Introduction
On September 25th, the NAB hosted the event “Collaborative Dialogue: Impact and Institutional Investors, The Path Towards a 10% Target Allocation.” following the launch of the NAB report, “On the way to 10% for Impact: State of Impact Investing in the Dutch Institutional Investment Sector.”
The event brought together leading institutional investors for a collaborative dialogue to co-create and prioritize solutions for overcoming barriers to expanding their impact investing efforts. Approximately 50 participants, including representatives from major pension funds, insurance companies, asset managers, sector associations and representatives of the Dutch government and regulators in the Netherlands, shared their knowledge and experiences, contributing to an insightful discussion on scaling impact investments.
The session opened with an introduction to the 10% Target Program by Simona Benvenuti, Director of the 10% program, who briefly presented findings from the report. After an overview of the barriers and potential solutions identified in the report, participants were divided into two breakout rooms: one for pension fund representatives and asset managers, moderated by Brenda Kramer, and the other for insurance companies and asset managers, moderated by Rens van Tilburg. The discussions in both groups focused on prioritising actionable solutions to scale up impact investing.
Breakout 1: Pension Funds
The pension funds breakout group addressed the key barriers, with participants agreeing that the lack of proper data was a significant challenge. Due to the varied sizes and asset classes of impact investments, harmonising data collection remains difficult. This data management challenge hinders the alignment of reporting and prevents pension funds from transitioning away from traditional risk-return based investment approaches to more innovative impact investing strategies.
Participants noted that impact investing requires an entrepreneurial spirit and innovation, which inherently carries higher levels of risk and uncertainty. Pension funds, by nature, tend to avoid such risks. However, asset managers can play a critical role in supporting asset owners by helping them take incremental steps towards product creation and innovative investments. Asset managers can also facilitate the creation of a standardised framework for pension funds to identify common themes and standardised KPIs, providing a stronger foundation for impact investments.
Both asset managers and asset owners emphasised the adoption of the GIIN definition of impact investing, which balances financial value with social and environmental values.
Discussions also turned to investments in emerging markets, where perceived risks remain high also due to a lack of information and reliable data. Better data availability and government support, especially in return enhancement and de-risking such investments, was also considered critical for increasing emerging markets allocations.
Capacity building within the impact investment ecosystem was another key theme. Collaboration between asset owners and managers was viewed as essential to ensure that capital flows toward high-impact areas like climate, biodiversity, and affordable housing and to develop adequate products per asset class. Shifting from a rigid result-driven approach to a more value-driven flexible approach can foster partnerships. Such partnerships driven by shared interests can reduce “analysis paralysis”, support the building of internal capacity and co-investments, and demonstrate the feasibility of impact investments across the ecosystem.
While no concessions are made on returns in line with fiduciary duty, this is not the main bottleneck. Not everything is about financial performance and risk mitigation. Impact on nature and society is also relevant, and investing in solutions offers interesting investment opportunities.
The sector is now more prepared than ever for deeper collaboration including knowledge sharing, resource pooling, in particular around choosing joint KPIs for reporting and even possible co-investing. Affordable housing was cited as a possible first step of standardising. As a short-term solution, participants agreed on the idea to share specific impact data monitoring practices and lead by example for others.
For the long term, an open-access platform with standardised information on impact investing practices was suggested as a valuable tool for improving efficiency and fostering informed decision-making in the sector.
All in, all participants agreed that the motivation is high, and taking the first step is essential.
Breakout 2: Insurance Companies
The insurance companies’ breakout group began by reflecting on the barriers highlighted in the NAB report. The group largely agreed with the report’s conclusions, especially the need for clear definitions, particularly regarding impact investing in public markets and the sourcing of suitable opportunities. Additionally, the group identified the investment culture rooted in traditional finance as another major obstacle.
Participants emphasised the importance of entrepreneurial behaviour to drive innovative solutions and create new sources of impact investing. The group stressed the need for a pro-active approach to impact investing, avoiding a passive, "sit and wait" attitude that could slow progress in the sector. Coordination and collaboration among institutional investors were considered essential for co-creating effective solutions.
A key discussion point was the need to define impact at the organisational level in order to set meaningful impact targets, focusing on the specific changes an organisation wants to achieve rather than merely aligning with the SDG. Participants acknowledged that impact investing is more challenging in public markets, such as listed equities, where the investor additionality differs from private markets. However, with well-designed theories of change impact in public markets is achievable.
For asset managers, educating clients and engaging with portfolio companies were also seen as critical steps, though there were differing opinions on the feasibility of engaging effectively with every company at portfolio level.
The group then highlighted the need for more stable, long-term and enabling government policies. Regulation, particularly in terms of reporting and accountability, was emphasised, with coherence among regulations like the CSRD and SFDR seen as necessary to provide clear guidance to the sector. The discussion then touched on the risk of green-hushing, where organisations are overly cautious about labelling their investments as impact.
Additionally, the group explored the ongoing challenge of investing in emerging markets.
Participants also highlighted the importance of finance structures targeting capital-intensive sectors like energy, and the role of catalytic and patient capital in enabling long-term impact. Blended finance structures were discussed as a critical resource to unlock both private and public capital where different type of investors can assume different level of risk. However, the group acknowledged that blended finance can sometimes be overly complex, requiring careful consideration of when and how to apply it.
Finally, it was addressed the scarcity of investment opportunities with a social focus, such as social bonds, compared to the more common emphasis on environmental goal.
Conclusion
The breakout sessions highlighted again the need of clear definitions and harmonised standards to make possible achieving impact across asset classes as well as the need of an innovative, entrepreneurial mindset to drive solutions. While taking distance from traditional investment strategies remains difficult, both groups emphasized the importance of taking small, incremental steps toward impact investing rather than waiting for fully developed frameworks and government regulations.
Collaboration among institutional investors was recognised as a key factor in scaling up the sector. Solutions discussed included mobilizing both private and public capital, with blended finance seen as a possible instrument for risk mitigation. However, participants agreed that its application should be carefully considered to avoid unnecessary complexity.
In conclusion, while the journey toward scaling impact investing is ongoing, participants shared a common vision of its immense potential. By taking small, concrete steps —such as building a clear vision, engaging stakeholders, developing a coherent theory of change, and setting time-bound targets— the sector can make significant progress.
The NAB will continue fostering collaboration among institutional investors but also diverse stakeholders, bringing clarity into impact definitions, supporting the sourcing and management of impact data, facilitating the exchange of information and expertise on impact investing in emerging markets.
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