The state of impact investing in the Dutch institutional investment sector
New report "On the Way to 10% for Impact, The state of impact investing in the Dutch institutional investment sector” reveals the critical role of impact investing in achieving SDGs by 2030, and urges Dutch institutional investors to act.
The report published today by the Netherlands Advisory Board on impact investing (NAB) highlights the untapped potential of institutional investments to address global challenges such as climate change, biodiversity loss, poverty, and inequality. However institutional investors have yet to sufficiently scale their impact allocations, putting the achievement of the SDGs by 2030 at risk.
The report serves as a baseline for the NAB's 10% Target Program, an ambitious initiative encouraging Dutch pension funds, asset managers, insurance companies, and banks to allocate at least 10% of their AuM to impact investments by 2025, with a specific 4% allocation to emerging markets by 2030.
"Our analysis shows that while some progress has been made, institutional investors are not yet allocating enough to achieve the SDGs," said Simona Benvenuti, Director 10% Target Program at NAB. "The 10% Target Program aims to lower the barriers for institutional investors and to develop actionable, realistic solutions that align financial returns with positive social and environmental outcomes."
The NAB is pleased to acknowledge that leading Dutch institutional investors such as a.s.r. and Achmea have already announced a target of 10% in June 2024 and in August 2024 respectively. These early commitments signal a growing awareness of the urgent need to scale impact investing. "We commend the leadership of a.s.r. and Achmea and urge other institutional investors to join them in this critical initiative," added Simona Benvenuti. "Together, we can unlock the full potential of impact investing to drive real, measurable progress towards the SDGs."
Key Findings
The report, which draws on both quantitative and qualitative analyses, reveals significant disparities in definitions and reporting standards of impact investments, particularly concerning intentionality and additionality. The report also refines impact investing categories with the differentiation between impact-aligned and impact-generating investments. It also raises the question of the inclusion or not of Sustainable Development Investments (SDIs) into impact investments. SDIs are included in the report but, unlike in 2022, presented separately from impact-aligned and impact-generating investments as they may qualify as impact but there is insufficient publicly available information to assess if they meet the required criteria.
The average allocation to impact-related investments has increased. However, less than 1% of the researched AuM can be classified as impact-generating with proven investors additionality, with the largest percentage represented by impact-aligned investments and SDIs.
Investors face significant hurdles such as market inefficiencies, traditional investment mindsets, and regulatory constraints.
Recommendations for Action:
For investors: set ambitious, time-bound targets, including a minimum of 10% of AuM for impact investing by 2025 and 4% for emerging markets by 2030; be more transparent about your impact allocations.
For policymakers: develop stable, long-term policies to support and encourage impact investing, and integrate impact considerations into broader government initiatives.
For the impact investing community: refine impact investing definition, foster cooperation and knowledge-sharing, and support efforts to harmonize international reporting standards.
Looking Ahead
The 10% Target Program will enter its second phase on September 25th 2024, with Collaborative Dialogue: Impact and Institutional Investors, The Path Towards a 10% Target Allocation organised by the NAB with key stakeholders including institutional investors and representatives of the public sector. The NAB will continue to work closely with institutional investors to reduce barriers and support them in reaching their impact targets.
The NAB also plans to explore increasing its ambition for more additional, impact-generating investments in the future.
Acknowledgments:
The NAB is grateful to the Editorial Board for their review and their invaluable contributions to the quality of the report as well as to the Ministry of Foreign Affairs and its community members for making this Program possible.
For more information or to access the full report, please click below, visit the 10% Target Program page or contact us: contact@nabimpactinvesting.nl.
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