Can the S&P500 be an impact investment option?

The impact of investing in the S&P 500

When I mentioned we were going to value the impact of investing in a listed index, the S&P 500, for example, the first thing a colleague told me was, “But what would be the additionality and intentionality of this investment? It has no impact!” The answer is both yes and no.

Its true that according to the latest thinking in impact investing (Heeb & Kölbel, 2020), the only way to generate an impact is through active engagement and growth strategies. Owning part of a public stock merely influences your attributed impact, not the overall impact on society. Still, it is frequently thought of as an impact strategy to optimize the risk exposure and return expectation. And overall, S&P 500 companies bring value to society, so our question is “how much”? Can investing in an S&P 500 index still deliver a high attributed impact compared to an alternative pure impact investing opportunity? This is what we aimed to discover, with the help of WISIT, the WifOR Institute Sustainability Impact tool.

“The analysis of the S&P 500's impact shows that even index-based investments – despite lacking intentionality or additionality – can have measurable societal effects. With WISIT, WIFOR empowers investors to value these impacts, enabling more informed decisions that consider not only financial returns but also societal outcomes.” Dr. Richard Scholz - Head of Impact Analysis WifOR Institute

How did we do it?

We used the composition of the S&P 500 in March 2025 (public information) as the basis of our assessment, which includes the capitalization per company and their revenue for 2024. We then calculated a range of impact drivers covering human, social, and natural capital across the value chain of those companies, and using WISIT, we were able to translate an economic activity (spending per company, sector, and country) into a range of impact drivers covering the supply chains of these companies. The drivers included:

• Natural capital drivers: Climate change, land and water use, air and water pollution, and resource use.

• Human capital drivers: Jobs and income, living wage gaps, gender pay gaps, occupational health and safety, child and forced labor, and training.

• Social capital drivers: Taxes paid, social utility of products.

For product utility, we used a simplified approach based on each company's revenue data, assuming that their utility to society would be a multiple of this latter. This approach could be further refined per company, sector, and product/service in the future.

We finally used the eQALY impact valuation method to translate those metrics into comparable and consistent societal value. The results are expressed in monetary units (USD), reflecting the change in well-being in society.

How much impact?

The S&P 500 has a market capitalization of $53 trillion and a revenue of $17 trillion. According to our results, the S&P 500 net societal value is $3.7 trillion. This means that for every $1 of revenue, it generates 20 cents of societal value. Or alternatively, for every $1 of capital invested, it generates 70 cents of societal value over a ten-year investment period.

In essence, this 0.2 ratio of societal value per dollar of revenue can be interpreted as a form of a “Price-to-Impact” (P/I) ratio—a concept introduced by Prof. Dennis Ostwald, CEO of Wifor. This ratio mirrors the familiar P/E ratio used in financial valuation but reframes it in terms of societal value instead of earnings. By using the P/I ratio, investors can assess and compare the broader impact performance of different investment options at a glance, beyond financial returns alone.

In our experience, an average impact investment can deliver a 1:3-10 ratio (click here to read our in-depth dive on the subject), and an average grant can deliver a 1:10-20 ratio. We are far from being optimal, although this lower societal performance comes with a perk: financial return. We observe a typical trade-off frequently discussed, very rarely backed up by data: the higher the financial return, the lower the impact return. Obviously, there are exceptions, but they are rare.

Therefore, investing in the S&P 500 provides a very low attributed impact and most likely no additionality or intentionality (as there is no growth strategy or engagement).

What is behind this $3.7 trillion societal value?

Impact valuation is a critical solution for comparing the different investments' absolute impact. However, it is also useful to understand the detailed impact drivers leading to this absolute and net impact.

The figure below shows the breakdown of the results per impact driver and per capital type. Social capital typically has an important positive component, although some potential negative impacts (tax avoidance, negative impact of products, etc) have not been fully integrated into our model at the moment.

Natural capital has a huge negative impact: $2.4 trillion societal value. This means that for every dollar of sales these companies do, they destroy nature at the rate of 14 cents each time. This impact is driven first by climate change, land use, air, and water pollution.

In terms of human capital, job creation and income generate most of the positive impact, although different impact drivers offset this positive impact to get close to a net-zero result. The gap to living wage and human rights issues, not only in the US, but abroad, driven by the importation of goods and services, drives most of the negative impact.

In conclusion, the S&P 500 exploits natural and human capital to generate financial gains, leaving a small positive impact through jobs (with questionable quality), product utility, and taxes. At least, it is not net negative, in which case, you could question the existence of most of those companies for our society.

Breakdown per Impact Driver

Diving into the impact per sector

The analysis granularity allows us to dive into different dimensions of the S&P 500 impact. The sector lens shows that some sectors have a net negative impact per USD of revenue, while others have a net positive impact per USD of revenue. Typically, agriculture, utilities, waste, food & beverage, and water companies have a net negative impact driven by their reliance on natural capital. Other sectors like insurance, services, and IT have a net positive impact on average as shown in the figure below.

It is particularly interesting to dive into the breakdown of human capital impact drivers per sector (second figure below). The actual net impact on human capital looks relatively small in the first figure. It hides a critical trade-off: jobs and income creation can be as beneficial as the pay gap to living wage, while other human rights impacts are relatively lower in terms of materiality. What really matters for increasing the S&P 500 would be to pay decent wages.

Social Value created per USD of revenue - Sector break-down

Human Capital results deep dive - Sector breakdown

The power of impact valuation data and method to drive insights for impact strategies

This exercise shows the deep-dive impact of the S&P, showing that it is possible to assess a very big portfolio representing trillions of dollars of investment in just a few days of work with the existing methods and data available today. This would have been unthinkable a few years back, when a study like this one would take a 6-figure consulting fee and months of work.

Additionally, beyond showing that S&P 500 is not really an impact investment and has probably very little role to play in an impact investment portfolio, it reveals that impact valuation can:

• Help with the identification of risks and opportunities.

• Support the development of an effective engagement strategy, based on the best impact levers.

• Inform portfolio allocation to maximize financial and societal returns.

• Raise awareness and educate on the impact of investments to a wider audience.

• Enhance transparency and accountability (including reporting) for investors.

The insights from this valuation are not just numbers—they are strategic levers for shaping better impact investing strategies. Contact us to learn more!

Note: WISIT, the WifOR Institute Sustainability Impact Tool, is a web application for analyzing the social, environmental, and economic impacts of business activities. It allows for the calculation of impacts along the supply chain in three simple steps.

Learn more here.