Impact Investing: From PE to Public Markets - A New Frontier

Impact investing, once predominantly focused on private equity (PE), is now expanding into public markets, as discussed at the 4th Palm Beach CorpGov Forum. This shift presents new opportunities and challenges for investors seeking to generate positive social and environmental impact alongside financial returns.

The expansion into public markets brings greater liquidity and accessibility to impact investing. Public markets offer increased flexibility, allowing investors to enter and exit positions more readily and engage with larger, more established companies. This growth in the impact investing ecosystem can drive more capital towards addressing social and environmental challenges. However, the transition also brings unique challenges, such as the need for better data and more sophisticated engagement strategies to effectively measure and manage impact in public markets.

According to the 2023 GIINsight series, 65% of impact investors allocate to PE, while only 44% do so in public markets (GIIN, 2023). Public markets offer scalability and liquidity, enabling investors to engage with larger, more established companies. However, measuring impact in public markets can be more complex due to less direct control and limited data availability. Experts like Dirk Schoenmaker and William de Vries (Triodos Investment Management) emphasize the importance of large corporations in driving sustainable transformation, provided they are willing to change.



The shift towards public markets in impact investing enhances liquidity and accessibility. Public markets offer greater liquidity, enabling investors to buy and sell securities more easily than private equity investments, which can be illiquid. This liquidity is crucial for impact investors seeking to optimize their portfolios and maintain flexibility. Moreover, the increased availability of impact funds on public markets expands accessibility, attracting a broader range of investors, including retail investors and institutions. This growth in the impact investing ecosystem can drive more capital towards addressing social and environmental challenges.

In conclusion, the expansion of impact investing into public markets presents new opportunities and challenges for investors. While public markets offer greater liquidity and accessibility, investors must navigate the complexities of measuring and managing impact in this new frontier. As the impact investing industry continues to evolve, investors are encouraged to explore these actionable insights and adapt their strategies to maximize both financial returns and social and environmental impact.