ESG in Public Markets: Adjusting Ambition or Defining It More Sharply?

During a recent Avida International roundtable, one central question emerged: how much impact can pension funds truly achieve through investments in public markets?

The discussion revealed two clear schools of thought.

Viewpoint 1: Public Markets Can Create Impact

According to the first group of participants, there is substantial impact to be achieved in public markets.

Investors can drive impact in listed markets through current contribution and additionality: investing in companies with demonstrably positive impact, complemented by positions in companies that actively contribute to the transition from brown to green, for example through engagement and stewardship. Listed equity can stimulate real-world progress — if investors use their influence purposefully and measurably.

Private markets remain essential for scaling early-stage solutions, but listed equity can likewise advance real-world outcomes, provided engagement is focused, sustained, and evidence-based.

Institutional investors in the Nordic countries have gained years of experience in this area. Their main insight: active engagement and collaboration are indispensable.

“In the Nordic countries, institutional investors have been integrating ESG, sustainability, and impact within listed equity for some time. A key conclusion from this experience is that active engagement is essential. Collaboration among asset owners and strategic partnerships with asset managers is crucial,”

says Anders Strøbech, Director (please confirm title) at Nordea.

“Institutional investors in the Nordic and Benelux regions share similar ambitions; cross-regional collaboration could further enhance these efforts.”

This approach is also gaining traction in the Benelux. Coalitions between like-minded pension funds and insurers can amplify influence and accelerate knowledge exchange.

Viewpoint 2: Real Impact Lies in Private Markets

The second group is more sceptical about the real-world impact achievable in public markets.

Their reasoning: buying existing shares does not bring new capital to companies — ownership changes, but the company itself does not.

Real impact, they argue, stems from financing companies that would otherwise lack access to capital: the start-ups and scale-ups developing sustainable innovations. These enterprises are almost always found in the private markets.

Another argument: financing companies that are not yet “green” but can transition (from brown to green) involves more risk and often results in poor ESG scores. Yet, according to this group, this is precisely where the greatest impact potential lies.

Two Visions, One Shared Challenge

Both perspectives share the same ambition: using pension capital to help build a more sustainable world.

But the paths to get there differ — and each brings its own challenges:

• How do you measure impact in public markets credibly, and prevent ESG from becoming more about reporting than real progress?

• How do you ensure that engagement actually changes something?

• How do you build constructive coalitions between institutional investors committed to advancing a shared impact agenda?

Avida International’s conclusion: the debate calls for more nuance, realism, and collaboration.

Perhaps it is time to speak less about “more ambition” — and more about the quality of that ambition. What’s your take?