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Actiam

“We can support pension funds in reducing the complexity of impact investing”

Meet Theo Brouwers, Managing Director ACTIAM Impact Investing, a man on a mission. “In partnership with Cardano, we are well positioned to unburden institutional investors by helping reduce the complexity of impact investing.” The urgency of impact investing is greater than ever, he emphasises. “It’s time to move from ‘can’ to ‘should’.”

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Impact investing requires an active role in sustainability

Choose an active role instead of a passive approach. This is in the heart the only way for dealing with the many dilemmas occurring while making sustainable investment decisions. Only an active role can ensure a strategy to have the desired impact on climate, society, and your portfolio. We compiled a top 3 list of the dilemmas that concern impact investors in everyday practice.

Future taker or future maker
An investor who wants to do the right thing and wonders what the extent is of his responsibility in the climate crisis, may ask himself the inconvenient question whether he wants to be a future taker or a future maker. A future taker sees global warning as an exogenous variable. It’s up to governments to present solutions, a future taker says. He navigates his portfolio through uncertain times by investing in companies which benefit from the changes taking place.

A future maker however thinks of the climate crisis as an endogenous variable. He takes positions as an active lobbyist to put real pressure on governments and the financial markets, as a new variant of shareholders activism. This will bring changes that benefit both society and the environment, and ultimately the portfolio.

Doing good or looking good
The choice between a passive or an active role pops up again, once there is commitment to green investing. The many shades of green will ask the investor an inconvenient question again, sooner or later. Do you just want to look good or do you really want to do good? It is fairly easy to make a portfolio look greenish by showing you strive for net zero. For instance by excluding polluting companies and by reverse engineering ESG rating institutes for a good rating on average.

A real-world impact approach is much more labour intensive. For instance, by teaming up with other asset owners to influence the executives of investee companies for speeding up net zero instead of greenwashing. By taking impact into account with risk and return, doing good will lead to investments that contribute to speeding up a socially fair transition to an earth neutral economy.

Play the game or change the game
The inherent conflict between short-termism and long-termism is a fundamental challenge for many investors. When it comes to the transition to a more sustainable economy, this also asks an inconvenient question. Do we remain passive by playing the game or are we prepared to actively change the rules of the game? Playing the game means focussing on short term results, using quarterly and annual performance reports and acting on sentiment.

Instead, we can change the rules by, for instance, changing the mandates of asset owners to encourage a longer term thinking. We cannot change human nature of investors, but we can change their incentives. By moving away form quarterly capitalism and include the longer term trends in our strategy. This also means accepting shorter-term negative market movements without getting cold feet. And for asset owners to align their long-term incentives better in their investment mandates.

Choose actively for real world impact
Dilemmas in the field of sustainability and justice will keep popping up in the everyday practice of investing. By choosing active instead of passive in the investment committee or board room, making real world impact will be withing reach much sooner.

Dilemmas in the field of sustainability and justice will keep popping up in the everyday practice of investing. By choosing active instead of passive in the investment committee or board room, making real world impact will be withing reach much sooner. Read our Dutch booklet Waar doen we echt goed aan? Dilemma’s in duurzaamheid for more dilemmas in impact investing.