Achmea IM: Impact investing with private debt is growing strongly

November 19, 2025

^{This text was originally written in Dutch. This is an English translation.}

Private debt offers interesting risk-return prospects and is also well suited to impact investing. The impact potential of private debt is significant thanks to the direct involvement and influence that private debt managers have on financing conditions as capital providers. This enables them to achieve social impact in addition to good financial returns.

By Mark Leeijen, Senior Fiduciary Adviser, Deanne Arends, Impact Portfolio Manager, and Ralph Engelchor, Impact Portfolio Manager, all at Achmea Investment Management

 
What are the characteristics of private debt?

'The private debt investment category is highly heterogeneous. It consists of many subcategories, each with its own risk/return characteristics. But even loans within the various subcategories can vary greatly. For example, loan categories within private debt range from very risky to virtually risk-free.

The type of loan also determines the impact potential of the investment. For example, the opportunities to make an impact are generally greater with riskier loans, because the growth of the companies or projects in question is often hampered by limited access to external financing. Through such loans, investors generally have more influence to agree on certain financing conditions that are linked to making an impact.

In Figure 1, we distinguish between the various types of loans, plotted according to risk-return profile and impact potential. Direct lending is by far the largest category within private debt, but we also invest in infrastructure debt and real estate debt. Private placements are mainly loans to companies with a (sub) investment grade rating. These are often companies in the upper middle market segment. Loans to these companies can, for example, serve specific sustainability or impact purposes. WSW loans are loans to Dutch housing associations with an explicit government guarantee. Together with Dutch mortgages, these loans offer opportunities to make an impact on issues such as climate and equal opportunities. Due to the government guarantee, WSW loans have a high credit rating. ECA loans also have a government guarantee and aim to promote and stimulate trade flows. Distressed debt and mezzanine are not our preferred option due to the (very) risky nature of these loans and their similarities with private equity.'

What makes private debt an attractive investment category?

'The high yield spectrum has an attractive risk premium. From a return perspective, private debt is therefore an interesting addition to the portfolio. Unlike more traditional liquid bonds, the interest rate risk of private debt is generally low, as the vast majority of these loans have a variable interest rate. The sectoral exposure of private debt also differs somewhat on average from that of other credit categories. As a result, private debt has different sensitivities than regular bonds in pension fund portfolios. This is reflected in correlations of 0.5 on average compared to investment grade corporate loans.

On the other hand, the sub-categories with a fixed interest rate and high credit rating are relatively safe, with a fixed coupon providing a stable income stream. These loans offer stability to the portfolio and are also suitable for protecting against the interest rate risk of pension payments.'

What makes private debt an attractive category for making an impact?

'Private debt is ideally suited to impact investing because it gives investors direct influence over the financing conditions. This allows them to focus not only on financial returns, but also on social impact. Private debt offers the possibility of incorporating sustainability objectives, impact covenants and reporting obligations into loans on a tailor-made basis. Think, for example, of linking interest rates to predetermined, measurable impact indicators.

Due to their direct involvement, private debt managers have more influence on the monitoring of investments and can also contribute administratively, for example through an acting board role. Their expertise and network increase the chance of successful impact realisation. Private debt can be used in a wide range of areas, from growth capital for social enterprises to project financing for sustainable infrastructure. For example, pension funds mainly use WSW loans to contribute to the affordability of housing in the Netherlands. Direct lending, on the other hand, offers many opportunities for various impact themes with a global focus, including microfinance in emerging markets. The category is growing rapidly, partly due to increasing allocation by institutional investors such as pension funds, and due to the professionalisation and standardisation of impact measurements.'

What role does private debt play in the investment portfolio under the Wtp?

'The risk profile and interest rate sensitivity determine the role of private debt in the investment portfolio under the Wtp. For example, investment grade loans with a long fixed interest rate, such as private placements and WSW loans, fit well into the protection portfolio (SPR) or interest rate module (FPR) due to their high duration and strong correlation with the risk-free swap rate. In contrast, the riskier high-yield segment is a good addition to the return portfolio (SPR) or return module (FPR) thanks to its attractive spread.'

What is the best way to implement private debt?

'We prefer implementation through fund investments and co-lending. This gives pension funds access to specialised private debt managers with in-depth knowledge of impact investing. Fund investments involve investing in specialised funds managed by a General Partner who takes care of the entire investment process and management. This ensures professional due diligence, impact management and diversification across regions and sectors.

Co-lending (co-investments) gives investors the opportunity to invest directly in a loan together with the fund, with the fund manager remaining responsible for selection and management. This combines the advantages of direct investments with external expertise and lower costs: co-investments are often not subject to a performance fee and the fixed management fee is lower. Both forms offer flexibility, scalability and the ability to accurately achieve impact objectives, while spreading risk and limiting operational burdens.'

What are the points to consider and/or risks?

'Impact investing with private debt has attractive risk-return characteristics, but also specific points for attention and risks. For example, the limited liquidity of private debt can be an obstacle. Because the loans are tailor-made, they are not, or only to a very limited extent, tradable. As a result, the costs of private debt are higher than those of regular liquid credit bonds. It is also very important to prevent impact washing and to maintain the focus on the measurability and reportability of the impact achieved. Nevertheless, we are seeing more and more pension funds with impact ambitions including private debt in the available investment universe for their portfolios.'