The additionality orthodoxy is keeping public markets out of impact investing

The argument that private-markets impact investing delivers dramatically more impact than listed markets has grown confident enough to become its own obstacle. Charlie Crossley, investment engagement manager at Friends Provident Foundation, is trying to puncture it. Writing in Net Zero Investor, he argues that impact investors need private and public opportunities alike, and that additionality — the claim that private capital enables impact that would not otherwise exist — is a spectrum, not a law.

Additionality, he acknowledges, is most plausible with earlier-stage companies that genuinely cannot access capital elsewhere, but for later-stage private companies it fades when demand is plentiful and another investor would step in anyway. The private-market premium is therefore real and conditional; the conditions are too rarely examined.

On the public side, Crossley points to a multidisciplinary review by Marti and colleagues that identifies 15 mechanisms through which listed-market investors influence company sustainability, among them field building, shareholder engagement, and portfolio screening. Shareholder engagement is the direct channel for pressing management on climate targets, while field building helps create the standards and research that eventually move entire industries. Available to any investor that owns listed equity, these mechanisms matter because the largest companies remain central to the climate and inequality challenges impact investors say they want to solve.

Crossley also cautions against certainty about where impact originates, noting the gap between the power-and-systems school exemplified by How Change Happens and the quantitative methods of effective altruism. If change practitioners cannot agree on the mechanics of change, a hard private-over-public ranking is hard to defend.

The stakes go beyond a philosophical dispute. An impact mandate that confines itself to private assets leaves the rest of a portfolio — often the largest positions in it — outside the impact conversation, and the debate has hardened into a reason for inaction when the impact community needs every tool it has. The more useful test is what an investor actually does across all its holdings: capital deployed, engagements run, screens applied — a test that applies regardless of where the trade clears.