In the rapidly evolving landscape of sustainable finance, impact investing has emerged as a powerful strategy for institutional investors seeking to drive measurable social and environmental change alongside financial returns. To shed light on the critical themes of impact measurement, integrity, and accountability, a panel of industry leaders - including Karlijn van Lierop of Achmea Investment Management, Nikkie Yamba-Pelzer of Triodos Investment Management (Triodos IM), and independent board member Casper Vlaar - recently engaged in a dynamic discussion moderated by Harry Geels, Investment Advisor at Aureus and adjunct head editor at Financial Investigator.
Institutional interest in impact investing is surging, especially among pension funds and insurers. However, the journey from intention to implementation proves to be complex. Building an impact portfolio requires not only careful alignment with member preferences and themes, but also a disciplined approach to asset allocation and risk management.
What then, are the main issues to consider when aspiring to implement impact in one’s investment strategy? And what are the experts’ recommendations?
1. Defining and measuring impact effectively
The panel underscored the importance of moving beyond high-level intentions by implementing robust frameworks for impact measurement. Success in both private and public markets relies on clear definitions, a clear strategy and plan to measure and manage impact to ensure that social and environmental objectives are genuinely achieved and reported.
Recommendation for asset owners:
Institutional investors should adopt industry-recognised frameworks (such as those from GIIN), establish clear impact objectives, and rigorously track KPIs across all asset classes. Well-defined Key Performance Indicators (KPIs) are critical for monitoring progress and demonstrating accountability to stakeholders. Aggregating these KPIs across entire portfolios enables integrated reporting and informed decision-making, moving impact investing from aspiration to action.
A clear Theory of Change is a useful tool in this regard. It has a strategic framework for setting, measuring, and refining impact objectives.
2. Aligning portfolios with stakeholder interests while managing financial returns
Building impactful portfolios requires aligning investments with stakeholder preferences and organisational values, while maintaining a disciplined, risk-aware investment approach. The discussion highlighted that competitive financial returns and positive impact are not mutually exclusive.
Benchmarking financial and impact performance is still an emerging practice, but developments such as the iSTOXX Triodos Developed Markets Impact Index are paving the way for greater transparency and comparability. Demonstrating additionality - showing that investments create value that would not otherwise exist - remains a cornerstone of credible impact investing.
Recommendation for asset owners:
Engage stakeholders to clarify impact priorities and preferences. Integrate impact objectives into the broader investment strategy without compromising on financial performance. Ensure continuous dialogue with clients and members to adapt portfolios as priorities evolve.
3. Ensuring authenticity and accountability amidst growth
As impact investing expands, the risk of greenwashing increases. The panel emphasised the necessity for rigorous due diligence, robust definitions, ongoing monitoring, and credible benchmarking (e.g., via indices like Triodos IM’s Stoxx impact index). Demonstrating additionality and collaborating across the value chain are essential for authentic, scalable impact.
Recommendation for asset owners:
Institutional investors must implement strict due diligence processes, avoid superficial impact claims, and utilise emerging benchmarking tools to compare apples to apples in terms of financial performance. Foster collaboration with industry peers and leverage technological advancements to enhance transparency and scale impact solutions effectively. By working together, institutional investors and impact managers can unlock new opportunities and scale solutions to the world’s most pressing issues.
Turning insight into action
For institutional and professional investors, the message is clear: meaningful impact investing requires more than good intentions. It demands robust frameworks, transparent reporting, vigilant risk management, and a commitment to continuous improvement. As the field matures, those who embrace these principles will be best positioned to deliver both strong financial returns and lasting positive change.
This article is an adaptation of the Financial Investigator webinar Impact Measurement, Integriteit & Aantoonbaarheid.