Photo: Ervins Strauhmanis

Holland shows the way on connecting policy and finance for sustainable development

10/12/2016

Resource:  Building Highways to SDG Investing – Report

Published by:  Various Leading Dutch Financial Institutions

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Note:  Technical terms are marked with an * and explained in the Glossary


Probably the headline news from the opening session of the GIIN Investor Forum in Amsterdam on 7th December was the presentation of a report to Lilianne Ploumen, Dutch Minister for Foreign Trade and Development Cooperation, and Frank Elderson, Executive Director of the Dutch Central Bank (DNB) by a group of leading Dutch financial institutions representing nearly €3 trillion in assets under management*.

Elderson and Ploumen (centre L,R) receive the SDGI report at GIIN 2016 Photo: Paolo Risser
Central Bank director Frank Elderson and Minister Lilianne Ploumen (centre L,R) receive the SDGI report at GIIN 2016  – Photo: Paolo Risser

The report announced the creation of an “SDG Investing (SDGI) Agenda” for Holland and abroad, with the group of 18 national pension funds, insurance firms, and banks committing to finding ways to address the “largest societal challenges of our time in our work and investments”.

Commitment and Challenge

But the commitment also came with a challenge, with the group calling on their government and regulator to come forward with policy changes and other public support to promote action in four key areas:

  1. Catalysing significant SDG investment through the systematic deployment of blended finance instruments
  2. Making SDG investment the ‘new normal’ by encouraging and enabling all Dutch retail investors to invest  with impact
  3. Establish an enabling SDGI data environment by  stimulating the uptake of sustainability indicators and standards
  4. Identify and address actual and perceived regulatory barriers and incentives to SDG investment

The group said that these changes were needed to help finance the $5-7 trillion that is needed each year to finance the SDG 2030 Agenda.

The SDGI agenda is a result of a six-month consultation process with more than 70 fellow investors, government representatives, and expert practitioners. One of the  co-ordinators of the initiative, Mr Herman Mulder, told NDCI.global that its genesis was itself a challenge by Dutch Central Bank director Frank Elderson, for the industry to tell the regulator what hurdles it faced in channelling financing for SDG goals, in Holland as well as the wider world. a senior executive at ABN Amor, Mr Mulder is a veteran of the establishment of the Equator Principles (EPs), which address the assessment and management of environmental and social risk in project finance.  Quite widely challenged as to their effectiveness on their launch in 2003, the EPs have now been adopted by 82 financial institutions in 35 countries and cover 70% of project finance debt in emerging markets.

From Defensive to Positive

Mr Mulder hopes that over time the SDG Investment agenda will get to the mainstream of finance in a similar way as the EPs have.  “I think it sends two clear signals immediately,” he told NDCI.global.  “First, that contrary to some of the behaviours leading up to the crash, the finance industry recognises that it exists to serve society, and not the other way around.  And second, I think it signals that the finance sector wants to move on from a compliance-driven, rather defensive attitude to one that is driven by a much more positive agenda based on achieving progressive outcomes.”

He sees the SDGI as linked to other initiatives under way in the business sector, especially new voluntary codes in sectors that have extensive supply chains in emerging markets and among vulnerable populations.  The first agreement has been reached by the textiles industry (representing 45% of the Dutch fashion industry), others are in progress in sectors such as food, flowers and gold, while the banking sector has also recently published a comprehensive covenant on human rights.  

 

Mr Mulder drew a distinction between these sector covenants, which  focus on avoiding adverse impacts, while the SDGI focuses on using core finance skills to help positively to create better world.

 

The next steps in the development of the SDGI is to consult with policymakers and regulators in Holland on the four key issues mentioned above, starting with a full-day session on December 14, and with a view to having the route for the “highway” agreed during 2017.

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