Achmea Real Estate: Buying up and making existing rental properties more sustainable for financial and social returns

April 24, 2025

_{This article was originally written in Dutch. This is an English translation.}

One million older rental homes must be made sustainable in order to meet the Paris climate goals. Onno Hoff, Fund Manager of the Achmea Dutch Residential Impact Fund, argues that by buying up and making older rental homes sustainable, financial returns can be linked to social impact. Financial Investigator spoke with him.

By Jolanda de Groot

Achmea has taken the initiative to purchase rental properties with the aim of making them more sustainable. What is the idea behind this?

'Currently, about 1 million rental properties have an energy label D or lower. That is 30% of all rental properties in the Netherlands. These properties must be made more sustainable in order to meet the Paris climate targets. On average, these homes emit 3,900 kilograms of CO₂ per home annually. By making our homes more sustainable to a Paris Proof level, we expect a reduction of about 70%, reducing CO₂ emissions to 900 kilograms of CO₂ per home. Of course, the transformation also involves CO₂ emissions, but these will be compensated within three years. We have launched an impact fund with which we want to make a significant impact on the social problem of climate change. The need is there, but what was still lacking was a concrete investment solution. That is now available.'

How will the homes become ‘Paris Proof’?

'Our first step is insulation, to reduce energy waste. This includes roof insulation, floor insulation, wall insulation and replacing exterior doors, windows and frames. Then we take measures to generate the necessary energy from sustainable sources. This can be realised with solar panels, heat pumps, solar boilers and connections to heating networks. Where possible, we also reuse materials to further reduce the carbon footprint. All these interventions are customised, tailored to each housing complex. Thanks to our experience in making more than 2,500 homes more sustainable for our current customers, we are well acquainted with various situations. We also work with renowned maintenance parties that specialise in sustainability. Experiences are directly translated into improvements and communication to residents is continuously tested. This ensures that these types of drastic measures are also feasible in an inhabited situation.'

Thanks to our experience with making more than 2,500 homes more sustainable for our current customers, we are well acquainted with various situations

How do tenants benefit from the sustainability improvements, despite a possible rent increase?

'To partially cover the costs of the transformation, the rent will increase slightly. On the other hand, energy costs for residents will decrease. This means that the total housing costs for tenants will remain the same in most cases and may even decrease slightly. Many residents do not have the means to move to a better home. For us, this social aspect, the affordability of housing and being able to continue living in your own neighbourhood, is at least as important as the climate benefits. In addition to the financial benefit, tenants also get a more comfortable home, which considerably improves the living experience and the indoor climate. Therefore, the impact we want to achieve is not only CO₂ reduction, but also the satisfaction and health of the residents.'

How do you want to involve other institutional investors in your initiative?

'Investing in making existing Dutch rental housing more sustainable fits in well with the socially responsible investment policy of many pension funds. It is very concrete and therefore easy to explain to participants. An investment in our fund contributes to the quality of housing, keeping affordable rental housing available and protecting the climate. Impact is about the intention and the additional effect of the investment. This fund scores on all points. To allow potential customers to test this, we have written a ‘Theory of Change’ and drawn up an impact framework. Because you can't just claim to be an impact fund. We are well aware of that. It means that we not only involve investors in the goals, but also in the results. To that end, we use KPIs that have been drawn up by the Global Impact Investment Network (GIIN). This network has provided an internationally accepted set of impact performance indicators.'

To what extent does the fund combine financial returns with social impact?

'The fund's objective is to realise both financial and social returns. The two go hand in hand. This is anchored in our ESG policy and forms the basis for this impact fund. In order to achieve the intended financial return, the rent will be increased slightly. As I mentioned earlier, this increase is not enough to cover the full financial costs. Part of the return will also come from the increase in value after sustainability improvements. This increase in value is not always immediately visible, as we concluded after research¹, but it will become apparent in the medium term. These two elements ensure a return over time that matches the risks and expectations of this real estate product. We calculate with an IRR that will be between 5% and 7%. The social return is achieved through a reduction in CO₂ emissions, which is closely monitored and reported to the fund's participants. We also contribute to social returns by improving the quality of housing for our tenants and striving for affordable housing costs. This is measured by means of annual tenant satisfaction surveys.'