Nuveen has been shaping the impact investing landscape for nearly two decades, pioneering public-market strategies that unite financial performance with measurable social and environmental outcomes. As Nuveen's head of ESG/Impact for global fixed income, Stephen Liberatore, outlines how the firm seeks total return and impact in public fixed income, while driving innovation across global markets. 

Environmental Finance: Nuveen's impact investing team has been managing impact portfolios since 2007. What inspired this early commitment relative to your peers?

Stephen Liberatore: Our early commitment was largely driven by our parent organisation, TIAA, an annuity provider primarily serving the US higher education sector.

I was originally hired to manage the fixed income component of the Social Choice strategy – a 60/40 blended equity and fixed income solution available exclusively to pension clients. Launched in 1990, it is one of the oldest sustainable strategies available. The expansion into dedicated impact strategies was a natural progression.

In fixed income, outperformance is not about picking winners; it's about avoiding losers. We believe that doing so requires careful analysis of future free cash-flow stability. ESG criteria and measurable impact indicators help us assess how capital will be deployed and the likelihood that cash flows will be more stable over time, which ultimately increases the likelihood of debt repayment and spread compression. Therefore, sustainability is inherent in our investment thesis and portfolio construction process.

Importantly, we have found that sustainability and total return are not mutually exclusive. When applied correctly, sustainability and performance support one another, especially in fixed income.

EF: Many impact strategies focus on private markets, but Nuveen has been a pioneer in applying impact investing to public markets. Why are public markets compelling for impact, and how do you balance performance, transparency, and measurable outcomes?

SL: First and foremost, we are an active total-return manager, so any investment must be attractive on a relative value basis. Historically, impact investing has been associated with private equity or venture capital, but impact can be delivered in any asset class if you are able to track how that capital is utilised.

Public fixed income is, in my view, one of the strongest arenas for impact because of its size and scalability. If you want to reduce the cost of capital and scale solutions, public markets are essential. The public fixed income market is large, liquid, highly diversified, and allows capital to reach sovereigns, nonprofits, structured finance vehicles, and supranationals – not just corporations. This creates broad opportunities for direct and measurable impact.

EF: Your team is often an anchor or lead investor in first-of-their-kind deals. Can you share why you like to get involved in these deals early on in their inception?

SL: The differentiation in our approach is the quality of our team. My co-portfolio manager, Jessica Zarzycki, and associate portfolio manager, Adam Guerino, possess the experience, expertise, and passion to evaluate unique, complex, and challenging transactions. As a result, we've been involved in the creation and evolution of the labelled bond market as well as numerous innovative structures, including debt conversions and outcome bonds.

A recent example is a blended-finance outcome bond involving the World Bank. The structure included principal protection and coupon guarantees, with proceeds directed to a Brazilian firm, Mombak, focused on rewilding deforested Amazon land. Instead of planting fast-growth monoculture trees, the project restores native ecosystems to generate verified, independently audited carbon removal credits, which are purchased by Microsoft. This is the first publicly traded carbon removal bond, and it is backed by world-class partners and an AAA-rated off-taker.

We have found; the earlier you are involved in a transaction, the more you can help structure it, direct capital, and obtain relevant impact metrics. We have built a reputation of being thoughtful and, because of our experience, issuers come to us to discuss transactions. Even if we don't invest, we will explain our thought process.

We're interested in structures that can serve as templates. For example, our early and ongoing work on debt conversions, which have historically been nature-based, is now expanding to areas like education and food security. We aim to help design repeatable frameworks that can scale and eventually expand the investable universe. That's good for impact outcomes – and good for achieving outperformance in active management.

EF: Impact reporting remains challenging across the market. What sets your reporting approach apart, and how do you ensure quality and consistency despite data limitations and a lack of standardisation?

SL: Once again, our success is directly tied to the team we have working on our strategies. Our Client Portfolio Management team of Alan Papier and Fatima Konsouh works closely with Max Hass and Lucy Nussbaum on our central Responsible Investment team on a very manual, labour-intensive process. It is especially complex because we invest in such diverse outcomes where no two reports look exactly alike. The key is rigorous upfront due diligence and engagement with issuers. We define what we are financing, establish clear use-of-proceeds expectations, and agree on relevant impact metrics.

Notably, our public fixed income impact process has been independently verified by BlueMark as aligned with the Operating Principles for Impact Management and as a Practice Leader. That validation supports the robustness of our approach – for investing and reporting.

EF: Looking ahead, where do you see the next frontier for impact investing, particularly in public markets?

SL: I expect to see increasingly granular outcomes as the market evolves. Because use-of-proceeds structures are now well understood and trusted, we can expand impact into more granular impact areas. This may enable better diversification for thematic strategies tied to specific social or ecological goals.

We're already seeing investors want alignment to specific themes – like ocean health – which is now possible through structures like marine-focused debt conversions.

Because the underlying use-of-proceeds structures have proven to be resilient and adaptable, we believe the opportunity set will continue to grow across all sectors within public fixed income markets.

For more information, see: www.nuveen.com/global/insights/impact-investing