Starting from Zero
Scalable learnings from first-time market sizing in Belgium
Last year’s report, Accelerating Impact, represented a first impact investing market sizing exercise for Europe. For Solifin and Impact Finance Belgium, the effort marked another set of firsts: sizing Belgium’s market and creating a national advisory board (NAB). Impact Finance Belgium shares insights on what it took to build these efforts from the ground up.
Putting Impact Finance on the Map in Belgium
Impact Finance Belgium (IFB) was created in early 2023, after extensive market research in Belgium, with lessons from EVPA, other NABs outside Belgium, and building on the preparatory work done by Solifin.
The Solifin network was founded in 2019 with two missions: (i) supporting positive impact companies in their search for financing and (ii) strengthening collaboration between actors in ethical and sustainable finance in Belgium. In 2019, Solifin implemented an ethical charter, defining "impact financiers" as parties who invested over 50% of their portfolio in positive social impact companies, whilst the remaining resources were allocated to socially responsible investments, following the Do No Significant Harm principle.
Within a few years, Solifin grew to about 30 diverse members, such as a bank, credit institutions, a foundation, crowdfunding platforms and impact funds, both public and private. The figure below shows how very different organisations are active on ethical and sustainable finance in Belgium.
To generate applications and apply the charter, Solifin established an ethics committee, composed mainly of academics and professionals in the sector. They contributed to evolve the charter towards increasingly detailed criteria, elaborating elements like the link between significant return on investment and rigor in impact measurement and the criterion of "additionality" in impact investing.
The first Impact Market Study – lessons learned and creation of a Belgian NAB
In 2021, Solifin joined forces with a consortium of seven other Belgian actors to carry out three major projects: developing a first study quantifying the impact investing market in Belgium (summer 2022), contributing to the organisation of Impact Week in Brussels (held in November 2022) and creating the Belgian NAB (started January 2023). The consortium delegated the first impact market study to Solifin and the King Baudouin Foundation, supported by the Belgian Philanthropic Foundations Association. The study, which included a quantitative and a qualitative survey, was carried out by a consulting firm supported by EVPA, which coordinated a data harmonisation exercise at the European level.
The study unveiled a series of characteristics of the Belgian impact finance market that were useful to present the market to the different stakeholders. The size of the Belgian market was estimated to be between 6 and 16 billion euros, or between 1 and 2.5% of Belgian total AUM, which is aligned with the GIIN's estimate of 1-2% for the global impact investing market. The study revealed that the largest contributors to impact investing are actors dedicated almost entirely to this market. Belgium has a unique range of family offices and fund managers active in the space. On the other hand, institutional investors (pension funds and insurance groups) barely contribute, whilst neighbouring United Kingdom and the Netherlands show the potential of these investors. The study also revealed a significant potential for market growth, up to 30 billion euros, in the next 3-5 years.
With Impact Finance Belgium (IFB) created, the ambition is to conduct this study every two years, taking stock of the several lessons learned:
- The initial database of Belgian financial actors to contact, as well as the right contacts (and their contact details), are essential.
- The questionnaire used must be translated perfectly into the native language of fund managers and must be simplified.
- Philanthropic actors must be approached specifically and require more support.
- The time required to collect data and follow up with contacts should not be underestimated.
- The creation of an editorial committee that discusses and challenges the working method and initial conclusions is a real asset, especially for the future dissemination of the study.
- Thanks to the existence of a NAB, the exercise can be simplified as many of its own members will fill it in, hopefully with a more harmonised set of definitions.
A starting point for all aspiring NABs
Navigating through an industry without any sense of direction is like trying to sail a ship without a compass. That's why a market study was essential for IFB, and will be essential for all aspiring NABs in other countries. The study allowed us to get our bearings and find the way in relation to our neighbours and international trends.
This exercise wasn't just about finding our footing, though. The study also allowed IFB to create a compelling story that effectively communicates the challenges we face and our ambitions for the future. This story will hopefully resonate with a diverse audience and provide a clear understanding of the work that IFB is undertaking.
But that's not all. By conducting this market study every two years, IFB can monitor market trends, the impact of our sustainable finance initiatives and the commitments of our members. It's an opportunity for stakeholders to learn and improve, and for IFB to keep pace with a constantly evolving industry.
What's more, this study will help us align our objectives with those of the European Union in environmental and social matters. This means that we can not only contribute to a more sustainable future for Belgium, but for the entire EU as well. And let's not forget about the qualitative interviews that were conducted as part of this study. These interviews provided valuable insights into the main barriers that industry stakeholders face. This information will help IFB build an advocacy agenda that addresses the needs of the industry and promotes sustainable finance initiatives.
This market study, especially because it was part of a wider European effort, is a significant step forward for IFB. It's a way to build stronger relationships with organisations that observe funding demand and to ensure that the market remains balanced. But most importantly, it's a way to chart a course towards a more sustainable future for Belgium and beyond.
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