Norwegian Impact

    Stockholm (NordSIP) – A country does not have to be big to make a significant positive impact globally, as a newly published survey by Norway’s recently established National Advisory Board for Impact Investing (NorNAB) demonstrates. The publication, The State of Impact Investing in Norway, provides a first-of-its-kind detailed snapshot of the landscape, estimating the scope and characteristics of the country’s impact ecosystem.

    According to the report, Norway’s fund managers and state-owned investment companies have invested roughly NOK 100 billion (approximately EUR 8.5 billion) in impact strategies. Given the total size of the European direct impact investment market, which is estimated at 80 billion euros by the EVPA (European Venture Philanthropy Association), Norway certainly stands out as a significant contributor in the field.

    An encouraging finding in the report is the broad acceptance of impact strategies among Norwegian institutional investors. Two-thirds of all respondents state they engage in impact investing, as per the definition coined by the Global Impact Investing Network (GIIN). Moreover, a third of those who do not engage in impact investing say they intend to do so soon.

    The survey results indicate that private equity is the dominant asset class among the surveyed impact investors, with 95% of the respondents making impact investments through such vehicles. Private debt (secured and unsecured loans) is the second largest asset class. Only three respondents, specifically some family offices and state-owned investment companies, engage in impact investing through public equity, which offers a more liquid market.

    All the respondents indicate seeking climate and environmental impact, while 64% target social impact. Norwegian investors seem to consistently prioritise climate change when addressing environmental challenges. The most targeted Sustainable Development Goals are SDG 13 (climate action), SDG 9 (industry, innovation, and infrastructure), and SDG 7 (affordable and clean energy). As to geographical distribution, half of the surveyed impact investors invest both at home and abroad.

    The survey demonstrates that Norwegian investors are embracing established frameworks and standards with regard to impact management and measurement. Approximately 60% indicate using the SDG Impact Standards, while another 50% are utilising the theory of change in their impact investing practices. About 40% state using the Impact Management Project’s (IMP) Five dimensions of impact, and 5% – Operating Principles for Impact Management. Other frameworks or methodologies mentioned by the respondents include Principal Adverse Impact (PAI) Indicators, EVPA Charter of Investors for Impact, The Principles of Social Value, impact-weighted accounting, and proprietary frameworks.

    On a positive note, the survey participants are optimistic regarding asset allocation towards impact investments in the upcoming years. Half of the respondents intend to increase their share of impact investments, while 45% plan to maintain the current share. Of these, five investors already have all their AUM invested in impact and cannot increase their share. The findings point to growth in the impact investing market among established organisations.

    One of the arguments that supports this growing interest in impact investments seems to be the predominant view among the surveyed investors that there is no negative trade-off between financial return and impact. Furthermore, nearly half of them believe that impact investments can be more lucrative than traditional investments. “Change the narrative that you must sacrifice financial return to achieve impact,” urges one of the respondents.

    “We can see that impact investing is gaining momentum,” says Espen Daae, Chair of NorNAB. “The report findings boost our confidence that Norway has a global role to play in advancing the Sustainable Development Goals through investments.”

    Image courtesy of Johny Goerend on Unsplash
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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