An increase in public focus on issues such as climate crisis and environmental sustainability has increased the popularity of impact investing in France and the Netherlands. But in Belgium, investors seem to be slower to follow this trend.
Just 1% of all Belgian investments aim for concrete and measurable social impact based on the UN's Sustainable Development Goals (SDGs), a particularly meagre report for the country. The results were highlighted by IF Belgium, a consortium of eight organisations that are active in the impact financing world.
The group argues that impact financing remains a largely unknown phenomenon in Belgium: "For many Belgian investors and entrepreneurs, the cliché 'unknown is unloved' unfortunately still applies," the group wrote in a statement.
What makes investments impactful?
The philosophy behind impact-driven finance is not to see money as an end in itself but as a means to sustainably improve our society and the planet by helping a business or organisation bring about a social benefit. For example, by building schools or investing in carbon-saving infrastructure.
Importantly, it is not the same as classical philanthropy due to its entrepreneurial and results-driven aspect. Impact financing is not the same as charity and also differs from classic investing in that it is not only the financial but also the social return that matters.
"Impact funders find it more sustainable to address a social or environmental problem from an economic logic, rather than relying solely on charitable donations or government grants," Steven Serneels, co-founder Impact Week and impact investor, noted.
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"If they have to choose between a possible lower financial return and social impact or a maximum financial return without positive impact, they resolutely opt for impact," he explained.
While this movement is gaining ground in neighbouring countries, Belgium is lagging behind, something IF Belgium wants to change to improve the country's position on the international impact map.
"Our ambition is that by 2030 at least 10% of Belgian investments will achieve a clear social return. That is times ten versus today, an achievable necessity," Serneels said.
It is organising Impact Week at the end of November to target investors and entrepreneurs who want to learn more about the how and why of impact finance, exchange know-how and further develop their impact network.