October 21, 2022
ABN AMRO Bank aims to make the greatest possible impact and thereby help realize a more sustainable society. Head of Sustainability Richard Kooloos talks about the development that sustainable companies are undergoing, the increasingly strict regulations for impact recording, and the necessity of being able to collaborate with a partner like StartGreen.
How do you shape sustainability at ABN AMRO?
‘I have been focused on sustainability in various roles for over 15 years. Now I am responsible for the sustainability policy of ABN AMRO Bank. Sustainability is about our own business operations, but primarily about the preconditions we set in our lending for the business operations of our clients. For example, regarding their transition to a 1.5-degree world and circular business operations.
Our policy is also aimed at making the greatest possible impact with our clients’ investments. We look at how we can use that money and our influence for an economy that emits less CO2, that addresses the problem of shrinking biodiversity, that reduces negative social impact, and increases positive social impact. In essence, we have the same mission and ambition as StartGreen; we just have a different set of instruments.’
How did the collaboration with StartGreen Capital originate?
The collaboration between the bank and StartGreen dates back to the founding of StartGreen. The founders saw a great need for financing sustainability development. They brought the knowledge and passion to finance those early-stage companies and thus give them an extra boost. As a bank, you cannot provide that impulse because the risk profile of early-stage impact companies does not fit bank credit. They are simply too young and therefore too risky.
We therefore began to play a role at a distance and, as a bank, invested in the venture capital funds of StartGreen with which start-ups can receive a boost. In addition, we provided a supervisory director to assist in making investment decisions. These StartGreen funds are now in the wind-down phase, so they only have a few investments left in the portfolio – mainly to bring a company to the next phase. When StartGreen seeks investors, we are always open to that. Together, we try to grow the market. Through knowledge sharing or by referring to one another.
StartGreen has since become one of the big names in the sustainability world. They are driven entrepreneurs with a lot of experience in this field who have proven they can give start-up entrepreneurs a push. They do this with financial resources, but also with an enormous network at all levels. From: “I know a good CFO” to: “I can put you in touch with this government agency and this potential buyer.” Sometimes a brilliant sustainable idea with an extremely robust business case still fails to get off the ground because the right team or business insight is lacking. That is why providing that further assistance is so important.
This long-term collaboration has also developed internally: we find making an impact with investments so important that we no longer only have this facilitated by third parties, but have also taken up the gauntlet ourselves. That is why we established our own Sustainable Impact Fund a few years ago. This does not stand in the way of the collaboration with StartGreen at all. In fact, the bank sometimes collaborates with one of StartGreen’s funds, and our fund occasionally reaches out to StartGreen when looking for investment partners.
What makes StartGreen a suitable partner?
The requirements for business operations and supervision have become enormously stricter over the last ten years. That sometimes makes it complicated for us: as a large lender, we are increasingly bound by processes and procedures, while as a start-up entrepreneur, you need flexibility and support. You want to be able to facilitate that, but the different speeds make it difficult to align them properly. The challenge is: How do we stick to the rules, but still do it? That is why it is good to have an executor like StartGreen who can offer that flexibility. The entrepreneurial StartGreen must be in the middle to put that fire and agility – if it can’t be done one way, then perhaps another – into practice.
Precisely because the requirements for everything we do have increased enormously, we only want to and can only collaborate with parties that operate at a high professional level. StartGreen must therefore meet our high supervisory and quality requirements on the one hand, but with our trust in their high-quality working method, they receive a valuable stamp: ‘Approved by a major bank.’ What I have experienced from the venture capital fund is that the companies in which StartGreen invests can, in turn, say: ‘StartGreen and this major bank believe in me,’ which had a positive effect on potential investors or buyers.
Why does the bank participate in Oneplanetcrowd projects?
Some impact companies or energy projects require a layered financing solution. In that ecosystem of parties that contribute to the success of such an enterprise in different ways, you also need parties like Oneplanetcrowd. We sometimes provide one of those layers in the form of debt capital. We can do that if the crowdfunding platform is robust and strict in its governance. We do not want investors to suffer and for us to be dragged into negative publicity when a company fails. In my view, professionalism, robustness, and reliability are therefore essential to be able to create more stacked financing solutions.
Furthermore, I believe the function of crowdfunding is only for a small part about raising money. Another important part is building a community and thereby validating support. Crowdfunding gives a certain legitimacy and weight to an idea. Money is thus the means but not the end. Here too, you must know your trade well and understand the sustainability side thoroughly. I therefore consider it a good development that the ESCP, the new European rules for crowdfunding service providers, will separate the wheat from the chaff: smaller, vague parties will not receive a license from the AFM and will disappear from the scene. This ensures better consumer protection.
How do you see the development of sustainability?
About 10 years ago, sustainability was still a strategic choice. Back then, I sometimes saw it get stuck at recycling coffee cups and double-sided printing. Now, being sustainable is not distinctive at all anymore; it is a prerequisite. Moreover, that sustainability is increasingly data-driven. So, it has moved from a qualitative choice to a quantitative prerequisite: from tell me to prove me. You have to be able to report and measure a great deal. As a result, sustainability is penetrating deeper and deeper into the core of business operations. One consequence is that matters such as nitrogen & CO2 emissions and flood risks now carry much more weight in investment decisions.
The old way of working no longer works. If you cannot provide the data, you are no longer in the game. Or to put it in Cruyffian terms: it only counts if you can count it. Every party does that in its own way. We have decided to do that together with a specialized party: the Impact Institute. I know that StartGreen has appointed a dedicated Sustainability Lead for this, who oversees the correct and complete measurement and recording of impact in World Favor. In this way, we are all finding our own way out of the woods.
The EU Taxonomy is going to affect everything. Initially, that will be a terrible compliance misery, which might take the soul out of sustainability a bit. The players who make it through the valley of death of compliance and can bring that soul back are the ones who will win the battle. If you succeed in shaping the ESG reporting well and if you can then also use that data to help entrepreneurs further, then you can distinguish yourself. I am happy to see that this capacity and knowledge are present at StartGreen and have every confidence that StartGreen will emerge from this even stronger.’
