Impact in private debt: the closer, the more powerful

September 17, 2026

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

Impact investing in private debt is increasingly centred on additionality: does the capital really make a difference? Sarah Stols and Rayane Cheniouni of Van Lanschot Kempen explain how that question guides their investment process and how they balance impact and return objectives.

By Michiel Pekelharing

Why are institutional investors increasingly focusing on private markets rather than public markets when it comes to generating impact?

Rayane Cheniouni: ‘We see private markets as the best fit for impact because the interests of both parties align very well here. A company needs capital and we commit for five years or more. Because these companies often cannot turn to banks, they pay a premium and we take on more risk. On the other hand, we have direct contact with the managers. We really understand the business, right down to the list of suppliers. That’s a huge difference from a shareholders’ meeting at a listed company, where, in a packed hall, I can only hope to be allowed to raise my hand when I represent 0.01 per cent of the capital. In private markets, my capital is additional and not taken over from someone else. That proximity makes the involvement much more direct and much deeper.’

Sarah Stols: ‘We focus specifically on small to medium-sized enterprises. The market naturally pushes larger companies towards banks and capital markets. If you’re big enough, that’s simply the cheapest and most flexible form of financing. Small and medium-sized enterprises don’t have that luxury. We focus on that segment with the aim of helping these borrowers grow into stronger companies, which can ultimately find cheaper financing elsewhere.’

Intentionality is one of the key criteria for impact investing. As an investor, how can you assess whether a manager or company is genuinely striving to create impact?

Stols: ‘For us, intentionality is a multi-layered concept. Positive impact and positive financial performance must be intrinsically linked at company level, as well as at manager and investor level, and must also reinforce one another.’

Cheniouni: ‘It’s particularly good when a manager incorporates impact directly into their financial models. Because, as investors, we’re always looking for the answer to the question of what it means – for example, in terms of growth, market access and regulatory risk – when a company meets a climate target. Recently, we challenged a manager on a target to make 30 per cent of a vehicle fleet electric. Why wasn’t it 100 per cent? They explained very clearly that this was simply not possible due to the lead times for electric cars and the installation of new charging infrastructure. Conversations like that reveal whether the impact ambition is genuine. What’s more, it also makes us even better credit analysts.’

In private markets, my capital is additional and not taken from anyone else. That proximity makes our involvement much more direct and much deeper.

How do you translate impact ambitions into outcomes that are both meaningful and comparable across a wide range of asset classes and regions?

Stols: ‘There is a clear move towards standardisation. At portfolio level, there are two metrics that work best across very different sectors. We use the IRIS+ metrics and encourage managers to adopt them. In addition, we have built our own framework that identifies which KPIs are most reliable for each theme and asset class. But figures alone do not tell the whole story.

A description such as ‘reaching underserved people through healthcare’ could refer either to a diagnostic laboratory reaching huge numbers of patients or to a small clinic treating just a handful of people for cataract-related blindness. Both institutions report using the same metric, but the actual impact on people’s lives differs completely. The qualitative story is therefore just as important as the figure.’

How do you prevent ‘additionality’ from remaining a catch-all term? How do you turn it into a concrete criterion on which to reject or approve an investment?

Cheniouni: ‘A good example is our approach to renewable energy infrastructure. We aim to invest in greenfield infrastructure: financing the construction of new renewable energy projects, so that we contribute to additional renewable energy capacity being added to the electricity grid. Within private debt, we have looked very specifically for the point in a project’s lifecycle where our capital makes a difference, because not every phase is equally additional. The construction phase is where developers struggle the most. At that stage, no cash flow is being generated yet and the risk is at its highest. Banks prefer to get involved once the project is operational. When providing finance for the construction of solar and wind farms in Europe, we work in partnership with a manager who knows the market well. A typical deal involves coming on board once land rights and long-term energy contracts have largely been finalised. We therefore come on board after the phase involving the earliest and most high-risk development risks. However, we do take on more risk than when financing an operational farm. This is offset by a higher expected return. Once the farm is built and stable, it is refinanced by a bank at much lower costs. The manager then recycles our capital into the next project.

Figures alone do not tell the whole story. The qualitative narrative is just as important as the numbers.

To what extent is the balance between risk and return put under strain when impact plays a role in investment decisions?

Cheniouni: ‘That tension is more illusion than reality. We apply the same risk-weighted return target to our impact strategies as we do to our regular private debt funds. So it’s not the case that we settle for a lower return simply because a strategy is impactful. If an opportunity looks attractive from an impact perspective, but the risk-weighted return, market maturity or deployment risk are not right, we won’t invest, no matter how good the impact story is. If a deal falls through, we do remain in dialogue with the managers. As soon as the market is mature enough and we are adequately compensated for the risk, we will invest. That balance between impact, risk and return is at the heart of our fiduciary approach. Our priority is to be a good steward of our clients’ capital. It is precisely that discipline that safeguards the income profile that private debt investors expect.’

Institutional investors are keen to generate impact closer to home. What is driving this shift, and how is it changing the way you develop solutions?

Stols: ‘We are indeed seeing increasing demand from clients for local impact. This has prompted us to explore the market thoroughly. We couldn’t find an existing solution that matched what our fiduciary clients wanted, so we developed one in collaboration with a manager: a Benelux-focused strategy that combines direct lending and infrastructure debt. Closer to home, impact looks different from how it does in emerging markets. It’s less about reaching large numbers of people and more about bridging a transformation gap. Examples include providing credit to Dutch and European companies to support energy security, labour participation, access to healthcare and housing. It is still not common practice, particularly among smaller companies, to assess their impact. For example, one manager is subsidising the first CO₂ emissions measurement for a number of underlying companies, purely to demonstrate how valuable that information is. It is slower and more labour-intensive work, but it is precisely that proximity that makes impact investing in private debt so powerful. And it enables us to carefully assess that impact within a fiduciary investment framework.’