The Case for Impact Investing in Public Equities
Impact investing is gaining interest as a growing share of investors seeks tangible progress on environmental and social goals alongside financial returns.
For a growing cohort of investors, financial returns aren’t enough. Those investors seek social and environmental progress in tandem with competitive investment performance. Impact investing through public equities provides an innovative mechanism to realize their objectives.
Impact investments are made with the intention to generate a positive, measurable social and environmental impact alongside a financial return. Its origins trace to microfinance where small loans funded micro enterprises such as farmers and entrepreneurs in remote villages.
Today, venture capital and private equity impact strategies play a critical role in building impact businesses across industries and geographies. However, the structure of private investing has prohibitive characteristics, including limited scalability and limited access to such investments for most investors.
We see public equity markets playing a growing and indispensable role in the impact ecosystem by driving impact and contributing at the investor, company and asset class levels:
Contribution from the investor
Public equities play a unique and complementary role in the impact investment ecosystem, offering solutions that private markets cannot and allowing more investors to participate in a space long available only to high-net-worth and institutional investors. To create impact, we see the following as best practices for impact investors in public equities:
Contribution from the company