Alliance investments editor Claudia Cahalane meets social investment leaders and innovators at Impact Europe’s Impact Transfomers event, at The Hague from 11-13 of June 2024.

On day one of Impact Transformers at the Hague, I find myself in an industrial kitchen with Netherland’s food waste social enterprise KiCo, chopping vegetables and pickling them. The cross-section of participants at my table gives a flavour of who you might meet at this two day event. 

While creating my jar of condiment, I met someone from an American impact investment consultancy, a British impact investor working with dormant assets, a Brazilian impact investor raising for a $30m clean tech fund, and sportswear giant Decathlon’s leader of equity and impact. 

Delegates make condiments with waste food in a KiCo workshop

The Impact Europe (previously EVPA) event drew around 200 delegates from across the social investment world. On my table, Danilo Zelinski, head of forest and climate tech investments at KPTL in Sao Paolo, told me about the new Amazonia Regenerate Accelerator and Investment Fund.

Zelinkski was looking for investors for the company’s recently launched first Latin American fund focused on sustainable development, biodiversity conservation and the promotion of the bioeconomy. 

I was particularly captivated by the energy of my fellow vegetable chopper Sophie Criquelion, based in Brussels. A former karoke host and customer service team member at Decathlon, she is now working to increase equality in sport. Her flagship product being a much-praised larger swim cap for the many people who’s hair doesn’t fit under a regular one, including those with afro hair. In addition, she’s led the company’s creation of ‘modesty swimwear’ for people who prefer to cover more of their body while in the pool.

‘Corporates don’t give anywhere enough. Why? We need to put pressure on and ask “how much are you spending on impact investing?” Nobody asks this.’ Sophie Fajour, Impact Europe’s corporate market development lead.

Over the two days, in a social impact co-working space called Titaan (a former tobacco factory in the now creative district of Binckhorst), we heard from lots of businesses, charities, impact investors, as well as the Netherland’s largest pension fund, on how they are approaching social investment. 

How much are corporates spending on social impact?

The team from Impact Europe regularly challenged participants and speakers on why only a few percent of capital is being deployed for impact at a time of growing social inequality in Europe. We discussed the rise of the far right and how addressing inequality was an emergency issue, alongside climate change.

Sophie Fajour, Impact Europe’s corporate market development lead, posited early on: ‘Corporates don’t give anywhere enough. Why? We need to put pressure on and ask “how much are you spending on impact investing?” Nobody asks this,’ she told the room.

What are the returns on social investment?

Multiple businesses, impact investment organisations, charities and others encouraged one another over the couple of days, delivering the message that social investment can, and does, offer financial returns. Perhaps not the very high 20% that some would hope for, but certainly a healthy four to eight percent.

‘We are coming close to market returns,’ said Gary White, CEO of nonprofit WaterEquity, who works with personal hygiene company Reckitt to provide loans to women in areas with minimal sanitation.

Speakers from Reckitt, Water Equity and Impact Europe in a plenary

He said investees – women who are on $6 dollars a day – paid back loans 98 per cent of the time, and at close to market rate. His story was echoed by many different businesses and organisations.

Charlotte Ward, head of financing and operations for Unilever’s climate and nature fund – which is investing in farmers to help them produce ingredients more sustainably – added: ‘We’ve found impact {investment} does not mean no return’.

But leaders consistently said that convincing the right people in their organisations to invest more in social impact was a battle. Albeit one that is getting very, very slowly easier.

Big name corporates talked about capital for social investment increasingly coming from a variety of departments and the business’s treasury, not just corporate social responsibility budgets (CSR).

However, Patricia O’Hayer, global head of communications and government affairs at Reckitt, said it can still be the case that finance officers aren’t interested when someone says they can offer a seven per cent return. Gary White from Water Equity, added: ‘You have to appeal to the business’s self interest’. ‘And know the trends over the horizon that align with their values {to convince them},’ O’Hayer continued.

Reaching a 10% target on impact investing

Turning attention to institutional investors’ level of impact investing, one session focused on the first phase of what’s known as the 10% Target Program, a Netherlands Advisory Board on Impact Investing initiative designed to support banks, insurance providers, pension funds and asset managers to increase their social investment. This session made it feel as though the target was very much a way off for most, and too high for some.

In a room predominantly comprising asset managers, Simona Benvenuti, director of the Netherlands Advisory Board talked about the aim of broadly doubling institutions’ target allocations to at least ten per cent of their assets under management by 2025, with four per cent earmarked for emerging markets.

The board’s stance is that institutional investors face “challenges in finely comprehending impact investing, display a conservative approach”. Currently, four to six per cent of Dutch Assets under Management is allocated to impact, with less than one per cent directed towards emerging markets.

Lack of investable wind energy projects

France is one of the countries leading the way, with the 90/10 Solidary Funds regulation, whereby organisations with more than 50 employees are obliged to offer staff an optional solidarity-savings fund, which allocates five to 10 per cent of its assets to eligible (unlisted) social enterprises.

We heard that a lack of investable wind projects, lack of tax incentives, fear and limited experience were some of the barriers to institutions investing more in society and the environment.

Although, in the session Catalytic Action Against Inequalities, global director of Business for Societal Impact (a standard which measures social impact) Clodagh Connolly, encouraged: ‘Our network collectively puts billions towards social investment each year. Just putting one to two per cent towards social enterprise can have great effect.’

Creative social investment

There was good inspiration through the event, as well as detail on how companies, charities and others are structuring loans using blended finance. Philanthropy was talked about often in the context of providing catalytic capital, such as grants or first-loss loans to get social investment projects started.

The two points of inspiration I heard mentioned several times were those of IKEA’s approach to working with social enterprises and Save The Children’s methodical foray into social investment.

For me, one of the most humbling and interesting presentations was by artist and designer Christien Meindertsma. She presented the milestones in a very long journey of trying to create waste free-products, highlighting the importance of social investment in this space.

The mammouth task of socially investing in sustainability

The main piece of work she showcased being a sofa containing nothing but sustainably produced wool and involving no waste in its production, a rare thing indeed. She had even invented new machinery to arrive at a process which left no waste and removed glue and other materials entirely from the system.

Seeing her persistence and commitment in detail was sobering. Corporates with increasing commitments to sustainability and multiple products saw how such advancements and innovation can likely only happen with multiple types of support and social investment over many years.

In the Systems Change Across The Continuum session, Asa Skogström Feldt, IKEA’s social entrepreneurship BV managing director, added: ‘If you look at secondary material which comes from the waste stream, which is a sector that is heavily in need of investments in infrastructure, it’s a very mucky business.’

IKEA works with hundreds of social enterprises

She revealed that IKEA invests in social enterprises in different parts of the world including in India and Texas working with a range of people including waste pickers. ‘You cannot believe how many steps there are in a waste value chain and then, the business comes from the other end,’ she explained.

Skogström Feldt told delegates that while IKEA has invested heavily in removing carbon from its supply chain, five years ago it identified the opportunity to invest more in another challenge: growing inequality in society.

IKEA has since partnered with around 200 social enterprises that all work with social innovation. The bonus for the company is ‘that it has really contributed to new ways of thinking’ she says. In the session, she encouraged others to at the very least start small with social procurement with non-core staff and systems such as IT and cleaning facilities to build a business case.

Lastly, at both this event and AVPN’s conference in Abu Dhabi in April, there was a lot of interest in social investment from global NGO Save The Children. Incidentally, there was reference made at The Hague about the increasing numbers of NGOs and corporates collaborating on social investment.

Outside social investment co-working space Titaan

Save The Children has launched its own social investment work, with partners, said Annika Tverin, the charity’s head of impact investment in a session on blended finance.

Save the Children’s social investment arm

‘We realised grants alone are not enough to meet the Sustainable Development Goals,’ said Tverin. And so, in the last couple of years, the non-profit has launched Save the Children Global Ventures focused on education, health and child protection.

The social investment spin-off organisation aims for improved development outcomes for 6,000 children. One of the main areas of investment being early childhood development centres in Rwanda, with funds going toward teacher training and equipment. So far Save the Children has raised USD $1 million, which it will deploy through local microfinance institutions.

There are a range of funding mechanisms in use, including the Children’s Impact Multiplier Fund which provides patient and catalytic capital for “highly impactful opportunities that traditional finance might overlook”. A five per cent first loss guarantee is provided by USAID (the United States Agency for International Development) as part of its CATALYZE EduFinance Rwanda fund.

Participants were as eager to hear details of how the Save the Children funds and other social investment was structured, as they were to attend group gym sessions, hang out for informal chats in well-thought out breakout spaces, and try out the Running Blind initiative, supporting those with no sight or limited vision to stay fit.