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European pension funds move to operationalize their impact strategies

ImpactAlpha, April 2 — Institutional investors in Europe are expanding their Impact investing mandates and relaxing restrictions that had blocked the deployment of capital.  

“People are moving from the talk to the walk,” Phenix Capital’s Sophie Robé told ImpactAlpha ahead of Phenix Capital’s fifth Impact Summit Europe convening today in The Hague.

One signal: the $23 billion Pensioenfonds Detailhandel, which manages pensions for Dutch retail workers, dumped  500 of the 1,600 stocks in its public-equities portfolio after committing $6.5 billion to an index fund aligned with the Sustainable Development Goals. Detailhandel helped develop the FTSE Russell SDG Aligned index to account for climate change, human rights, working conditions and other ESG (for environmental, social and governance) factors.

European supertankers of finance chart a course to a different future

Among the findings of Phenix’s survey of 64 asset owners managing more than €9 trillion:

  • Increasing allocations. Nearly four out of five of the asset owners said they expect to increase their allocation targeted at impact investing over the next three years. More than 90% said delivered positive environmental and societal impact is part of their ‘fiduciary duty.’ European regulators last month approved requirements for asset owners, insurance companies and money managers to disclose their ESG performance under a uniform framework.

    Global Goals: European Pension Funds Tilt Capital Toward ‘SDG Investing’

  • Relaxing rules. Several large investors are relaxing internal rules to allow investments in smaller funds. Minimum investments of $50-$100 million (along with 20% concentration caps) had meant only very large funds could get institutional checks. New rules that allow investments of as little as $5-$20 million “is going to create a whole new set of opportunities,” Robé said.

Phenix’s new Global Impact Platform, with more than 1,000 strategies from 400 fund managers, should help investors move from simple “alignment” with the global goals to integration into larger parts of their portfolios, Robé said. “Their new investments do have more intentionality.” 

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