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Inside Impact Investing
Reset the economy Part II: William Burckart - The changed investment environment
Season 1, Ep. 2
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COVID-19 and the subsequent social and economic crises have underlined once more that we must urgently address the severe shortcomings in our present-day economies and societies. We must intensify our efforts to combat climate change, loss of biodiversity, and rising inequality, and build an economy that is fit for the future: one that is more resilient, more sustainable, and more inclusive.
Investors play a crucial role in the transition to this new economy, providing the capital needed to realise real and profound change. The investment choices they make can have a positive impact on our planet and on society, and at the same time safeguard their chances of solid long-term investment returns.
In a series of articles and podcasts Hans Stegeman, Chief Investment Strategist at Triodos Investment Management, explores the contours of a future-proof economy, and the ways to get there.
In this second episode, Hans Stegeman and William Burckart, President and COO of The Investment Integration Project and co-author of the book 21st Century Investing, discuss a new approach to investing to drive systemic change:
- Choosing the right transitions; a forward-looking approach in making investment decisions
- Impact first; contributing to positive change and thus mitigating risks, instead of the other way around
- The best asset classes to make impact.
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3. The challenges of Impact Performance Reporting
26:35In this podcast episode, Rosl Veltmeijer discusses the challenges of impact performance reporting with Mike McCreless, Executive Director at Impact Frontiers, and Rebecca Spohrer, Impact Manager at Triodos Investment Management. How to report on impact is a much-debated topic within the impact investing industry. To create a common ground for impact reporting, Mike McCreless's Impact Frontiers have created a set of impact reporting norms, based on a public consultation. Together with Triodos Impact Manager Rebecca Spohrer, Rosl Veltmeijer discusses these norms and how they were developed as well as the general challenges and pitfalls of Impact Reporting.Impact Frontiers' impact reporting norms can be found hereTriodos IMs 2023 impact reports can be found here
2. Investing in the circular economy
26:18Our current linear, growth-based economy uses vast quantities of resources to make things which we consume and then throw away. This system depletes finite raw materials and produces vast quantities of waste. In this episode of Inside Impact Investing, fund manager Rosl Veltmeijer discusses how we can turn our linear economy into a circular one with Professor in Sustainable Business Nancy Bocken (Maastricht University) and Chief Economist Hans Stegeman (Triodos Bank). Together, they analyse the role of the financial sector in enabling this transition which goes against the logic of our current market economy and forces us to fundamentally rethink the logic of markets, including the role of investors therein.Paper: Pursuing profitability in slow fashionFast fashion is a prime example of our current linear economy with a business model relying on consumers endlessly buying more clothes. Its circular opposite is slow fashion, which embodies products that are made to last, and can be serviced to extend the lifespan. But can slow fashion also be profitable? Read the paper by Nancy Bocken and Sasha Sarokin.1. What's next for the SFDR?
29:18The EU Sustainable Finance Disclosure Regulation (SFDR), which has taken effect in March 2021, was one of the first regulatory initiatives stemming from the 2018 EU Sustainable Finance Action Plan. It is a sustainability-related disclosure framework for financial market participants and financial advisers focusing on the integration of sustainability risk and the consideration of adverse sustainability impact in the investment process. Since the implementation there has been criticism on its effect. In 2023, the European Commission therefor initiated a consultation on the SFDR. Both the Dutch financial market authority AFM and Triodos IM published a position paper on how to improve the SFDR. In this podcast episode, Portfolio Manager Rosl Veltmeijer discusses the overlap and the differences between the two positions with Zoë du Chattel, Senior Supervision Officer at AFM and Hadewych Kuiper, Managing Director at Triodos Investment Management.One of the conclusions is that both the AFM and Triodos IM are in favor of a minimum level of disclosure for all funds to create a level-playing field and that both would like to convert the current transparency regime into a labelling regime so retail investors can easily see which product is more or less sustainable.7. Ingrid Robeyns - The case for limitarianism
29:17Ingrid Robeyns holds the Chair in ‘Ethics of Institutions’ at the Ethics Institute of Utrecht University. She is specialised in applied and "non-ideal" ethics and political philosophy and works on the development of normative frameworks, theories, and methods. In this podcast episode, she discusses her new book “Limitarianism. The Case Against Extreme Wealth” with Chief Economist Hans Stegeman. Together they explore why extreme wealth is problematic and why it is so difficult to address limits. They also look at possible solutions, especially from within the financial sector.6. Jennifer Hinton - Post-growth economics
29:00Jennifer Hinton is a systems researcher and ecological economist. She is also a co-director of the Post Growth Institute, a global network of researchers and activists seeking pathways beyond the growth-based economic system. Her work focuses on how societies relate to profit and how this relationship affects global sustainability challenges. In conversation with Hans Stegeman, Jennifer elaborates on the key insights of her research into post-growth economics. Together, they explore the role of finance in the current unsustainable economy and which role it should play in the transition to a post-growth economy.5. Sasha Zoueva and Rebecca Spohrer - How to manage and measure impact
34:40Impact investing is gaining ground rapidly. With capital inflows growing and regulation increasing, there is a need for clear definitions and standard practices in impact management and measurement (IMM). In this episode, fund manager Rosl Veltmeijer discusses some essential questions with IMM experts Sasha Zoueva, Director of Strategic Learning and Impact at the Rockefeller Foundation and Rebecca Spohrer, Impact Manager at Triodos Investment Management: What is impact, exactly? Can it be measured and managed? What do regulators expect from us? What are the challenges and what is the quality of current impact data?Useful linksOperating Principles for Impact Management: https://www.impactprinciples.org/9-principlesImpact Management Platform: https://impactmanagementplatform.org/GIIN’s IRIS+ taxonomy: https://iris.thegiin.org/The Social Value International principles: https://www.socialvalueint.org/principlesTheory of Change: https://www.thinknpc.org/resource-hub/ten-steps/4. Bas Eickhout - The role of politics in creating a greener Europe
33:07As a member of the European Parliament for the Dutch political party GroenLinks (green left) and vice-chairman of the Environmental Committee, Bas Eickhout works on European climate policy among other topics. He is convinced that Europe must and can take the lead in combating climate change. Besides being a member of the European Parliament, Bas is also a climate scientist. That’s why he is committed to an ambitious EU Green Deal. In conversation with Hans Stegeman, he elaborates on the political reality in Brussels and how sometimes you need to accept a bad compromise to create an opportunity to improve it later on.3. Gaya Herrington - How to avoid global collapse
27:44In 2020, Gaya Herrington made global headlines with her master’s thesis at Harvard University. In her research Update to Limits to Growth, she assessed whether the predictions of the original Limits to growth report from 1972 are supported based on today’s data. Her conclusion: the predictions made back then still hold through today. Without major changes to our use of resources, economic growth will peak around 2040 and then rapidly decline. In this conversation with Hans Stegeman, she elaborates on the systemic changes that need to happen to bend the curve and avoid a global collapse.2. Elena Arveras and Nikkie Pelzer - A deep dive into SFDR
20:28As part of the EU Sustainable Finance Action Plan, the Sustainable Finance Disclosure Regulation (SFDR) requires asset managers to assess and disclose how sustainability risks are considered in their investment processes, and how they consider investment decisions that might result in negative effects on sustainability factors. In this episode, fund manager Rosl Veltmeijer discusses the reasoning behind the regulation as well as its implementation so far with Elena Arveras, legal officer for sustainable finance at the European Commission, and Nikkie Pelzer, impact manager at Triodos Investment Management. They also look ahead to see which next steps and further developments the sector can expect.