Colruyt scion Piet Colruyt (photo) is firmly convinced that impact investing will take off in the coming years. “By 2030, impact investing should reach a 10 per cent market share. It will not remain a niche market,” said Colruyt.
Today - 30 November - it’s Belgium’s Impact Day. It is also the day that a new knowledge centre on impact finance is being launched: Impact Finance Belgium, also known as IF Belgium. The two founders are Steven Serneels, the former chief of EVPA, a European organisation around philanthropy and impact investing, and Piet Colruyt, a scion of the department store family of the same name.
The ambition is clear, encouraged by a firm belief that impact investing won’t remain a niche market. Impact investors will increasingly seek to combine the financial return of their investment with a social return, for example by contributing to social challenges such as the fight against poverty or global warming.
IO: Is impact investing already well established in Belgium?
Piet Colruyt: “We just did a study to chart that. It is estimated that there is between 6 and 16 billion euros in impact investing in Belgium. That’s 1 to 2.5 per cent of total assets under management. But what is striking about this is that impact investing is mainly a matter for family offices and wealthy individuals. Traditional banks or institutional players such as pension funds and insurers still do far too little. There is still huge growth potential there.”’
IO: Are institutional investors interested in impact investing?
PC: “Banks, insurers, pension funds and asset managers are all sitting on a huge pile of money. I constantly hear from them that there is enough money, but they can’t find enough projects to fund. At the same time, there are many social entrepreneurs walking around with great ideas, but not finding funding. So there is still a huge mismatch between impact businesses and the financial world.’
IO: How can this mismatch be addressed?
PC: “That’s what we want to find out with IF Belgium. But we can certainly take inspiration from neighbouring countries. In France, for instance, there is a scheme where employees can opt for a 90-10 pension savings plan, where 10 per cent of the capital automatically flows to impact investments. That has given a huge boost to the impact investing market.”
IO: Institutional parties tend to be guided mainly by numbers. For them, is impact a concept that is sufficiently measurable?
PC: “Impact is perfectly measurable, that’s not the problem. There is a lack of standardisation, though, which makes it hard to compare projects and companies. It is still much easier just to compare the returns on an investment. But a hundred years ago, this was no easy task either, which led to the standardisation of the accounting system. This allows us to compare companies perfectly on a financial level. The same is now happening for impact, where Europe is also very clearly playing a pioneering role.”
IO: Do you also see a role for the retail market?
PC: “Impact investing needs to be democratised. Now, impact investments are only accessible to people with large assets, which is then often a very concentrated investment. By casting it in a retail product, impact investing not only becomes much more democratic, but the investments can immediately be spread much wider. This creates very nice opportunities, both for society and for the investor. Social housing is a great example. In Belgium, there are still 300,000 families on the waiting list for social housing, while an investment in social housing can both provide an initial return of around 3 per cent. I am sure a group of investors is definitely interested in that.”
This interview originally appeared on Investment Officer Belgium.