Investing with ImpactWhy Private Markets are the New Frontier for ESG and the Energy Transition

For many retail investors, ESG (Environmental, Social, and Governance) investing has traditionally meant "screening out" bad actors in a public stock portfolio. However, a new wave of thematic investing is allowing individuals to move from passive avoidance to active participation.

Private markets are uniquely positioned to drive the energy transition and sustainable infrastructure because they allow capital to flow directly into the "real economy." Here is how individual investors can now fuel global change while seeking competitive returns.

In the public markets, you are often just a passenger. In private markets, fund managers act as active asset managers, not just asset holders. This "hands-on" approach is critical for ESG for two reasons:

• •Operational Alpha: GPs (General Partners) now rely on operational improvements to drive returns. This often includes improving a company's energy efficiency, diversifying its leadership, or securing its supply chain—actions that directly improve ESG scores while building long-term value.

• •Direct Influence: Because private equity firms often hold majority stakes, they can mandate sustainability overhauls that would be impossible for a minority shareholder in a public company.

New regulatory frameworks like the ELTIF 2.0 and LTAF are making it easier for retail investors to back specific sustainability themes. We are already seeing specialised products emerge:

• •The Energy Transition: Investment in the energy sector saw a 28% increase in buyout value recently, driven by the need for the infrastructure required to deliver AI services and the broader energy transition.

• •Retail-Ready Green Funds: Firms are now launching specific vehicles, such as Energy Transition ELTIFs, aimed directly at individual life insurance and retirement contracts.

• •Global Themes: New multi-asset funds are being designed to allocate specifically to global themes like sustainability and digitisation, giving retail clients a risk-managed way to invest in the future.

ESG goals rarely happen overnight. They require the patience and discipline that define private market investing.

1. Long-Term Horizons: The average holding period for a private company is now over 6.6 years. This timeline is perfectly aligned with the years-long effort required to build a solar farm or decarbonise a manufacturing plant.

2. Tangible Results: Unlike a fluctuating stock price, the success of a private ESG investment is often measured by real-world impact: megawatt-hours of clean energy produced, jobs created in mid-market enterprises, or the successful "greening" of an older asset.

The "retailization" of private markets signals a structural rebalancing of global capital. It is no longer just about institutional giants deciding which green projects get funded.

As an individual investor, you now have the opportunity to participate in innovation-led growth that supports the environment and society. By choosing specialised, thematic funds, you can ensure your capital is not just sitting in a portfolio, but is actively shaping the real economy.