Impact investing in the creative economy today

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2021 is the United Nations International Year of Creative Economy for Sustainable Development. Acknowledging the importance of the creative sector, the framers of the United Nations’ Sustainable Development Goals included creativity and culture alongside economics and technology when charting the path forward for global development.1 Creativity and culture are recognised as contributing to dialogue and understanding between peoples, as empowering people to take ownership of their own development, and as the basis for innovation that can drive inclusive and sustainable growth.2 The COVID-19 pandemic puts joint efforts by governments, civil society, private sector and international organisations in a new dimension, highlighting the importance of the creative economy as part of a global recovery.3

The UN resolution on Creative Economy for Sustainable Development highlights the sector as an important tool for the attainment of the Sustainable Development Goals in an inclusive and equitable manner. The resolution, which was agreed by consensus by the United Nations General Assembly (UNGA) on 19 December 2019, was co-sponsored by 81 countries (roughly half of the world).4

In the near future, in a world that is attempting to recover from a pandemic and its unprecedented effects, the path of economic growth is uncertain. Fostering cultural and creative industries strategically for a sustainable and inclusive recovery will have long-term benefits, including, but not limited to, an increase in quality of life, the stimulation of innovation and thus a more resilient economy with improved ability to adapt in the face of challenges.5

The creative industries account for 3 per cent of global GDP.6 But that’s changing quickly as the global creative economy grows at 9 per cent annually, and 12 per cent in the developing world.7 The value of the global market for creative goods doubled from US$208 billion in 2002 to US$509 billion in 2015, an increase in export growth rates of more than 7 per cent over 13 years.8 According to recent forecasts, the creative economy will represent around 10 per cent of global GDP in the years to come.9

The creative economy is not only one of the most rapidly growing sectors of the world economy, it is also highly transformative in terms of income generation, job creation and export earnings.10 But opportunities are often unevenly distributed and, unless efforts are made, the environmental toll of this growth can be severe. There is the chance now – before the sector grows even larger – to shape the creative economy to be more inclusive and sustainable.

US$31 trillion11 in assets under management (AUM) globally is dedicated to sustainable and impact investment. Impact investment rewards and scales businesses that follow standards of worker safety and dignity, offer fair compensation and benefits, embrace principles of diversity and equity, engage and demonstrate respect for local community, and steward the environment. The growth of impact investment has been marked by the development of more responsive investing vehicles addressing the specific capital needs of industries, impact themes, geographies and populations.

Fundación Compromiso, Nesta and Upstart Co-Lab have partnered on this report to bring attention to the potential for impact investing in the global creative economy. While impact investing targeted to the creative economy is nascent, there are growing examples of interested investors and socially and environmentally oriented creative economy entrepreneurs. Fund managers in both developed countries (including the US, the UK, France, Germany and Switzerland) and developing countries (for example, throughout East Africa) are starting to launch investment vehicles that link sustainable and impact investment to the creative economy.

In this report, 44 experts from 17 countries have contributed essays along two themes: Creativity at work, which illustrates how the creative economy is addressing key issues of inclusion and sustainability, and Connecting impact capital, which describes a range of efforts to finance creative activity in alignment with values. Wealth advisers, impact investors, creative entrepreneurs, government officials, and art and community leaders have all shared their vision of the creative economy as a source of high quality opportunities that will allow investors who understand the power of art, design, culture, heritage and creativity to achieve social and environmental impact as well as financial reward.

The examples and perspectives captured here are intended to inspire global policymakers, fund managers and wealth advisers, institutional and individual investors, and philanthropic funders of the global ecosystem for impact investing to prioritise the creative economy. May this report also serve as a call to action to art patrons and collectors, commercial and charitable creative organisations, and leading artists and designers regarding a new opportunity to attract financial resources to meaningful endeavours in art, design, culture, heritage and creativity.

What is the creative economy?

The definition of ‘creative’ is something that is both new and effective.12 The term ‘creative economy’ was introduced in an article by Peter Coy in 2000 about the impending transformation of the world’s economy from an industrial economy to an economy where the most important force is ‘the growing power of ideas’.13 John Howkins elaborated in his 2001 book, The Creative Economy: How People Make Money from Ideas, describing the creative economy as a new way of thinking and doing that revitalises the manufacturing, services, retail and entertainment industries with a focus on individual talent or skill, and art, culture, design and innovation.14

‘Creative economy’ was elevated to the world economic and development agenda at the Eleventh Session of the United Nations Ministerial Conference on Trade and Development (UNCTAD XI) in Sao Paulo, Brazil in 2004.15 A United Nations multi-agency group then defined the creative economy essentially as ‘the knowledge-based economic activities upon which the “creative industries” are based’. The definition extends to all parts of the creative industries that are also considered an important source of commercial and cultural value, including trade, labour and production.16

Today, creative economy definitions are typically tied to efforts to measure economic activity in a specific geography. A relevant set of art, culture, design and innovation industries is determined, and the economic contribution of those industries is assessed within a region. A unique set of industries defines each local creative economy, reflecting the culture, traditions and heritage of that place.

Based on research by the Creative Economy Coalition (CEC), a working group of the National Creativity Network; the National Endowment for the Arts and the Bureau of Economic Analysis; Americans for the Arts; the UK Department for Culture, Media and Sports; Nesta, a UK-based innovation foundation; and the United Nations Educational, Scientific and Cultural Organisation (UNESCO), Upstart Co-Lab defined the creative economy by identifying a set of 145 industries engaged in the inputs, production and distribution of creative products using the North American Industry Classification System (NAICS). Upstart Co-Lab distills these industries into five pillars of the creative economy: Ethical Fashion, Sustainable Food, Social Impact Media, Other Creative Industries and Creative Places.

Global creative industries generated US$2.25 trillion in revenue and formally employed 29.5 million people worldwide in 2013, the latest year for which UNESCO has commissioned research.17 In emerging markets, the artisan economy is a major driver of informal jobs for an estimated 300 million people18 and projected to reach a global valuation of US$985 billion by 2023.19

The creative economy defined
Ethical fashion – Companies producing clothes, shoes, jewellery and accessories that proactively address industry challenges related to labour, environmental impact, governance and/or preservation of cultural heritage.

Sustainable food – Producers and providers of food and beverage products and experiences that proactively address and raise consumer awareness of resource conservation, preservation of cultural heritage and/or access to healthy food.

Social impact media – Companies that leverage the power of communication, storytelling and technology to drive positive social outcomes at scale, give a platform to under- represented voices and/or build a diverse workforce.

Other creative businesses – Other facility, input, production and distribution businesses in art, design, culture and heritage industries that are run sustainably, provide quality jobs and have a social impact.

Creative Places – Real estate projects that are affordable, target creatives or businesses in the creative economy, and benefit their neighbours, such as affordable workspace for artists and creative economy businesses.

What is impact investing?

Impact investing is investing with the intention to generate positive, measurable social and environmental impact alongside a financial return.20 It is an investment approach, applicable to all asset classes, that counters the traditional separation of environmental, social and governance risk factors from investment decisions that are focused on financial returns alone. Impact investors consider how their investments align with their social and/or environmental goals and values, as well as their financial return objectives.

While terminology varies among practitioners, for the purposes of this report impact investing is the umbrella term that includes concepts such as sustainable investing, ESG (investing in companies operating with best environmental, social and governance practices) and SRI (socially responsible investing, or sustainable, responsible and impact investing).

Impact investing defined
For the purposes of this report, impact investing will be used as the umbrella term to encompass a range of overlapping concepts:

Environmental, social and governance (ESG) factors are non-financial data that investors may consider as part of their investment analysis as a way to evaluate whether their investments promote sustainable, fair and effective practices and mitigate potential risks.

Impact investments are investments made into companies, organisations and funds with the intention to generate measurable social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets and target a range of returns from below market to market rate, depending on the circumstances. Impact investors actively seek to place capital in businesses and funds that can harness the positive power of enterprise.

Socially responsible investing (SRI), socially conscious, ‘green’ or ethical investing, is any investment strategy that seeks to consider both financial return and social good. In general, socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights and diversity.

Sustainable investing is investing with long-term gains expected in social, environmental and governance areas. A vision of a sustainable future is set as a reference point for developing strategic actions.


The creative economy is not only one of the most rapidly growing sectors of the world economy, it is also highly transformative in terms of income generation, job creation and export earnings

While the term impact investing was only coined in 2008 and the mainstreaming of this approach is 10 years old, the underlying philosophy has many examples throughout history. Investors have long used their investments to reflect their values and drive social change: from Quakers who refused to allow their financial resources to support the slave trade, to religious orders that would not invest in ‘sin stocks’, to the anti-apartheid divestment movement of the 1980s.

In addition to such negative screening,21 more proactive strategies have emerged. These approaches do not simply limit the investable universe through exclusion of activities determined to be harmful to society and the environment, but actively seek constructive opportunities. Community development financial institutions22 target investments to generate economic opportunity in underserved communities. Early-stage impact funds strategically invest in companies that promote renewable energy, or intentionally back women entrepreneurs. Pooled funds of public equities, built around themes such as social justice or the United Nations Sustainable Development Goals, invest in companies with aligned best-in-class corporate practices.

Globally, impact investment assets under management were US$31 trillion at the beginning of 2018, an increase of 34 per cent over 2016.23 The amount of capital committed to impact investing has grown significantly in recent years as leading global financial institutions add expert impact investing advisory teams and launch new impact funds in response to client demand and an evolving understanding of the role of business in society. At the time of this report in 2020, Apollo Global Management, Bain Capital, Bank of America, BlackRock, Blackstone, Goldman Sachs, J.P. Morgan, Morgan Stanley and UBS all have dedicated impact investing groups; and Generation Investment Management, KKR, LeapFrog Investments, Prudential Financial, Turner Impact Capital and UBS are all managing impact investment funds of US$1 billion or more.24

The emergence of dedicated impact investment funds aligns with shifting expectations of the role business plays in society. Since 2018, Larry Fink, CEO of BlackRock, the world’s largest asset manager, has stressed the link of profit to sustainability, long-termism and purpose in his annual letters to CEOs and investors. In his 2020 letters, he affirmed that ‘sustainability should be our new standard for investing’.25 In 2019, David Rubenstein, founder and co-executive chairman of The Carlyle Group (a multinational private equity, alternative asset management and financial services corporation) stated that, in the future, companies are likely to be ‘judged on their ESG contributions and performance almost as much as on their financial performance. And the companies that perform well financially, but don’t do well on ESG concerns, may not be as highly valued on the market as they would be today’. Rubenstein followed up on this assertion in 2020 with a firm-wide commitment to ‘investing for impact’, stating ‘it is precisely the societal goals of the impact investor – diversity and inclusion, environmental sustainability, responsible governance – that increasingly generate the above-market returns sought by the market as a whole’.26 In its 2019 Statement on the Purpose of a Corporation, the Business Roundtable, an association of CEOs of the largest US companies, made a commitment to all stakeholders – including customers, employees, suppliers, communities and the environment – as well as shareholders, and ‘urge(d) leading investors to support companies that build long-term value by investing in their employees and communities’.27 The statement is a profound shift from the shareholder primacy doctrine of the past 50 years.

Creative economy definitions are typically tied to efforts to measure economic activity in a specific geography and a unique set of industries defines each local creative economy, reflecting the culture, traditions and heritage of that place

Impact investing in the creative economy today

The creative economy has not been well understood by the impact investing sector. As an example, for 10 years the Global Impact Investing Network (GIIN) has captured data on ‘arts & culture’ in the Annual Impact Investor Survey of its 289 global members, representing US$221 billion worth of impact assets under management. In 2020, arts & culture was reported as representing only 0.1 per cent of assets under management, with allocations from only 9 per cent of respondents. However, the 2020 report suggested that impact investing leaders are beginning to recognise the error of defining the creative economy too narrowly, with the GIIN including the following acknowledgment for the first time: ‘Allocations to some sectors may be greater in reality than as reflected in these analyses. For example, some investors are active in arts & culture through their investments in other sectors like housing or education. These investments may be classified here as housing or education investments, though they also have an impact on arts & culture’.28

A narrow framing of the arts and cultural sectors misses the significant and growing opportunities available for impact investors. Upstart Co-Lab’s 2018 report Hiding in Plain Sight: Impact Investing in the Creative Economy29 identified more than 100 private equity, private debt and real estate funds, representing an estimated US$60 billion AUM, that had been active in the creative economy. Nineteen per cent of the funds reviewed had explicit creative economy strategies or invested exclusively in one or more of five creative economy categories. One-third of the funds were investing in multiple creative economy categories. Most of the funds in the study focused on impact themes related to the environment, quality jobs, women and girls, or entrepreneurs of colour. While creativity and culture was not the stated priority for the majority of funds analysed, many of their portfolio companies were in the creative industries, demonstrating a strong correlation between the creative economy and social and environmental impact. Concern among consumers about how their food, clothes and entertainment are produced has grown significantly in recent years. Human wellbeing and planetary health may have been niche issues in the past, but have evolved into mainstream trends. Consumers are demanding sustainable and ethical business practices from the companies they patronise and are voting with their wallets. But it’s not only about sustainability and ethics. Consumers are also demanding more engaging, more authentic and more varied products and experiences. Changes in purchasing power around the world require companies to diversify their offerings to appeal to many more distinct audiences.

Impact investors are attracted to the creative economy by its scale: global problems, big market opportunities, large consumer demand. Early impact investors in Ethical Fashion are trying to reinvent the global supply chain around environmental sustainability and improved livelihoods. Sustainable Food investors are betting that new, delicious and exciting products and experiences will translate to healthy people and a healthy planet. First movers in Social Impact Media see the power of stories from previously under-represented voices to shape opinions and drive action, while simultaneously creating quality jobs and economic opportunity. US-based real estate developers in places like Denver, Chicago, Los Angeles and New York are incorporating creativity and culture into large-scale mixed-use, mixed-income projects, adding value to their assets and to the surrounding communities. This basic intersection of profit and purpose plays out in every industry in the creative economy.

Examples of impact investing in the creative economy

The creative economy has the capacity to intrigue, engage, educate and activate more mindful consumers so that the benefits of ethical and sustainable supply chains and the full power of media to drive positive change can be realised. Seasoned impact investors are already putting impact capital to work in Ethical Fashion, Sustainable Food and Social Impact Media to achieve social and environmental goals such as environmental conservation, gender and racial equity, and access to economic opportunity. Those who care about shaping a creative economy that is inclusive, equitable and sustainable will find numerous opportunities to deploy their values-aligned capital. Contributors to this report provide compelling testimony to the power of bringing together committed investors with creative entrepreneurs.

Below are several other examples of funds that allow impact investors to deploy capital to the creative economy:

Community Investment Management (CIM) is an institutional impact investment manager providing strategic debt funding to scale and demonstrate responsible innovation in lending to small businesses and other underserved borrowers in the United States. CIM invests in the credit products of innovative non-bank lenders, including, but not limited to, online marketplace lending platforms that are addressing the financing gap between banks and high cost alternative lenders. CIM funds two-to-three times more women-, BIPOC- and veteran- owned businesses than conventional banks and financial institutions. In aggregate, businesses funded by CIM have generated US$8 billion in total revenue, created 10,000 jobs and maintained 69,000 more jobs. In addition, 24 per cent of CIM’s small business lending portfolio is in the creative economy as defined by Upstart Co-Lab.

LISC NYC Inclusive Creative Economy Fund finances the affordable workspaces that make it possible for creatives to start and grow businesses, hire workers into quality 21st-century creative economy jobs and maintain the spirit of New York City as a place where creativity is produced, not just consumed. This is the first impact investment fund focused on arts, design, culture and creativity in the context of community development, and is managed by the Local Initiatives Support Corporation (LISC). The fund, which closed in 2019 at US$6.2 million, offered investors an eight- year note paying 2.75 per cent annual interest. LISC is AA- rated by S&P. The fund was developed and launched in partnership with Upstart Co-Lab.

Purpose Evergreen Capital GmbH & Co. KGaA (PEC) is a holding company supplying patient capital to finance companies committed to steward ownership, with an economic and legal approach to corporate governance that ensures organisational self-determination and protects a company’s mission and independence for the long term. Steward-owned businesses are governed by those who are directly involved in the operations of the business, not external shareholders. PEC is focused on four impact objectives: support equitable corporate governance, boost employee economic security, nurture workplace inclusion and foster community development in the form of job creation. PEC invests in mature, profitable companies aligned with the UN Sustainable Development Goals in sectors including fashion and textiles, organic food and agriculture, and digital platforms. PEC reports that approximately 60 per cent of its current portfolio investments and forward pipeline are in the creative economy as defined by Upstart Co-Lab.

The creative economy as a source of impact investment capital
Pension funds, sovereign wealth funds, charitable

foundations and universities have been active institutional impact investors for the past 10 years. While this report focuses primarily on impact investment opportunities available in the creative economy, it would be incomplete to overlook institutions in the cultural sector as a potential source of impact investment capital as well. This is a new role for these organisations, but there are already some early examples.

A narrow framing of the arts and cultural sectors misses the significant and growing opportunities available for impact investors

In 2020, Netflix, a publicly-traded media-services provider and production company headquartered in the US, made a commitment to allocate 2 per cent of its cash holdings – initially up to US$100 million – into financial institutions and organisations that directly support Black communities in the US. Netflix described this as part of its commitment to racial equity and an effort to address one factor that contributes to 19 per cent of Black families having either negative wealth or no assets at all – more than double the rate of White households – according to the US Federal Reserve.

In 2019, the Andy Warhol Foundation moved 25 per cent of its US$300 million endowment to a socially responsible strategy. The same year, the Souls Grown Deep Foundation & Community Partnership, which is dedicated to promoting the work of African American artists from the south and supporting their communities by fostering economic empowerment, racial and social justice, and educational advancement, adopted a 100 per cent impact investing policy. Building for the Arts, a producer of community arts initiatives, and Creative Capital, a funder of innovative artists, each invested from their endowments in the Local Initiative Support Corporation’s NYC Inclusive Creative Economy Fund, the first community development fund for impact investing in the creative economy in the US (developed in partnership with Upstart Co-Lab) in 2018 and 2019 respectively.

Since 2018, the Louvre Museum has allocated 5 per cent of its €250 million endowment fund to socially responsible investment, with a focus on artisan and traditional craft businesses, cultural tourism, cultural heritage and education, all themes connected to the mission of the Louvre Museum.30 For example, the fund has invested in Mirabaud Patrimoine Vivant (Living Heritage), a private equity fund focused on European artisan and traditional craft businesses from socially responsible Mirabaud Asset Management. Investments also include Alpha Diamant II, a private equity fund investing in capital development and donating 80 per cent of returns above 5 per cent to support education; and Alter Equity, a venture fund investing in companies generating environmental and social solutions and donating returns above 5 per cent to French heritage projects; both of which are generating ‘excellent performance’.31

In 2016, the Field Museum in Chicago and the American Museum of Natural History in New York pledged to divest from fossil fuels in alignment with its programme and policy stance on climate change32. In 2015, California Institute of the Arts (CalArts) made a commitment to divest from fossil fuels, and reports that the shift generated approximately US$700,000 of investment gains for CalArts from 2016 to 2020.33

As this report goes to print, there is much uncertainty about the future. May now be the start of a focused global effort to bring about positive social and environmental change through the creative economy as the world rebuilds after the COVID-19 pandemic.

3 UNCTAD, “How the creative economy can help power development”, (Retrieved June 25, 2020)
4 United Nations. International Year of Creative Economy for Sustainable Development
6 17 EY, Cultural times: The first global map of cultural and creative industries, December 2015, p16
7 United Nations Development Programme and the United Nations Educational, Scientific and Cultural Organization, Creative Economy Report Special Edition, 2013, p153
13 Peter Coy, “The Creative Economy,” BusinessWeek, August 28, 2000; Creative Economy Coalition, America’s Creative Economy: A Study of Recent Conceptions, Definitions, and Approaches to Measurement Across the USA, August 2013, p10
14 John Howkins, The Creative Economy: How People Make Money, 2001.
15 Eleventh Session of the United Nations Ministerial Conference on Trade and Development (UNCTAD XI), Sao Paulo, Brazil, 2004, Sao Paulo Consensus, paragraphs 65 and 91
16 Creative industries include a wide range of goods and services ranging from goods such as books, paintings, musical industries, DVDs, toys to services such as advertising, market research and public opinion services, architectural, engineering and other technical services, research and development services and personal, cultural and recreational services (including audio visual services and other cultural and recreational services).
18 Gupta, Neelam (2001) Invisible labor: social security for home-based workers of the garment, agarbatti and papad industries, Delhi, SEWA Bharat, p v and vi
19 Research and Markets, ltd. “Handicrafts Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2018-2023.” Research and Markets – Market Research Reports – Welcome, June 2018
21 Negative screening refers to the exclusion of companies that do not comply with specific, pre-set social or environmental criteria.
22 Community financial development institutions are private financial institutions committed to expanding  economic opportunity in low-income communities by providing access to financial products and services for local residents and businesses; this model is primarily in the US.
30 Louvre-Endowment-Fund-Annual-Report-2018.pdf
31 Correspondence with Philippe Gaboriau, CEO, Louvre Endowment Fund, 9 October 2020.
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A new way of funding our creative economy