UBP: Impact investing in listed equities, a strategic allocation for long-term pension capital

April 29, 2026

Impact investing in listed equities enables pension funds to align long-term returns with structural global transitions, combining scale, liquidity and active ownership with measurable real-world outcomes.

By Mathieu Negre, Head of Impact Investments, and Yvan Delaplace,  Investment Specialist – Impact Equities, both at UBP

Pension funds invest over multi-decade horizons. Their liabilities extend far into the future and require stable, compounding returns in a world undergoing structural transformation. Climate transition, demographic shifts, infrastructure renewal, digitalisation and biodiversity loss are not temporary themes. They are forces reshaping industries, regulation and capital allocation. \

Impact investing in listed equities is based on a straightforward premise: companies providing solutions to systemic global challenges are likely to benefit from structural growth, regulatory support and resilient demand. It is forward-looking equity investing aligned with long-term economic transformation.

What is meant by impact?

Impact investing differs from traditional ESG integration. ESG primarily evaluates how a company operates. Impact focuses on what a company produces. The investment approach concentrates on businesses whose core products or services address environmental or social challenges. To ensure consistency and diversification, the opportunity set is organised around selected UN Sustainable Development Goals. These objectives are translated into six broad investment themes, spanning environmental priorities such as climate stability, healthy ecosystems and sustainable communities, alongside social priorities including health and wellbeing, basic needs and inclusive economies.

This structure provides a disciplined and balanced framework for portfolio construction. Each of the holdings in our portfolios is assessed through a structured framework evaluating the intentionality, materiality, additionality and potential of its impact alongside financial fundamentals.

For example, Xylem¹, a company specialising in advanced water treatment and infrastructure solutions, contributes to improved water quality and resource efficiency. Its technologies addressing emerging contaminants such as PFAS illustrate how environmental impact can be embedded in core business models.

ESG primarily evaluates how a company operates. Impact focuses on what a company produces.

Why listed equities?

Impact investing is often associated with private equity. Private markets play an important role in funding early-stage innovation. However, systemic change requires scale, and scale sits in public markets. Most of the world’s largest infrastructure operators, healthcare providers, food producers and industrial leaders are listed companies. Engaging with these actors is essential to achieving real-world outcomes.

Listed equities offer structural advantages: scale, liquidity and stewardship:

• The transition to a more sustainable and resilient economy requires capital at a scale measured in trillions. Public equity markets are the only capital pools deep enough to finance transformation across sectors and regions.
• Public markets allocate capital efficiently and transparently. Liquidity allows capital to be reallocated as companies adapt to structural change, enabling investors to increase exposure to solution providers and reduce exposure to those failing to respond to evolving risks. Broad participation and continuous trading help keep transaction costs low.
• Shareholders in listed companies exercise voting rights and engage directly with management. Sustained dialogue can influence strategy, disclosure and longterm direction.
• As passive investing expands, capital increasingly flows according to index weight rather than economic relevance. Active listed impact strategies seek to address this imbalance by directing capital toward companies providing structural solutions.

As a result of sustained dialogue, Bank Rakyat1 Indonesia became one of the early disclosers among emerging market banks to report financed emissions. This illustrates how active ownership can improve transparency and capital allocation over time. Private markets incubate innovation. Public markets scale it.

Performance considerations

A common concern is whether impact implies lower returns. However, companies positioned around structural solutions tend to benefit from three reinforcing forces: innovation, regulation and shifting consumer demand, creating durable growth tailwinds. Portfolio companies are typically established businesses with strong balance sheets, attractive returns on capital, visible revenue growth and defensible market positions. Impact exposure is therefore not a concessionary allocation. It represents participation in long-term structural growth.

Impact strategies can also enhance diversification by providing exposure to areas of the market that are often underrepresented in traditional indices. These are quality businesses delivering essential solutions in segments benefiting from rising demand.

Since inception², our positive impact global equity and emerging equity strategies have delivered competitive annual returns of 15.9% and 15.2% respectively. This track record supports the view that a disciplined impact approach in listed equities can be consistent with long-term financial objectives.

Governance, discipline and oversight

Our impact platform has been active since 2018 and comprises three listed equity strategies: emerging equity, global equity, and biodiversity restoration. It includes a dedicated impact investment team, an independent Impact Advisory Board and a formalised engagement framework. The Advisory Board meets regularly to review holdings, challenge impact authenticity and assess engagement outcomes. Investment cases and impact assessments are examined in depth. Engagement priorities are defined and progress is monitored. This governance structure is designed to ensure that impact objectives remain measurable, transparent and integrated within the investment process.

Biodiversity as a financially material theme

Beyond climate, biodiversity is increasingly recognised as economically material. More than half of global GDP, approximately USD 44 trillion, is moderately or highly dependent on nature. At the same time, nature-positive transitions are estimated to generate up to USD 10 trillion in annual business opportunities by 2030. For longterm asset owners, biodiversity therefore represents both systemic risk and structural opportunity. In response, we launched a listed equity biodiversity strategy in 2021. The framework distinguishes between companies contributing to the protection of ecosystems and those supporting restoration.

The biodiversity investment universe continues to expand across sectors, including technology, infrastructure, and resource efficiency solutions. For example, companies such as Everpure1 contribute to biodiversity preservation through more efficient data storage architectures that reduce energy consumption, electronic waste and resource intensity. Given the complexity of biodiversity measurement, assessment combines corporate disclosure, external analytical tools and structured engagement. For pension funds with multi-decade horizons, biodiversity is directly linked to economic resilience, supply-chain stability and long-term value creation.

Conclusion

Impact investing in listed equities provides exposure to structural economic transformation while maintaining liquidity, governance discipline and active stewardship. Private capital supports early-stage innovation. Public markets enable scaling. For pension funds managing intergenerational capital, allocating to companies building resilient and resource-efficient systems is a strategic decision grounded in long-term economic fundamentals.

  
_{1 The securities identified should not be considered as recommended for purchase or sale. Past performance is not a guide to current or future results.
2 Global Impact: 27 September 2022. EM Impact 7 May 2020. Performance until 27/02/2026. Past performance is not a guide to current or future results.}

Read the article in Financial Investigator magazine