Impact Investing in the Danish Pension Fund Industry: An Assessment of Opportunities and Challenges in sub-Saharan Africa

Nils Martin Heller & Peter Juergen Hofmann

Student thesis: Master thesis

Abstract

Growing concerns about scarcity and inequality have become increasingly urgent. Impact investing presents considerable opportunities to effectively address pressing social and environmental challenges by narrowing the prevalent funding gap in sub-Saharan Africa and contributing to the achievement of the Sustainable Development Goals by 2030. Whilst the impact investing industry has made significant gains over the last few years, Danish pension funds have been reluctant to engage in the impact investing sphere of sub-Saharan Africa.
With this paper, the researchers aimed to enrich the academic literature with a framework focused on the opportunities and key challenges facing Danish pension funds related to impact investing in sub-Saharan Africa. The researchers interviewed a range of Danish pension funds as well as experts within the field and engaged Danish pension fund members by means of an online survey. Drawing on these qualitative and quantitative measures, the findings were clustered according to strengths, weaknesses, challenges, and opportunities rooted in the internal external environment of Danish pension funds.
A lack of awareness and understanding around the true possibilities of impact investing and a narrow interpretation of fiduciary duty translate into challenges, such as omissions in the context of learning potential and future-readiness. Contrastingly, Danish pension funds are well-positioned to unveil substantial opportunities in the impact investing sphere of sub-Saharan Africa by leveraging their key strengths, access to significant financial resources and considerable market power.
The researchers concluded that Danish pension funds have the ability to capitalise on the opportunity to generate both financial and social returns through impact investing. Considering Danish pension funds’ key strengths as well as their ability to catalyse other sources of private capital and to legitimise industry standards, it is evident from the research that Danish pension funds are well-positioned to engage in impact investments in sub-Saharan Africa.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages259