solving real problems with a $40 trillion one.

The challenges we face—from the climate crisis to longstanding and emerging social issues—demand massive solutions. While ESG metrics can sometimes be weak, jurisdictions improve them over time. If you asked me (though you didn’t!), in 10 years, ESG as we know it will likely fade. It will evolve into something more aligned with impact approaches—but that’s a decade down the road.

That’s an interesting point. Everyone seems to be talking about ESG and impact right now, but there’s confusion. Many people think they’re making an impact when they’re really not.

Exactly. The starting point for understanding impact differs across countries. For instance, in the UK, I believe everything will shift more decisively towards impact in the next decade. Understanding impact is a journey, and different countries are at various stages. Change is happening at different speeds in different regions. It’s not just about when a country adopts ESG principles but how quickly they can adapt and scale them. Japan, for instance, is another country where we’re seeing movement, and I think we’ll also get to that point there.

There’s a long-held belief that impact investing means sacrificing financial returns. Is that myth finally being debunked, or do you still see resistance from traditional investors?

It’s a choice, not a sacrifice. Whether you’re an asset owner, be it a large pension fund, a family office, or even an individual deciding where to put your pension savings, it’s about what you value. Some prioritize purely financial returns, others want a balance of returns and impact, and some go all-in on sustainability. Those are choices, not compromises.

I’m keen to see more people choose impact and sustainability, but it’s not always easy. Personally, it took me five or six years to persuade one of my main advisors to shift toward sustainability. It was tough. The initial reaction was: What does that even mean? How do you persuade them? It took time. But I think it’s much easier to start that conversation now, especially in the UK.

At what point do they start to change their minds? What’s the tipping point?

It comes down to pressure from asset owners. Advisors, pension funds, and investors must follow where the money is going. The market responds if enough individuals, wealthy families, or offices demand sustainable options. Otherwise, they won’t attract capital. This is about choices, but not all choices are straightforward. Take lithium, for example. Is it a good investment because it’s key to electrification? Or is it a bad one because mining involves destroying large areas of virgin forest? These are complex decisions.

One significant driver of change is generational. Younger people in wealthy families are more climate-conscious because they will live through the climate crisis. For them, it’s not abstract—it’s their future. Older generations might talk about it, but younger ones are pushing for real action because they’ll experience the full impact of climate change. This generational shift is influencing more sustainable choices over time.

Another factor is performance. Impact investing is no longer just ethical, it’s competitive. The latest data shows that impact funds are outperforming traditional ones. That’s another reason to choose impact. It’s not just good for the planet; it’s good for your portfolio.

Finally, look at the big themes dominating investment: financial inclusion, electrification, and healthcare for an aging population. These are inherently impactful sectors. If investing with a 10-year horizon, you must ask: What will the world look like? What will drive returns? The world is changing, and ignoring those shifts isn’t just short-sighted—it’s risky.

So, while it’s about choices, more choices are naturally moving toward sustainability and impact, whether due to regulation, market performance, or the undeniable reality of global challenges. The key question remains: Who are the asset owners, and what choices are they making—and why?

Impact investing isn’t about sacrifice—it’s about making a choice for a better future.

You’ve been deeply involved in advising global bodies like the G7 and G20. How receptive are these institutions to companies, and what is the concept of impact investing? Are governments making progress?

Governments and multilaterals, including the COP series, are moving forward, but the balance between talk and action is off. This isn’t because they’re unwilling to act but because they’ve faced backlash in countries where they pushed too fast on climate action without considering the impact on their populations. That approach doesn’t work.

Take the Just transition as an example. We need to address climate change, but to succeed, we must secure public backing and allow people to have a voice in the process. A Just transition ensures that environmental goals align with social equity. Without this alignment, governments risk alienating the very populations they need on board.

What role do you see governments playing in the development of the impact investing ecosystem?

Some countries still don’t effectively support SMEs’ growth, which is astonishing when considering that SMEs are the backbone of any economy. Some jurisdictions lack a legal framework that allows profit and purpose to coexist. It’s crazy. Why not embrace it? It’s a proven approach.

Beyond this, regulatory systems need improvement. For example, ISSB (International Sustainability Standards Board) currently focuses only on single materiality, but this will evolve. It’s a process of moving from one mandate to the next.

Some governments are leading the way. Take Japan, for instance. They’ve gone from almost no impact investing to being at the top in just four years. Their success came from alignment: the Prime Minister supported it, leading investors like Ken Shibusawa championed it, and the country’s affinity for systems and numbers worked in their favor. They went from negligible impact investing to $85 billion in assets under management in four years. It’s phenomenal. Collaboration played a significant role. Officials in Japan had extensive meetings with counterparts in the UK and France, and at the GSG, we encouraged this exchange. The people driving these changes are often deep within treasury or finance departments, but connecting them makes all the difference.

Spain is a completely different model. The GSG national partner in Spain was led by Juan Bernal, who headed the investment side at CaixaBank, one of the country’s largest banks. They embraced impact investing wholeheartedly. For example, if you had a CaixaBank account, you’d encounter impact-related materials and be encouraged to invest in socially responsible projects. From a low starting point, Spain normalized impact investing quickly. These transformations aren’t linear; they bubble up until something clicks and significant changes happen.

The balance between talk and action is off, not because governments are unwilling, but because rushing without considering social impacts doesn’t work.

There’s increasing concern about impact washing. How can investors and regulators combat this? And what should the role of banks be?

Combating impact washing is indeed a crucial issue. It’s the responsibility of governments and, in particular, financial regulators, to create robust frameworks for emerging markets. When a new market format is established, regulation becomes essential. Different regions approach this differently. The UK, for example, typically observes new areas of the financial market until they stabilize. Once they reach a certain level of maturity, regulations are introduced, creating structure and growth. Conversely, the EU adopts a more prescriptive approach, laying out regulations before the market has even formed. This has been problematic and is one of the reasons why specific initiatives struggle to gain traction there.

Global standards are inevitable, but they need to be practical. Ultimately, the UK’s adaptive style often resonates better—watch the market, understand its trajectory, and then act.

How can NGOs and social entrepreneurs be better integrated into the impact investment ecosystem?

NGOs and social entrepreneurs are essential to breaking new ground. Their primary role is innovation, coming up with bold, fresh ideas, some of which can truly transform industries. Integration often depends on the political climate and the receptiveness of policymakers. For example, in the UK, under certain political parties, there has been a proactive engagement with NGOs and social entrepreneurs. At one point, organizations were bracing for a tough fight to gain attention, but they found that doors were already open due to their well-structured pitches.

NGOs thrive by leading innovation, but their role evolves into ensuring accountability once ideas take root.

Once an idea gains traction, NGOs shift to a different function—ensuring integrity. This aligns with the ESG framework, focusing on whether the initiatives are genuine and impactful. They become the gatekeepers, asking the critical questions: Is this real? Is it effective? Is it good enough?

What unconventional strategies have you seen that empower communities to solve their problems? How can impact investors produce meaningful solutions while addressing those challenges?

The best way to illustrate this is with examples. Let’s take Ghana. Many sub-Saharan African countries struggle with Development Finance Institutions (DFIs) because DFIs typically deal with large sums of money and primarily operate in US dollars. This creates a real hurdle for countries in the region.

In Ghana, the GSG national partner team tackled this issue by carving out a a pool of capital in local currency from their national pension fund. This pool addresses the challenge by creating a mechanism where $10 million from DFIs can be integrated into the pool, and then distributed effectively to micro, small, and medium enterprises (MSMEs). It’s a scalable model, with Nigeria attempting something similar through their treasury and Zambia exploring a credit risk guarantee program. This variety of tools shows innovation at work. On the topic of MSMEs, though, I’d like to circle back to social entrepreneurs. We often lump social enterprises into one category, but they vary greatly. In lower- and middle-income countries, MSMEs form the backbone of the economy. However, only a small subset of these ventures have the potential for significant scale. Governments need to distinguish between creating numerous small jobs and nurturing ventures with transformative potential—completely different objectives requiring different solutions.

As you step down from GSG, what trends and developments in impact investing are you most excited about, and what risks do you think we need to be mindful of?

Well, at the core, what excites me most and is necessary is the movement of impact investing into the mainstream. The climate crisis demands a new financial system that integrates the internalities of investments and the externalities. We’re reaching a point where putting a monetary value on both the harms created and the benefits generated is unavoidable. I recall a conversation with a significant investor who suggested using NFTs to assign value to whales, aiming to protect them by monetizing their existence. My immediate question was, “What about the plankton and the krill? Are you going to buy those too?” Some things can be monetized; others cannot. However, we need mechanisms to evaluate the harm and the good in investments. Some frameworks will be essential, whether they evolve through ISSB standards, government accounting, or approaches like the IFVI (International Foundation for Valuing of Impacts) valuation model.

Some advocate assigning an NFT to every piece of land, but that’s not practical. However, a targeted approach could yield significant results. For instance, three of the four major accounting firms once concluded that addressing just 10% of impact valuation areas could deliver 90% of the value. That’s worth pursuing. But impact valuation isn’t perfect, and that’s okay. Look at the evolution of standardized accounting—it took nearly a dacade to develop after the 1930s. Why do we demand perfectionism in impact metrics when the field is still in its infancy?

The valuation part is particularly challenging because it’s inherently subjective. Carbon, for instance, is a global metric and easier to quantify. But when you move into social aspects—well-being, equity—that’s where things get far more complex.

Absolutely. For instance, IFVI recently hosted significant events around the United Nations General Assembly (UNGA) and engaged over 120,000 actors in their discussions. They’ve started shaping a framework for social issues that incorporates national perspectives. Whether it works remains to be seen—we’re venturing into new territory. It’s clear, though, that we can’t just focus on carbon. Take lithium mining, for example it might help with the green transition, but its social and environmental costs are substantial.

Yes, carbon is one factor, but humanity faces countless other challenges. The social side of impact is crucial yet incredibly intricate.

And that’s where AI could play a transformative role. Our current computational power opens up possibilities that were unimaginable before. However, the challenge lies in trust. If the system appears too technocratic, people may grow suspicious. They might think, “Are we being manipulated here?”

Let me share an example from health care: the UK’s NICE (National Institute for Clinical Excellence) introduced a system in the 1990s to evaluate whether treatments were “worth it” by calculating quality-adjusted life years. Initially, there was a massive public outcry. Parents protested, saying, “If my child needs this expensive treatment, are you saying they should die because of the cost?” But after a few years, the system was accepted. Today, it’s used in about half of the world’s jurisdictions.

This shows that impact valuation can address various issues over time, even those as sensitive as life and death. Sure, we’re now navigating an era of fake news and heightened skepticism, which makes things harder. But if NICE could work under such scrutiny, why shouldn’t impact valuation systems evolve similarly?

The climate crisis demands a financial system that values both the harm created and the good generated—it’s not an option, it’s a necessity.

What would you consider your proudest achievement at GSG, and what do you hope your legacy will be?

It’s the global movement, how it works together, and how dedicated it is. That’s fabulous. The next team, the next CEO, will now have a solid foundation to build upon. Without that foundation, none of this would have been possible. This movement spans over 60 countries! It’s not just a single region’s effort; it’s a collective achievement on a massive scale.

That’s a huge achievement. Finally, what’s your boldest prediction for the future of finance in the next 10 years?

Impact valuation. It might not look exactly like what the IFVI or VBA visions, but it’s coming for the most critical issues we face in one form or another.

Let me give you a radical example: jeans. If you go to a supermarket, you can get a pair for £5 to £10. If you go to Levi’s, it’s £60 or £70. Designer jeans? £500. It’s the value we place on them. Now, think about the things we don’t put a monetary value on: our lives, livelihoods, and places we cherish. Waterfront homes sinking underwater—why aren’t we putting a value on those? Of course, we must. Here’s the point: the price we assign doesn’t have to be entirely logical, it’s a choice. Just as we’ve chosen how to price jeans, we can choose how to value sustainability and impact. Take accounting, for instance. The International Financial Reporting Standards (IFRS) govern the auditing of over $200 trillion globally. It’s a colossal system, from small cafes to the world’s largest corporations. It’s not perfect, but it works. Why can’t we apply similar principles to sustainability? Why can’t we measure it consistently?

It’s all about measurement—how we measure, when we measure. Without consistency, we’re stuck.

Exactly. That’s why we need consistent methodologies, like IFRS. The International Sustainability Standards Board (ISSB) is crucial for this. It’s just starting—it’s produced a few standards so far, and those only address single materiality. But the potential is immense.

Have you seen the full IFRS documentation? Thousands of pages. Why can’t we have thousands of pages dedicated to sustainability? It’s possible, but public support is essential, and that’s where things falter. Take London’s Ultra Low Emission Zone (ULEZ) as an example. For seven years, there were warnings: if you drive a polluting vehicle, you’ll face charges. But once enforcement began, people revolted—smashing cameras, turning them around. Why? Because there wasn’t enough effort to bring the public along. Even when the rationale was that 4,000 children die annually from smog-related issues, the messaging didn’t land. Contrast this with what the U.S. did through the Inflation Reduction Act (IRA). Yes, the U.S. has money and the advantage of the dollar, but it wasn’t just the $1.3 trillion budget that mattered. It was how the funds were deployed. They started with people—families—and focused on who those families’ trust. It wasn’t just throwing money at problems; it was strategic and inclusive.

Public support isn’t optional—it’s essential for meaningful change.

This has been such a fascinating discussion. Thank you for sharing your insights and bold vision for the future, Cliff.

My pleasure. Apologies if I’ve gone on too long!