We recently brought together clients, colleagues and industry experts for a debate centred around Where can investor capital create the greatest impact?
The objective was never to determine whether public or private marketsPrivate marketInvestments in companies, assets or projects that are not traded on a public stock exchange. Private-market investors may provide capital directly and can sometimes have closer involvement in governance, strategy and impact management. read more are “better”. Rather, it was to create a lively and differentiated forum to explore how different forms of capital contribute to addressing social and environmental challenges, and how investors can think about them as complementary tools within an overall portfolio.
The conversation ranged widely: from whether an investment makes something possible that otherwise might not have happened, to how investors can use their money, ownership and voice to influence companies. We explored how capital can back new ideas, support businesses as they grow, and help successful solutions reach more people, as well as the role investors can play in encouraging change across entire industries and systems.
The audience questions were informed, ranging from the role of engagementEngagementHow we influence as an investor. We have three levels of engagement – reactive engagement, proactive engagement and system-level engagement. Engagement activities can include meetings, email correspondence, calls and/or video conferences with an assets management team and/or investor relations. read more and accountability in public marketsPublic marketMarkets in which investments such as shares and bonds can be bought and sold by a wide range of investors, typically through a public stock exchange, enabling wide, public ownership. read more to the transparency of private market impact reporting, blended financeBlended financeThe strategic use of public or philanthropic funding to attract additional private investment towards social or environmental objectives. read more, exits, and what we really mean by creating “more” impact.
Where the room ultimately landed was where much of the impact investingImpact InvestingInvesting with the intention of generating positive, measurable social or environmental outcomes alongside a potential financial return. Impact investing is an approach rather than a single asset class and can be applied across both public and private markets. read more industry finds itself today. While the debate format demanded a choice, the discussion revealed something more nuanced. Public and private markets may create impact in different ways, but both have an important role to play. One can help incubate new solutions and provide patient, targeted capital, the other can help scale those solutions and influence the behaviour of some of the world’s largest companies.
In other words, perhaps it’s less a question of either/or and more a question of how and when different forms of capital can work together to create impact.
Green bondsBonds that raise money for projects intended to deliver environmental benefits. read moreThe debate introduction
“This House believes we can achieve more impact through public markets than private markets.”
At the outset of the debate, Chair – Sarah Teacher, CEO Impact Investing Institute established a common foundation. Impact investing, she explained, is not an asset class but an investment approach: the intentional allocation of capital to generate positive, measurable, social and environmental outcomes alongside financial returnsFinancial returnsThe financial gain or loss generated by an investment, including changes in its value and any income it produces. read more. Importantly, the approach spans both public and private markets.
She also highlighted the scale of the opportunity. Impact investing has grown into a significant global market, with capital increasingly directed towards addressing environmental and social challenges while seeking financial returns. Most recent market data shows the UK impact market at £77 billion and the global market at £1.571 trillion.1
Yet within that growth sits an ongoing debate. Many investors instinctively associate impact investing with private markets, where capital can be directed towards specific projects, businesses and solutions. While others argue that public markets, through their scale and reach, offer a powerful mechanism for driving change across the global economy.
The debate explored these competing perspectives. To ensure a lively discussion, the debate was framed as a choice between public and private markets, but it consistently returned to a broader question: what does it actually mean to create impact, and how should investors think about different sources of capital within an overall portfolio?
The debate
The case for public markets: scale, influence and accountability
Speaking in favour of public markets, the team began by clarifying that they were not arguing private markets cannot create impact. Rather, their case was that public markets have the potential to create more impact because of the scale at which they operate.
Their argument rested on three pillars: scaleScale of impactThe number of people, communities or environmental systems reached by an outcome, or the geographical and economic reach of that change. read more, influence and accountabilityAccountabilityThe expectation that an organisation explains its decisions, reports on its performance and takes responsibility when it falls short of its commitments. Companies are expected to be accountable to their shareholders. read more.
Scale matters
Public markets provide exposure to some of the largest companies in the world. These organisations employ millions of people, influence extensive supply chains and deploy vast amounts of capital every year. This can all feed into their scale of impactScale of impactThe number of people, communities or environmental systems reached by an outcome, or the geographical and economic reach of that change. read more. The argument was that when companies operating at this level improve labour standards, reduce environmental harm or increase investment in sustainable solutions, the resulting impact can be considerable.
The public markets side also highlighted the role of fixed income markets, particularly greenGreen bondsBonds that raise money for projects intended to deliver environmental benefits. read more, socialSocial impactA meaningful change in people’s lives or communities, such as improved health, greater inclusion, better access to essential services or fairer economic opportunities. read more and sustainability bondsSustainability bondsBonds that raise money for a combination of eligible environmental and social projects. They combine characteristics of green bonds and social bonds. read more. Trillions of dollars have been raised through these instruments to support projects ranging from renewable energy and clean transport to social infrastructure. Given the scale of listed markets, even incremental improvements in sustainable practices have the potential to be felt across a broad range of stakeholders.
Underlying this argument was a systems-levelSystems-level investingAn investment approach that considers how investment decisions and investor influence can affect the wider systems on which long-term financial, social and environmental outcomes depend. read more perspective. Impact is not only about creating new solutions; it’s also about improving the behaviour and outcomes of the companies that already shape the global economy.
Influence beyond ownership
A common criticism of public markets is that shareholders own only small stakes in large businesses and therefore have limited influence. The public market advocates challenged this assumption.
They argued that engagement, stewardshipStewardshipHow investors use their rights and influence to protect and enhance the long-term value and impact of their investments. Stewardship can include engagement, voting, monitoring, escalation and collaboration. read more and investor collaborationCollaborative engagementTwo or more investors working together to engage a company or address a wider market issue. Collaboration can combine investors’ knowledge, influence and ownership rights. read more can drive meaningful change. One example cited was the development of a global mining tailings standard following the tragic collapse of a mining waste facility in Brazil. Investor engagement helped drive the creation of industry-wide safety standards that reshaped how tailings facilities (mining waste storage facilities) are managed across the sector.2
This idea of systems changeSystems changeA lasting change to the structures, rules, behaviours or relationships that shape how a wider system works. Rather than addressing only one symptom or organisation, systems change seeks to influence the underlying conditions affecting an industry, market, community or global system. read more featured prominently throughout the discussion. Public market investors argued that by targeting influential companies and collaborating with other shareholders, they can create ripple effects that extend well beyond a single investment holding. Even relatively small investors can play a role if they focus on strategic, long-term issues that are material to a company’s future success.
The importance of transparency
Another strength highlighted by the public markets team was accountabilityAccountabilityThe expectation that an organisation explains its decisions, reports on its performance and takes responsibility when it falls short of its commitments. Companies are expected to be accountable to their shareholders. read more.
Listed companies operate under extensive disclosureDisclosureInformation formally provided by a company, fund or investor about its activities, risks, performance or outcomes. Disclosure supports transparency, although the existence of disclosure does not necessarily mean the information is complete or comparable. read more requirements, making information more accessible, comparable and transparent. This transparencyTransparencyMaking relevant information about material decisions, activities and performance clear and accessible to investors and stakeholders. read more allows investors to measure outcomes, challenge management teams, vote on key issues and hold companies accountable when progress falls short. Public reporting can provide confidence that outcomes are being measured and scrutinised.
The public markets team argued that this visibility allows investors to assess whether impact is genuinely being delivered. In their view, the ability to evidence, verify and monitor outcomes is an essential component of creating meaningful impact at scale.
Long-term stewardship
Investment horizon was the third theme the public markets side touched on.
While public markets are often criticised for encouraging short-term thinking, speakers argued that public market impact investors can remain invested indefinitely. Unlike private equity funds, which often have finite lifespans and eventual exit requirements, public market investors are able to support companies throughout multiple stages of growth and development.
From this perspective, stewardship becomes an ongoing, more long-term relationship. Public market investors can remain engaged through strategic dialogue, votingVoting rightsThe rights attached to an investment that allow an investor to vote on certain company decisions. These may include the election of directors, executive pay, auditors, changes to a company’s constitution and shareholder proposals. read more and collaborationCollaborative engagementTwo or more investors working together to engage a company or address a wider market issue. Collaboration can combine investors’ knowledge, influence and ownership rights. read more for decades, helping companies navigate long-term social and environmental challenges.
Democratising impact
Another important argument for public markets centred on accessibility.
Public markets are accessible to a wide range of investors through pensions, individual savings accounts (ISAs) and investment accounts – for as little as £1. If impact investing is ultimately about changing how capital functions within society, then enabling millions of people to participate matters. The public market advocates argued that connecting how people invest with how they work, consume, and vote creates an additional layer of influence that private markets struggle to replicate at scale.
The case for private markets: additionality, innovation and depth
Those speaking for private markets accepted many of the arguments around scale but questioned whether scale alone is the best measure of impact.
Instead, they emphasised additionalityAdditionalityThe extent to which an investment or investor action helps produce an outcome that might not otherwise have happened, or helps it happen sooner, at greater scale or to a greater depth. read more, innovation, and the depth of changeDepth of impactHow significant or transformational an outcome is for the people, communities or environments affected. Depth considers the extent of change, not simply how many people or places are reached. read more that focused capital can create.
Impact begins with innovation
A central theme of the private markets case was that businesses and solutions begin life as private ventures.
Private capital often supports companies before they are mature, profitable or publicly listed. It enables entrepreneurs to take risks, develop new technologies and test solutions to social and environmental challenges that more established businesses may be reluctant to pursue.
Speakers pointed to examples from healthcare, renewable energy and industrial decarbonisation, arguing that many of the innovations shaping tomorrow’s economy emerge first within private markets. Public markets may eventually provide the capital required to scale these businesses, but the initial development frequently relies on private investors willing to support new ideas.
This led to a broader assertion: private markets function as the incubator of impact. They provide the capital required to move solutions from concept to reality.
The importance of additionality
The private markets team gave significant attention to the concept of additionality, asking whether positive outcomesPositive outcomesBeneficial changes for people or the planet that occur through an organisation’s products, services, operations or wider influence. read more would have occurred without the investment.
Their view was that private investments often provide new capitalNew capitalFresh funding provided directly to a company, fund, project or intervention. This capital may allow an organisation to start, expand or accelerate its activities. read more directly to companies, projects and interventions. This creates a clearer link between investment decisions and resulting outcomes. When investors finance a new business, project or service, they can more easily demonstrate how their capital contributed to change.
While the debate included discussion around how strictly additionality should be applied, the private markets team argued that direct capital provision remains a critical distinction. It’s generally easier to trace the route from investment to outcome when funding is allocated directly to a company or solution.
Active ownership and influence
The private markets team also stressed the degree of influence they’re able to exert through active ownershipActive ownershipThe use of an investor’s ownership rights and influence to encourage better company behaviour, performance and outcomes. It commonly includes engagement and voting but does not mean managing the company’s day-to-day activities. read more.
Because ownership is often concentratedConcentrated ownershipAn ownership structure in which a relatively small number of investors hold significant stakes. read more, investors frequently take board seats, participate in governance, help define impact objectives and support management teams directly. Beyond capital, they can contribute expertise and strategic guidance.
The argument was that the influence investors have can be highly targeted. They can help design impact measurementImpact measurementThe process of collecting and assessing information about the social and environmental outcomes associated with an investment. This may include quantitative indicators, qualitative evidence and comparison against an investment’s stated impact objectives. read more systems, shape strategic decisions and support organisations over extended periods without the pressure of day-to-day share price fluctuations.
A broader impact toolkit
Private markets also challenged the belief that impact should be viewed exclusively through the lens of company ownership.
They highlighted a wide range of structures that sit within the private market’s ecosystem, including social outcomes contractsSocial outcomes contractsAgreements in which payment is linked to the achievement of agreed social outcomes. read more, blended financeBlended financeThe strategic use of public or philanthropic funding to attract additional private investment towards social or environmental objectives. read more vehicles, infrastructure funds, private debtPrivate debtLoans and other forms of debt financing provided outside public bond markets. The terms private debt and private credit are often used interchangeably. read more and impact litigation financingImpact litigation financeFunding provided to support legal cases that seek financial redress or wider positive social or environmental outcomes. read more. These structures often address challenges that have no straightforward public market equivalent.
Particular emphasis was placed on blended finance, where public or philanthropic capital helps attract commercial investment into underserved areas. Supporters argued that this approach can unlock significant new capitalNew capitalFresh funding provided directly to a company, fund, project or intervention. This capital may allow an organisation to start, expand or accelerate its activities. read more by reducing perceived risk and demonstrating viable investment opportunities.
Beyond scale: depth and need
One of the closing statements focused on the idea that impact should not be measured solely by scale.
The private markets team suggested that depth and need are equally important. A programme that transforms the lives of a smaller number of people facing severe challenges may generate profound impact, even if the headline numbers appear modest compared with large-scale public market initiatives.
Examples included social outcomes contractsSocial outcomes contractsAgreements in which payment is linked to the achievement of agreed social outcomes. read more supporting individuals at risk of homelessness and financing models designed to address highly specific societal needs. The argument was that transformational change at an individual or community level represents a meaningful form of impact that should not be overlooked simply because it affects fewer people.
Beyond a public versus private debate
As the discussion unfolded, it became increasingly clear that framing the issue as a choice between public and private markets risks oversimplifying how impact is created. Indeed, one of the most interesting themes to emerge from the debate was not where impact investing belongs, but how different forms of capital play different roles in delivering positive change.
Throughout the evening, both sides acknowledged the strengths of the other. The public markets case recognised that many of the most innovative solutions to social and environmental challenges begin their journey in private markets, where investors can provide patient capital, support early-stage growth and help new ideas take shape. The private markets case, in turn, recognised the importance of public markets in providing liquidity, enabling successful businesses to scale and extending their reach to millions more people.
The Chair’s closing reflections captured this shared perspective. Private markets can help incubate solutions, fund innovation and support highly targeted interventions where capital can be closely linked to outcomes. Public markets can help scale those solutions, influence corporate behaviour and direct capital towards change at a system-wide level. Together, they represent different points along a continuum of capital, each contributing in distinct but complementary ways.
Ultimately, the debate was never really about crowning a winner. From the outset, impact investing was defined as an approach rather than an asset class, one that can be applied across both public and private markets. The consensus of the debate was not that investors must choose between public and private markets, but that solving the complex social and environmental challenges of our time will require both. On the night there was an audience debate – can you guess who won?
