Investing sustainably: return and impact go hand in hand
As part of their investment strategies, financial institutions and investors are increasingly seeking to achieve sustainable objectives. This is one of the reasons why the “impact investing” is increasing. This form of investment focuses on societal impact in addition to financial return.
The King Baudouin Foundation is an institute whose primary objective is to set up and support societal projects. “We are seeing a significant change in our sector,” explains Luc Tayart de Borms, Managing Director.” Foundations used to allocate the proceeds of their financial investments to a good cause, regardless of the method and location of capital investment. We have now understood that this capital could be used to carry out a mission.”
Moreover, another reason for the growing importance of impact investing: “We often support projects in developing countries. These donations or assistance generally expected nothing in return. However, for a project to have a lasting effect, it is necessary to integrate economic logic into it.”
“To do so, we invest in a societal return. In this way, we will carry out more and more economically viable projects, or even very profitable projects,” explains the director of the King Baudouin Foundation.
What are the results?
This same philosophy is in line with Belgian development cooperation policy. “Our primary goal is to ensure that aid becomes unnecessary in the long run. We aim to stimulate economic growth in the countries where we operate so that people can move forward in a sustainable way,” said Alexander de Croo, Deputy Prime Minister and Minister for Development Cooperation.
“The question is no longer how much we have spent on development cooperation, but what results we have achieved,” adds De Croo. Impact investing thus becomes a cornerstone of Belgian development cooperation. Belgium even has a specific investment vehicle: the Belgian Investment Company for Developing Countries, the BIO.
“BIO invests in local projects that should have a major impact: infrastructure projects, Internet access, financing, professionalization in the agri-food sector… BIO has invested about 750 million euros in companies in our partner countries.”
Opportunities also for Belgian companies
The BIO thus succeeds in associating financial return with economic and societal progress. “This benefits not only local communities, but also Belgian companies, for whom impact investing offers opportunities in these booming markets,” the minister continues.
“Governments, the private sector and NGOs must join forces to help eradicate global poverty. This is the only way to achieve the United Nations’ Sustainable Development Goals,” concludes Alexander De Croo.