Pelle Pedersen Sets Off on Impact Quest

    Stockholm (NordSIP) – Pelle Pedersen (Pictured left), Head of Responsible Investment at Danish pension manager PKA and one of the youngest yet most vocal proponents of an accelerated pace of change in the responsible investment field, has decided to set off on his own. We caught up with Pedersen in a short interview where he described the impulse behind his decision and his aspirations for a more impactful future.

    “Over the last six or twelve months, I’ve grown increasingly frustrated to see impact start-ups having so much trouble finding the necessary support to grow,” starts Pedersen. “These are companies that are developing solutions to help solve global challenges, and reach SDGs, but they are completely overlooked by the majority of investors, especially in venture capital and private equity.”

    “Imagine your portfolio in a 4-degree world?”

    Looking at larger institutions, Pedersen observes, investment policies have started to shift but not fast enough. One of the hurdles is that the current format of traditional early-stage investors like venture capitalists are not aligned with the long-term investments required by game-changing innovations in the field of impact investing. “If we are to deliver on the SDGs we need new companies with real solutions in the areas of energy, recycling, water saving and filtration, and many others. Right now, the companies driving innovation in these fields are overlooked, and the long-term capital is simply not available to them. In the traditional VC/PE model, funds have an investment of 10 to 12 years at most. This does not generate an incentive to invest in companies that are in R&D stages but could revolutionise how consumers consume or recycle. Instead, these firms choose to invest in companies that are closer to market, or already produce something. They improve the P&L and then try to find an exit.”

    “Some of the companies obtain financing, but it is not the right capital.”

    Pedersen mentions studies performed in academia which show that the current VC and PE model doesn’t fit clean tech and other such revolutionary business ideas. “Some of the companies obtain financing, but it is not the right capital, where the investors’ interests are aligned with the business, and they stay with it until it can deliver impact at scale,” continues Pedersen. “Long-term financials may look attractive, but the ambition is always to achieve short-term profit. You need time horizons of 15-20 years instead of the usual 10-12.”

    Having spent the past five years shaking up the institutional investment mindset at PKA, Pedersen has helped set the train in motion, but it may not be enough. “On the institutional investor side, we can continue to talk about ESG integration, and that’s good. However, imagine your portfolio in a 4-degree world? It will face some serious challenges that are not currently embedded in valuation, nor in the investors’ minds. It is likely that we will reach that scenario, if we don’t radically change how we use fossil fuel, and more generally, how we use and produce energy, already today.”

    Hence, for Pedersen, it feels like the right time to make a move. “I’m thirty years old and don’t yet have children. If I don’t do it now, then when? PKA has been an amazing place to work with, filled with brilliant colleagues, among which I found friends for life. I will always be grateful to them for giving a young guy like me such a wonderful opportunity to learn, flourish and excel. I am proud of what we have been able to accomplish together. My journey there will end on July 31, and then I will be on my own.”

    “I want to help those companies grow here in the Nordics.”

    What lies ahead will be driven partly by opportunities, but mostly by a drive to close the financing and knowledge gap in the impact sector. “The market has been looking at impact companies through the wrong lens. They are merely considered ‘nice to have’ when in fact, it all comes down to business. Companies across sectors exist because they are offering products or services that consumers want to buy. The companies I am talking about will, one day, offer entirely new products and services that will provide impact at scale, and that is also business. It represents a tremendous market opportunity. Right now, I’m looking at working with a diversified group of investors such as high net worth individuals, foundations or corporate investors to help these companies scale as they lack an ecosystem to thrive in.”

    Right now, Silicon Valley is often the only answer for starved European entrepreneurs. “I want to help those companies grow here in the Nordics,” concludes Pedersen. “I believe in finding a low-tech solution to address the most pressing issues, and then see how we go from there. At the onset, I’m looking at partnering with existing impact advisors and people on the communication side that can help set up a one-stop package to support execution and network for impact companies.”

    Image: PKA and Pexel


    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA is Editor-in-Chief for NordSIP and Managing Director for Big Green Tree Media. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.

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