The two institutions plan to pool resources to establish a fund platform and advocate in support of themes including regenerative agriculture, sustainable forestry and nature restoration.
Dutch-based ethical bank Triodos Bank and Canadian pension fund Fondaction have formed a partnership to tackle the financing gap for the provision of biodiversity and natural capital solutions in developed markets. They will also invest in each other’s activities and advocate to make the financial sector fairer, more inclusive, greener and more efficient.
Under the partnership agreement, Triodos Investment Management (Triodos IM) and Fondaction Asset Management (FAM), which are subsidiaries of the two organisations, will develop a closed-end fund platform to invest private capital in projects and organisations active in biodiversity, nature, and climate resilience. Targeted themes include regenerative agriculture, sustainable forestry and nature restoration.
Triodos IM had some €5.7bn of assets under management at the end of 2023, which was invested in a wide spectrum of impact-related themes. Fondaction, a labour-sponsored fund based in Québec, manages a total of C$3.50bn in net assets, while its FAM subsidiary manages fund platforms totalling over C$480m in areas including the energy transition, natural capital protection, environmental markets, and the circular economy.
Demand but little opportunity
Hadewych Kuiper, managing director of Triodos IM, told Impact Investor the platform is intended to help mobilise the flow of capital from large private institutions into areas of green investment where investable opportunities are still thin on the ground.
“We don’t need more words, we need action. There is a finance gap for institutional asset owners who want to allocate more capital to impact or sustainability. We chose natural capital and biodiversity for the partnership because there’s a huge demand, but no real solutions. So we decided: let’s join forces to provide proper investment solutions for this part of the market,” she said.
To attract interest from large institutions that the partners seek, fund sizes are likely to be in the €100m-plus tier, while each individual investment made by the fund platform is likely to be in the tens of millions of euros.
Kuiper said that although there was demand for these investments, the limited number of suitable investable projects and companies meant the partners would need time to identify worthwhile investments.
“We really need lead time to develop a decent strategy, so we probably won’t launch the fund platform until 2025, probably the second half” she said.
In addition to establishing the investment platform, and collaborating on advocacy and education, the partners also plan to invest in each other’s activities over the next two years to better scale impact and accelerate change. Details of how that might happen have yet to be announced.
Like-minded institutions
The partnership between these two investors from different continents is, in part, the product of a longstanding relationship forged by their membership of international networks – in particular the Global Impact Investing Network (GIIN), of which Triodos Investment was a founding member.
“We have both been members of the GIIN’s Investors’ Council since its early days and this is really where our collaboration started,” Kuiper said.
The similarities between the approach to impact investing of the two institutions made them a good fit for the partnership, she added.
“Triodos has a unique position in the financial sector. We have a very strong mission. Our investments are all working to change society and aim for a sustainable economy, and that really drives us in every investment decision. There are a few like-minded institutions around the world that have been doing this in a similar way and Fondaction is one of them.”
Geneviève Morin, Fondaction’s CEO, said collaborations between institutions that shared a vision and values was essential to foster the transformation needed to shape tomorrow’s economy.
“Our partnership with Triodos Bank and Triodos Investment Management is an exceptional opportunity to mobilise our strengths and multiply our impact on the economy and the financial sector. And by investing in each other’s activities, we mutually contribute to our successes,” she said.
Combining the distinct institutional networks of the partners should also help mobilise investments in Europe and North America, though Kuiper stresses the venture is seeking to attract investment and make investments globally, not just in those two markets.
