Despite being a frontrunner in sustainable investing, the Netherlands might be missing out on opportunities to contribute more towards the Sustainable Development Goals, according to a study by the Netherlands Advisory Board on impact investing
In brief
- Dutch investors have committed assets worth an estimated €150-180 billion for impact, which represents between 4-6% of all assets under management
- A global average of between 5-7% is thought to be needed to achieve the SDGs by 2030
- €2.8 trillion may be missing out on major impact investing opportunities
- Institutional investors have the biggest potential to scale up, with calls for “at least” doubling their allocations to impact investments
Despite being regarded as a frontrunner in sustainable investing, the Netherlands might be “punching below its weight” when it comes to contributing to the UN’s Sustainable Development Goals (SDGs), warns a study on the state of the Dutch impact investing sector by the Netherlands Advisory Board on impact investing (NAB) in collaboration with KPMG.
Dutch investors have committed assets worth an estimated €150-180 billion for impact, which represents between 4-6% of all assets under management in the Netherlands.
However, a global average of between 5-7% is thought to be needed to achieve the SDGs by 2030. As a result, Dutch assets worth €2.8 trillion may be missing out on major impact investing opportunities, the study says.
NAB blamed “legal and regulatory barriers, market efficiency hurdles and an excessively conservative investment culture”, for the Netherlands missing out on grabbing a significant share of the global impact investment sector, which is worth between $1-2 trillion.
“Overcoming challenges such as poverty and climate change will require the mobilisation of private funding on a massive scale,” said NAB chair Yvonne Bakkum.
She called on the newly formed Dutch government, led by prime minister Mark Rutte, to “lead by example by adopting an impact investing approach to the new funds included in the new coalition agreement”.
Public commitment
“For instance, by applying a blended finance approach – whereby the government and other donors assume the higher risks – the climate fund, nitrogen fund and ‘National Growth Fund’ can create opportunities for institutional investors to tag along,” said Bakkum.
“Only by collaborating can we realise the systemic change needed to reach the Sustainable Development Goals, and take our international reputation as frontrunner in sustainable investing to the next level.”
A survey among 38 Dutch impact investors showed they have allocated an average of 10% of their total assets to impact, or a total of €116 billion. Pension funds are the biggest impact investors in the Netherlands with €76 billion under management, followed by fund and asset managers with €25 billion, and public investors (national or regional funds or development finance institutions) with €12 billion.
“Only by collaborating can we realise the systemic change needed to reach the Sustainable Development Goals, and take our international reputation as frontrunner in sustainable investing to the next level.”
Yvonne Bakkum, NAB
NAB called on Dutch institutional investors to “at least double” their impact investing allocations to a minimum of 10% of their assets under management by 2025, 40% of which should go to emerging and developing markets.
Force for good
“Impact investing enables investors to make a profit while generating positive social and environmental impacts,” said Marco Frikkee, partner, sustainable fnance at consultancy firm KPMG.
“Nonetheless, 94-96% of assets under management in the Netherlands are still invested conventionally, with little or no regard to wider impacts. This needs to change. In particular, Dutch institutional investors urgently need to shift more money into investments that benefit both people and the environment.”
Sir Ronald Cohen, chairman of the Global Steering Group for impact investment, said: “Together, we must get to a point where every company couples financial reporting with reliable measurement, in monetary terms, of its impacts on the world, and government is able to incentivise positive corporate behaviour. When we reach that point, financial markets and businesses will truly be a force for good, creating a fairer and more sustainable world.”
The full report can be accessed here.
