The shift towards public equities
While impact investing has primarily focused on private markets, recent investor surveys are reporting a shift towards public equities.*
In Canada, this shift has occurred at roughly the same rate as global markets. The UNPRI and RIA respectively reported 39% and 36% public equity allocation across respondents’ portfolios.
Impact investing focuses on investing in business models that target specific positive impacts at their core. Applying this lens across all asset classes indicates that investors are pushing beyond ESG integration to intentionally creating deeper impact across their entire portfolio. An increasing number of impact investment products in public equities markets, such as a growing number of mutual funds and ETFs, have made this shift possible and present an opportunity to democratize the sector to all investors types, including retail investors.
Insights from these products can feed back into further product development to create a range of products catering to a greater portion of the investor spectrum. Although this segment of the market is growing, “impact washing” is an increasing concern for impact investors, particularly in public markets where impact measurement is even more challenging. Investors should look deeply into the impact thesis, research process, decision making criteria and fund management to understand how impact is considered. Impact investment managers have the opportunity and responsibility to develop impact measurement and reporting tailored to public markets.