43% of Nordic institutional investors invest in impact strategies

Nearly half (43 per cent) of Nordic institutional investors are investing in impact strategies, new research has found.

Analysis by NN Investment Partners (NN IP) and Kirstein A/S revealed that a further 22 per cent had plans to invest in impact strategies.

Impact investing is where capital is allocated to bring about positive changes in regard to environment, social and governance (ESG) factors.

Furthermore, 75 per cent of Nordic institutional investors with established allocations to impact strategies believed that net returns would differ very little from traditional strategies.

Despite this, 19 per cent of Nordic investors had no plans to invest in impact strategies, while 16 per cent were undecided.

Additionally, on average, investors allocate around just 5 per cent of their total portfolio to impact strategies.

Commenting on the findings, NN IP head of fixed income and responsible investing, Edith Siermann, said: “Our research shows that the appeal of impact investing is not limited to creating a better world.

“Improved risk and return and sustainable growth are also important, which explains why many investors have indicated to us that they want a broad range of impact products to choose from.”

The analysis also revealed that investing to support the environment is a top priority for Nordic investors, with 97 per cent saying it was ‘very important’, compared to 81 per cent and 73 per cent who cite governance and social factors, respectively.

Siermann added: “Nordic institutions, especially those in Sweden, are leaders in the field of ESG integration, but investors across Europe and globally display a clear desire to improve. Impact investing is seen as an investment approach with a wide range of untapped opportunities to create sustainable, long-term investments.

“There are hurdles to be overcome, including the limited size of the investable universe, fee models that are out of synch with the going rate for impact strategies and the complexity of allocating to SDGs.

“But whereas the last decade has been about exclusion, the next 10 years will be about how to measure and increase impact. This is one of the pillars of our responsible investing approach because the better you can measure an impact, the better you can make one.”

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