The fund focuses on businesses committed to accelerating the transition to a sustainable, inclusive society. It requires portfolio companies to report on their impact, with the assistance of Amsterdam-based Impact Institute.
Fairphone is a good example of a portfolio company in ABN Amro’s Sustainable Impact Fund, according to investment director Eric Buckens. The fund has recently invested in this Dutch company which sells sustainable, modular smartphones, as reported by Impact Investor.
The recent announcement of HMD Global, trademark holder of Nokia, that it will launch a modular concept for its latest device seems to indicate that the Fairphone approach can help accelerate the transition towards a more sustainable smartphone industry.
ABN Amro launched its Sustainable Impact Fund in July 2021, replacing its existing Energy Transition Fund and the Social Impact Fund.
The fund has now raised €500m, with investments split across equity investments for mature companies with a proven business model, and venture investments in young companies with a proven concept. Investments range from €500,000 to €30m.
“Too often, also in impact investing, impact in practice means not much more than ESG”, says Buckens. “If you look at the investments we’ve made so far, those are companies that are really changing things. That’s what we’re looking for. Companies that intrinsically offer products in a different way in their business model. And at the same time are helping to change the market.”
Other examples of recent investments are in the sustainable detergent and soap brand Seepje, as well as in the Danish sustainable fashion brand Colorful Standard, the fund’s first step in the sustainable fashion industry.
This lifestyle brand designs and produces garments inclusively and sustainably. “By partnering with Colorful Standard, we can help to set the global standard for sustainable fashion”, says Buckens. The fund’s investment enables the company to accelerate its international expansion.
On average, the ABN Amro Sustainable Impact Fund plans to hold a stake in a given company for five to seven years. During that time, the fund manager may also put forward members to sit on the supervisory board or opt for representation by an external expert on its behalf, as was the case at the Danish company Fiberline Composites, a manufacturer of components for lighter, stronger wind turbine blades.
Another portfolio company is Envision, a company that develops software that allows the visually impaired to scan their surroundings using smart glasses or a smartphone. These images are then converted to audio or text, which can help them better navigate different surroundings.
“Not every company we invest in is able to change the production chain”, says Buckens. “But these are the kind of investments we prefer to make. Like Wakuli, a direct-to consumer coffee company. By cutting out the middle men, they can pay farmers two times more than other coffee brands.”
The fund has also invested in the Amsterdam-based Impact Institute, a social enterprise focused on boosting boost the impact economy by enabling more organisations to measure and manage impact, including the companies the fund invests in.
The investment the Impact Institute to further develop its open-source standards for measuring, valuing and reporting on impact, an area in which it cooperates internationally with other organisations including with Harvard Business University and a coalition of international banks.
“With them we entered the full measurement process for the fund’s entire portfolio,” says Buckens explains. “We also involve the Impact Institute in due diligence processes.
The Impact Institute helps companies not only to measure their positive and negative impact, but above all to then determine the social value they create on balance, which is reported in conjunction with their financial accounts.
Buckens adds: “The aim is also to understand the synergy between impact and financial goals, and to adjust business operations accordingly. Understanding this is extremely important, and can really help these companies to improve their operations. That is why we think the focus on impact measurement is so important.”