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For The Netherlands: Sustainable Development Proposal

Eighteen major financial institutions, including ABN AMRO and ING Groenbank, have signed onto an ambitious program for sustainable development goals’ investment (SDGI).

The institutions involved proclaim that they believe it is in their best interest, “as well as that of our clients and investees, to consider the largest societal challenges of our time in our work and investments.”

The document setting out their program begins with three international developments that together marked the year 2015: the Addis Ababa Action Agenda, the 2030 Sustainable Development Agenda, and the Paris Agreement on Climate Change. These agreements together provided a “comprehensive, global strategy toward a fair, stable, and sustainable society.” But what the strategy needs is a “crowding in” of money. It needs to have investors eager to go onto the SDGI bandwagon. And that “is not happening at the right pace and scale yet.”

To get there, the signators invite the government of The Netherlands and the Dutch National Bank to “collaborate with the undersigned” in at least four respects: deploy “blended finance instruments” to catalyze SDG investment; encourage and enable Dutch retail investors to treat SDG as the new normal; enable an appropriate “data environment” with indicators and standards; and address “actual and perceived regulatory barriers and incentives to SDG investment.”

Under each of these four big points come supportive points. There is of course some overlap among them. But the points are as follows:

The Blending of Finance Instruments

There should be intra-institutional targets for SDG investing and institutions should “proactively” address the existence of internal barriers.

Also, wherever feasible, institutional funds should be pooled to create or extend economies of scale, and further adoption by smaller institutions, inclusive of pension funds.

The government should leverage its public spending in order to enhance the crowding-in effect.

As an illustration of how this crowding-in might work, the report cites the MASSIF fund, which “provides much needed financial resources to small businesses and micro-entrepreneurs,” in the process “supporting local financial intermediaries and institutions that can contribute to their development.”

The finance sector and government should work together to focus on energy, infrastructure, water, agriculture, food, and health care, areas where progress can be made.

SDG projects that have to jump through bureaucratic hoops to get licensing/approval should have a “one-stop shopping” system for assistance there.

Mobilizing Retail-Oriented Capital

A broad campaign should target public awareness of the opportunities in SDG.

The finance sector should promote SDG in private portfolios where feasible.

As an example of retail-oriented impact investing, the report refers to the Triodos Multi Impact Fund, launched in 2015, offering retail investors the chance to put their money into “renewable energy, organic agriculture, microfinance, arts and culture, and sustainable trade.”

Regulators should facilitate this process, opening up certain investments that might otherwise be closed to retail investors.

The government, its regulators, and the finance sector should all work to see to it that SDG is open to pension systems as an investment option.

Through university curricula and otherwise, training in the management of impact investing must become more widespread.

Data Environment and Standardization

The finance sector should collaborate to identify a “select set of SDG indicators for tracking institutional SDG investments, that can be used to track and compare” such initiatives.

All parties should encourage the use of such indicators in reports benchmarks, and indexes. As an example, the report cites a study earlier this year by the Central Bureau for Statistics offering a “baseline SDG dataset for The Netherlands,” a study that will be repeated next year.

The government should make clear its SDG ambitions and ensure efficient and value-adding data and recording processes in this space.

The government might also work toward a universal SDG data infrastructure.

Supportive Regulatory Environment

Regulators should research the barriers and incentives, inclusive of barriers that “are perceived but do not exist,” and should publish the results of this research;

They should also ensure transparency by stimulating the uptake of the SDGs in the context of corporate reporting.