Read Alex van der Laan’s take on impact investing

Alex van der Laan (47) has been with PGGM Investments for three years as a Senior Investment Manager. He graduated from Erasmus University Rotterdam with a MSc in Economics and is a CFA charterholder. Alex is part of our Long Term Equity Strategy (LTES) team. The LTES team seeks to invest in listed companies that not only yield a sound financial return, but also make a broader positive societal and environmental impact through their product offering. The companies in the LTES portfolio provide solutions to the United Nations Sustainable Development Goals (SDGs).

Analysing financial profiles and impact

Within the team, Alex is a senior analyst responsible for investments that contribute to solutions in SDG 6 (Water) and SDG 7 (Clean Energy), with a focus on water industrials and utilities in the water and renewable energy sector. Alex: ‘I generally spend my time researching the financial profile of companies in the utilities and industrials sectors and their potential SDG impact. This involves analysing sector and company data, meeting company management, and developing financial models and forecasts of (potential) investments.” Alex also spends time engaging with companies on ESG and impact issues. Alex: “As I have a good overview of best ESG and impact practices, I guide portfolio companies to better align their ESG and impact strategies to the SDGs.’’

Increased awareness

As climate change and biodiversity loss are increasingly affecting us, Alex sees that both ESG and the positive impact created by companies are now highly on the agenda of governments, regulators and investors. Alex: ‘On the one hand, this means more investors are jumping on the ESG/impact bandwagon. On the other hand, it means increased opportunities. For example, in the utilities space, governments have announced large investment packages to accelerate the transformation to renewable energy production. I consider these changes and opportunities when formulating my investments theses and in analysing and valuing our companies.’

Greenwashing and weighing impact

An important risk that the LTES team has to deal with is the allegation of ‘greenwashing’: presenting investments as being ‘green’, while in fact they aren’t. Alex: ‘This might occur if we do not sufficiently research our portfolio companies for their positive impact, but also for their negative influences on society. For this reason, we can never rely on data vendors alone. We need to fully understand the activities and indeed the intentions of the companies.’ Another challenge that Alex faces is measuring impact: how do you allocate, measure and attribute the SDG impact of companies? Alex says: ‘For a pure water utilities company this is pretty straightforward. But what to do with an environmental consultancy firm in this space? Also, it is challenging to weigh the positive impact of company’s product against the negative impact of manufacturing these products.’