“For a better country, we will have to invest differently and cooperate more.”

What will the Netherlands look like in the future? We asked a cross-section of people this question.

In this episode: Francis Quint, head of the investment branch of the Rabobank. In her view, we need to build a more sustainable society in the next ten to fifteen years, with equal opportunities and better services for all. Accelerating that transition calls for a different vision on asset management - from short-term to long-term socially responsible investing - and for coalitions between investors, companies, and the government. "Together, we need to set concrete goals and take action."

Is this the Netherlands? That question spontaneously arose for Francis Quint several times in the past year. “My father was isolated in his room in a nursing home for months. Our children could not go to school and home education was sometimes difficult. The corona crisis has shown that care and education - basic needs for all of us - do not have the level and adaptability that I always assumed.”

It is one of the social issues that Quint is keen to help solve. She is globally responsible for the 2.2- billion-Euro investment portfolio the Rabobank uses to invest in innovative non-listed companies: from start-ups to large corporations. Internationally, the focus is on the transitions in the food sector and agriculture; in our own country, it is also on energy transition, healthcare, and digitization. Now is the time to build the Netherlands of the future, Quint says.

What should we tackle first?

“We are facing a major social challenge: in the coming years, we need to bring about change in five areas simultaneously. The first is the energy transition, to meet the climate targets and be carbon neutral by 2050 at the latest. The second transition is to reduce social inequality and build an inclusive society in which everyone feels at home and has equal opportunities. The third challenge is to work towards affordable and accessible healthcare for every Dutch person. The fourth transition must take place in Food & Agriculture: how do we ensure sufficient food for everyone, with the smallest ecological footprint, by making the food chain more sustainable? And the fifth transition must enable and accelerate the other four: digitization.”

That is a tall order. How will we accomplish that? 

“The pandemic has shown that we cannot continue on the current path. The corona crisis has magnified our social problems. We have experienced how urgent it is to make our energy consumption and food chain more sustainable, how dependent we are on supplies of raw materials and products from abroad, how unequally it is distributed in our society and where the shortcomings in care and education lie. That helps; we have become more aware of the need for change. This is the right time to actually initiate and accelerate all the necessary changes.”

That is going to require a lot of money… 

“To achieve the Paris climate goals, we need $6 trillion worldwide to invest in sustainability through 2030, according to BCG's Global Asset Management report. And that's just one of the transitions we need to make. But the good news is that that money is already there. That six trillion dollars is only eight percent of the current total assets under management worldwide. We just need to start using that wealth in a different way. Currently, investments are still often focused on the short term. We need to change that: from purely financially driven investments to investments for the long term. This is only possible if investors take their social responsibility seriously and are prepared to commit to long-term goals. As a long-term investor, we at Rabobank deploy part of our capital to drive social change. Just as APG does with its pension participants' assets for its affiliated funds.”

Isn’t investment return still more important than social return?

“As a bank, we obviously need to attain a certain return, just as pension funds need a return for their participants’ future income. But the great thing is that financial and social returns go hand in hand. One example is our investment in Oatly, a Swedish company that makes oat milk. That company has grown tremendously in recent years and is now about to go public. Or take Kingfish Zeeland, a land-based fish farm to combat ocean depletion. That company also went public recently. Previously, sustainable companies were seen as risky innovations. By now, they are also proving to be more financially rewarding than unsustainable investments.”  
    

What else is needed for the Netherlands of the future, besides sustainable investing? 

“The change will happen a lot faster if we start working together more in the Netherlands and form coalitions: not only between companies and long-term investors, but also with the government. For example, the government can accelerate the energy transition by subsidizing sustainable behavior and taxing non-sustainable behavior. For example, the subsidy for electric cars has led to an incredibly fast start. A tax on fossil fuel consumption or CO2 emissions can further stimulate the switch to green energy. In addition to the government, you need the business community for sustainable innovations and the development and construction of the necessary infrastructure, such as charging stations. Financing large projects like that requires long-term investors. So, it's important that you know how to find each other and forge coalitions.”

Can you give some examples of such coalitions?

“At Rabobank, for example, we are working with investor Tikehau Capital in an Energy Transition Fund of one billion Euros to accelerate the energy transition in Europe. Oil and gas company Total is also involved in that fund, in order to be able to make the switch to sustainable energy. Another example is the establishment of the Rabobank Carbon Bank for buying and selling CO2 emission rights. Together with farmers worldwide, we are developing projects for CO2 storage in trees and in the soil. And we mediate between parties that store CO2 and companies that want to reduce or compensate their emissions. Incidentally, we expect these companies to have the ambition to reduce their CO2 emissions as much as possible. We also bring about cooperation within our own investment portfolio. For example, we are looking at how we can place start-ups or innovative sustainable products, such as plant protein, with larger companies with the scale to roll out these kinds of innovations more quickly.”   

Sustainability innovations are fairly concrete. But how do you promote social innovation and reduce inequality?

“Education will play an important role in that. We need to broaden our current education system into lifelong learning. Digitization can help to provide everyone with equal opportunities for development and training, and to retrain or re-educate people more easily and quickly. Then prosperity will also be better distributed. For digital education, you can think of all kinds of innovative applications. We need to work together on this as well.”

What role do you see for APG in helping to shape the Netherlands of the future?

“Pension providers are working on the world of the day after tomorrow. A position as a responsible and involved long-term investor is appropriate for this, which APG already is. Within all those five transitions that need to take place in our society, APG can look for recognizable projects that are close to the constituency. Show people even better that their pension money benefits society and helps solve problems they face every day. Like improving education, making homes more sustainable, or building a sustainable infrastructure. At Rabobank, we invest about half of our assets in the Netherlands, because this is where our roots are. Perhaps APG could also consider investing a larger proportion of its assets in its own country and participate in local coalitions more often? Taking into account, of course, the desired risk profile.”

How far are we still removed from the Netherlands of the future? And will we ever arrive?

"I am optimistic by nature: just name concrete goals together and take action. I also see all kinds of positive developments. For example, there are many more organic products in the supermarket, people are more concerned with conscious eating. You also see more people taking the initiative to make their homes more sustainable, to drive electric vehicles, etc. People often only want to work for companies that show social responsibility. That also forces change. As long-term investors, we do this on a large scale: companies can no longer escape taking responsibility. By working together more closely, we can accelerate these transitions, aided once again by digitalization. In this way, we will be building a better Netherlands together in the years ahead.”