Institutional portfolios increase impact allocation

How the 10% target came about 

The10% impact targetrepresents a rethinking of how capital can address urgent global challenges while still generating competitive returns.The rationale behind it is clear: The United Nations’ Sustainable Development Goals (SDGs) require an estimated USD 4 trillion in annual financing, a sum far beyond what public funding alone can provide. Private capital must step in, yet impact investing remains a small fraction of institutional portfolios. 

The NAB’s target aims to bridge this gap, pushing the market from its current 4-6% allocation toward a more meaningful scale. As Laure Wessemius-Chibrac explains, the target emerged from a straightforward observation: “We started with market research, looking at the current state of the impact investing market.

The total assets under management invested in impact were somewhere between 4 and 6%. Our board thought it would be a good idea to not only present the results but also issue a guideline: where should we be in an ideal world? We all thought doubling the market within five years was a realistic ambition.” 

Setting a target of 10% was not arbitrary. It was based on the fact that some of the most forward-thinking institutional investors were already allocating at or beyond this level. By setting a clear benchmark, the NAB sought to catalyse broader discussions in boardrooms, moving impact investing from a niche consideration to a mainstream priority. Hadewych Kuiper recalls the moment the target was set: “We really wanted this to be a discussion in the boards of pension funds. A clear but challenging target could stimulate that conversation–and it worked.” 

Aligning capital with purpose 

At its core, impact investing is defined by three principles: intentionality, measurability and financial return. Unlike traditional investing, where financial performance is the sole focus, impact investing explicitly seeks positive social or environmental outcomes alongside competitive returns. This dual objective is not just a moral imperative.It is increasingly seen as a financial necessity. As Wessemius-Chibrac puts it: “Impact is a positive change or transition, alongside a financial return. The underlying investment should contribute to a solution for people or planet.” 

The 10% target is a tool to accelerate this transition. It is not a regulatory mandate, but a voluntary ambition designed to push institutional investors to rethink their portfolios. The target is ambitious yet pragmatic, reflecting both market realities and the need for systemic change. Several Dutch institutional investors have already committed to it while others have allocated billions to impact investments without formally adopting the 10% target. These commitments are not just about meeting a numerical goal.They reflect a growing recognition that impact investing is not only compatible with fiduciary duty but may be essential to it. As Kuiper emphasises: “These partiesdon’t believe there is an opposition between financial return requirements and impact-driven goals. They’re convinced they go hand in hand.” 

Barriers to scaling impact: culture, standardisation and pipeline 

Despite the momentum behind the 10% target, significant challenges remain. These barriers vary by institution, asset class and geography, but several key themes emerge.  

One of the most persistent obstacles is cultural resistance within financial institutions. The financial sector is notoriously risk-averse and slow to change. Wessemius-Chibrac: “The financial sector is not known for its appetite for change and innovation.Most pension funds, particularly at mid-management level, have always practiced finance the same way and are reluctant to propose different mandates or risk profiles.” 

This resistance is compounded by a lack of standardisation in impact investing. Unlike traditional asset classes, which have well-established frameworks for measurement and reportingon financial outcomes, measuring and reporting on impactis still evolving. Definitions of impact vary widely, leading to confusion and hesitation among investors. Wessemius-Chibrac highlights this issue: “Impact investing is younger than traditional investing, so there’s a need for standardisation. There’s a lot of information available, but it’s often inconsistent, creating confusion. Different shades of green, shades of social or shades of impact – that’s why we need clearer frameworks.” 

Another major challenge is the perceived lack of investable opportunities. Many institutional investors struggle to find impact investments that meet their risk-return requirements, particularly in certain sectors or geographies. Kuiper acknowledges this but argues that the problem is often one of perspective: “If you only look at a narrowly defined arealike affordable housing in the Netherlands, opportunities may seem limited. But if you look across asset classes, including listed equities and bonds, impact allocations become much more feasible.” 

Pipeline development is particularly difficult in sectors like nature and biodiversity, where investable projects are still emerging. Kuiper notes that Triodos is actively working to address this gap: “For themes like biodiversity loss, moving capital is still challenging because of a lack of pipeline. Asset managers need to fill that gap by developing investable opportunities for larger institutions.” 

The specific challenges of emerging markets 

Emerging markets present a specific set of challenges of their own. While these regions face some of the world’s most pressing social and environmental issues, they are often perceived as high-risk by institutional investors. Wessemius-Chibrac points to the role of rating agencies in perpetuating this perception: “The Global Emerging Market Risk Database (GEMS) shows that real risk–measured by defaults–is often lower than what rating agencies suggest based on country ratings. This disconnect is a significant hurdle.” 

Blended finance–combining public or philanthropic capital with private investment–can help mitigate these risks. Wessemius-Chibrac: “Blended finance models can scale emerging market investments by de-risking them. These structures can mobilise large-scale institutional capital.” 

Why the Netherlands are leading the way 

The Netherlands haveemerged as a leader in impact investing, with several institutional investors already committing to the 10% target. This leadership is not accidental, it results from a combination of regulatory pressure, a culture of innovation and a long history of responsible investing. 

Wessemius-Chibrac highlights the role of regulation in driving progress: “Pension funds have had to consult their members under the new Dutch pension framework and what came back was clear: participants want more impact, especially in areas like affordable housing, healthcare and energy transition. This has been a key driver of board-level decisions.” 

The scale of commitments is striking. Big pension funds like ABP and PMT have already allocated billions of euros to impact investments, while several large insurance companies have made significant pledges. These commitments reflect a broader recognition that impact investing is a critical tool for managing systemic risks. Kuiper: “Ecological and societal risks, like social unrest, are real threats to investment portfolios. Investors must go where the opportunities are, and those opportunities increasingly lie in solutions to these challenges.” 

The Netherlands’ success is part of a broader European trend, with countries like France and the UK also making significant progress. However, the Netherlands stand out for their ability to turn ambition into action. Kuiper: “We have a long history of responsible investing in Europe, particularly in the Netherlands. The next step, impact investing, is a natural progression.” 

Moving from why to how 

As impact investing grows, the conversation is gradually shifting from why to how. How can institutional investors integrate impact principles across their portfolios? How can asset managers develop investable opportunities in high-impact sectors? How can regulators and policymakers create an enabling environment? 

One promising development is the growing recognition that impact investing is not about niche allocations but about embedding impact principles across all asset classes. Kuiper emphasises this point: “It’s not about seeing impact as a separate asset class. It’s about embedding intentionality, measurability and financial return across a portfolio. There are plenty of opportunities if you look actively.” 

This shift is already underway. Institutional investors are exploring impact opportunities beyond traditional asset classes. For example, Triodos Investment Management offers solutions in the energy transition and nature-based solutions, both of which are attracting significant interest. Kuiper: “We actively invest in renewable energy infrastructure, storage solutions and grid improvements–all critical for Europe’s energy transition. These are proven technologies that fit institutional risk-return profiles.” 

The energy transition is just one example. Other sectors, such as affordable housing and healthcare, are also seeing increased investment. However, scaling these opportunities will require continued innovation, particularly in sectors like nature and biodiversity. Kuiper notes that Triodos is actively developing these opportunities: “Our approach is to invest in farmland and forestry in Europe and the US, working with farmers to transition to regenerative practices. These are long-term investments that fit institutional needs.” 

The role of regulation 

Regulation will play a critical role in shaping the future of impact investing. The EU’s Corporate Sustainability Reporting Directive (CSRD) is one example of how regulatory frameworks can drive change by requiring companies to disclose their environmental and social impacts. Wessemius-Chibrac sees this as a positive development: “The CSRD will lead to greater transparency and accountability. Success would mean all stakeholders–financial institutions, corporations and policymakers–striving for impact as a normal part of their business.” 

However, political leadership remains a missing piece. While regulators and civil servants are increasingly focused on impact, political polarisation is a barrier. Wessemius-Chibrac: “The laggards are the policymakers. We find ourselves in a polarised political environment where ideology often trumps long-term thinking. That’s why we need a multi-partisan conversation about securing a liveable planet for future generations.” 

Beyond the 10% target  

The 10% impact target is not an endpoint but a milestone.As impact investing becomes more mainstream, the distinction between impact and traditional investing may blur. Kuiper envisions a future where impact is simply part of how all investments are evaluated: “We might even lose the term impact investing. Every investment has an impact–positive or negative. The question is whether you’re conscious of it. Impact, risk and return should be the new IRR.” 

This shift would represent the ultimate success of the impact investing movement: a world where capital routinely generates positive outcomes for people and the planet without needing a separate label. The NAB’s 10% target has already been a catalyst for this transformation, sparking conversations, driving commitments and demonstrating that impact investing is not just a niche strategy but a viable and necessary part of institutional portfolios. 

From ambition to action 

The progress so far is encouraging, but the work is far from over. The next five years will be critical in determining whether impact investing can truly become mainstreamor whether it will remain a peripheral consideration. Wessemius-Chibrac: “The climate and biodiversity crises aren’t going away. We must find solutions, and impact investing is part of that. It’s here to stay, and investors will have to embrace it–whether now or later.” 

It is clear that the 10% target is more than a number. It is a symbol of what’s possible when capital aligns with purpose. The journey toward mainstreaming impact investing is well underway, and the Netherlands are leading the way. The question is no longer whether impact investing can scale, but how quicklyand how farit will go.