Change the world, start with your pension fund

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By Marc Hutten

What exactly does a sustainable investor buy? The previous column on this site by Harald Walkate prompted reflection on the motives driving sustainable investors. Ultimately, these can be traced back to a combination of three objectives:

  • Peace of mind. Sustainable investors maintain a “moral baseline.” They avoid investing in tobacco companies or the fossil fuel industry, given the social and environmental damage these sectors cause.

  • Better returns or lower risks. This goal, of course, is not exclusive to sustainable investors; every investor seeks to avoid risks—including ESG risks—and to capture returns from opportunities created by sustainability trends.

  • A better world. Beyond financial return, sustainable investors explicitly pursue a form of societal return that can and should be clearly defined.

On that last point, investors must think carefully about what kind of impact they wish to achieve—ecological, social, local, or global—and how to realise it.

Most sustainable funds invest in public markets, buying shares of listed companies. This means the fund’s money goes to the sellers of those shares, not to the companies themselves. The capital, therefore, does not directly fund the enterprises striving to improve society or the planet—the very purpose many sustainable investors hope to serve. This concept is known as “additionality”: the notion that an investor’s capital enables activities that would not have occurred without it.

Within this framework, we distinguish between investor contribution and investee contribution.

  • Investor contribution refers to the investor’s added value—beyond capital—such as management support, expertise, networks, and strategic advice. The aim is to strengthen the enterprise and enhance its growth and impact. Engagement also falls under this heading: through dialogue, demands for improvement, and, if necessary, escalation, an investor can truly make a difference.
  • Investee contribution refers to the enterprise’s own achievements: tangible results, growth, and impact. Here, the sustainable investor’s broader objectives—social impact, or the success of a particular project—are central. In other words, impact that delivers a net positive value to society.

Public versus private markets

The investor’s contribution varies between public and private markets. In public markets, the investor’s potential influence is generally more limited and indirect. In private markets, it tends to be greater and more direct: impact objectives can be written into financing terms or embedded in company operations. Influence increases with the size and strategic importance of the investment—through capital size, subordination, or duration—and also with the investor’s expertise and trusted relationship with the company.

For investors who genuinely wish to make the world a better place by enabling sustainability solutions that otherwise would not happen, private markets typically offer a far greater potential for investor contribution. Here, capital flows directly into projects—building wind farms or providing microfinance—rather than to another shareholder on the secondary market.

Access to private markets

Private market investments are largely out of reach for most retail investors. Yet individual investors can still make a major contribution through their pension funds, for two key reasons:

  1. For most individuals, the majority of their total investable wealth sits in their pension pot.
  2. Pension funds can invest in private markets.

Measuring the positive (and negative) societal impact of investments is complex but rapidly evolving. Increasingly rich data on the effects of both public and private companies are becoming available. These insights should be used to assess the true extent to which investment and pension funds contribute to a better world.

Translating these impacts into accessible, comprehensible language is essential—allowing investors to make informed choices about where their capital can do the most good. And those investors are often also pension fund participants. They hold a powerful key: the ability to engage more actively with their own pension fund.

I am convinced that, for private individuals, the greatest investor contribution and societal impact arise not from stock-picking, but from engaging with their pension fund to drive real-world change.

About the author

Marc Hutten is an Investment Solutions Specialist at Achmea Investment Management. He is responsible for innovation and product development with a focus on Impact Investing and ESG. From 2016–2021, he served on the board and risk committee of Stichting Pensioenfonds Achmea. Marc previously worked as a portfolio manager and has extensive experience in both quantitative and fundamental equity research and management. He holds an MSc in Business Economics from the University of Groningen and an MSc in Investment Management from VU Amsterdam. He is a CEFA charterholder (VBA).

This translation was generated with the assistance of AI. The original Dutch version, which remains the authoritative source, is available at: https://www.dsi.nl/actueel/verbeter-de-wereld-begin-bij-je-pensioenfonds/

Three integrity pitfalls putting sustainable finance under pressure

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Sustainability is everywhere in the financial sector – but that doesn’t mean it’s easy to get it right. On the contrary: conversations with professionals reveal that practice often falls short of ambition.

DSI and The Can Do Company spoke with experts from across the sector about the tension between sustainability goals and the realities of day-to-day work. From these conversations, three recurring integrity pitfalls emerged – striking in both their persistence and their familiarity. These have been captured in the dialogue document Between the Lines, designed to raise awareness among professionals and spark honest, constructive conversations.

Three recurring areas of tension

  1. Managing expectations: Who is responsible for driving sustainability – companies, investors, governments? Sustainability may appear measurable and controllable, but system pressures and a false sense of certainty often lead to greenwishing rather than real impact.

  2. Communicating effectively How can we make the trade-offs and complexity of sustainability understandable? More data and more transparency don’t automatically create clarity or sound advice – especially when knowledge gaps stand in the way of meaningful dialogue.

  3. Safeguarding integrity
    How can we prevent rules and regulations from unintentionally blocking real progress? Hopeful slogans and checklist-driven compliance can replace solid reasoning – putting both genuine impact and trust at risk.

What now?
Between the Lines is used as part of DSI’s permanent education programme and as a conversation starter within financial organisations. It is not a conclusion, but an open invitation to reflect and engage.

Want to learn more or connect with the initiators?
Download the document at www.dsi.nl/en/susfin or get in touch with DSI.

What is the sustainable investor really buying: a better world or peace of mind?

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Sustainable finance is booming – but doing the right thing is often more complex than it seems. In this series, DSI invites professionals to share their perspectives on the tensions, dilemmas and unwritten rules within sustainable finance. Each month, we publish a guest column inspired by the converation starter Between the Lines. What patterns do you see? Where do integrity pitfalls arise? And what does it really take to achieve meaningful change in the financial sector?

By Harald Walkate

In recent years, sustainable investing has taken off. Good news, one would think – savers, investors and pension participants clearly want to contribute to a better world.

At the same time, however, we need to ask what investors are actually achieving. Many assume that their money flows directly into companies doing good for people and planet – enabling those companies to do even more good. In sector jargon, this is known as additionality: the idea that your investment causes something to happen that otherwise wouldn’t. In other words, a direct causal link between your investment and positive impact.

The reality is far more complicated. For at least three reasons: (1) Most sustainable funds invest in listed companies – meaning the money goes to the sellers of shares, not the companies themselves. (2) Many sustainability solutions are not (yet) commercially viable, so listed companies – with profit as their core driver – are often unable to deliver them. (3) Many sustainability challenges are systemic. The idea that we can achieve sustainability by simply adding up small improvements by companies and individuals is flawed. Systemic problems require systemic incentives to discourage harmful behaviour and promote better alternatives. And who creates those incentives? That’s right – governments.

Does that make sustainable funds the next toxic product – promising the world while delivering little, and charging high fees along the way? Not necessarily. It depends entirely on what the consumer believes they’re buying.

There are roughly three types of motivation:

(a) Peace of mind – “I don’t want to invest in ‘bad’ companies – tobacco, weapons, fossil fuels. I know this won’t reduce smoking or end wars, and I accept that returns may be lower, but I don’t want to profit from these industries.”
(b) Outperformance – “I believe companies that perform well on sustainability will deliver better financial returns.”
(c) Additionality – “I invest because my money helps realise solutions that otherwise wouldn’t happen. I want my money to make a real-world difference.”

Can these expectations be met? Based on current research, a very rough answer might be:
(a) – very well
(b) – no
(c) – to a very limited extent

But how much do we actually know about what motivates consumers? Surprisingly little. This is an under-researched area, and it’s not a topic that financial institutions tend to explore with clients.

This is precisely why DSI’s Between the Lines initiative is so timely – and so well named. If we want to understand whether consumers get what they think they’re buying, we first need to understand what they believe they’re buying: is it (a), (b) or (c)? Financial institutions must learn to read between the lines. Simply hearing “I want to invest sustainably” is not enough – we must ask what the client believes this will achieve.

There’s another reason why the title hits the mark. Financial institutions today operate in a world full of sustainability regulations – including the EU’s Sustainable Finance Disclosure Regulation (SFDR), which classifies funds according to sustainability characteristics.

And yet these regulations say little to nothing about whether a fund aligns with motivations (a), (b) or (c). That makes it all the more important for financial institutions to engage in meaningful dialogue with clients – to clarify whether they’re seeking higher returns, peace of mind, or real-world change.

DSI’s efforts to spark this conversation couldn’t be more relevant. If done well, our savings could indeed contribute to solving pressing societal challenges. But that will require an honest conversation – about investor motivations, the trade-offs involved in different investment strategies, and when money truly makes a difference.

About the author

Harald Walkate is a senior advisor on sustainable finance, impact investment and blended finance at Route17. He is affiliated with the Blended Finance Lab at the London School of Economics and a senior fellow at the University of Zurich’s Center for Sustainable Finance & Private Wealth. Harald brings a unique combination of strategic insight and deep expertise in impact investing, SDG finance and climate-related topics. He previously held senior roles in corporate strategy, business development and sustainability at major financial institutions and started his career as a lawyer. He is also an active jazz pianist and composer.