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Alternative Market Briefing

PGGM pushes finance to rethink how ESG/impact investing is viewed

Friday, March 08, 2019

Bailey McCann, Opalesque New York:

When Dutch pension fund PGGM set the goal of €20 billion invested in impact/ESG solutions by 2020, the organization recognized that it would have to do a lot of the work around metrics on its own. Speaking at the recent Opalesque Netherlands Roundtable, Piet Klop, Senior Advisor Responsible Investment at PGGM Investments said that his team also had to shift the conversation around ESG/impact investing to help people understand the value.

"When we speak about ESG, we try to present issues as not-yet-financial rather than as non-financial or extra-financial," Klop says. "That little tick tends to draw in a whole new audience." By changing the viewpoint, Klop and his team can overcome the view that ESG/impact is more philanthropic - a nice to have, but not a distinct set of performance factors.

Framing ESG/impact issues as 'not-yet-financial' also helps the organization think through how to invest in solutions that may not yet be of institutional size. "Right now, we haughtily dismiss everything that's not 50 or 100 million euro already. Or if there's not a 20-year data or track record, then don't bother, try the other guy," Klop explains. "But that way we're always investing in yesterday's economy, no? New ideas are rarely a 100 million investment opportunity right away or come with 20 years of data."

In response, PGGM set up a €500 million sub-mandate that allows the pension to invest in smaller private equity ......................

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