Corporate social investors can be a sort of “Trojan horse” for integrating social impact into a parent company’s strategy, according to the head of the Netherlands-based Rabo Foundation.

Pim Mol, who worked for Rabobank for almost 10 years before joining his foundation as managing director in 2018, said he saw the “dark side” of banks and how they can “add to the problems of society”.

A new CEO of the bank – a retail bank in the Netherlands with origins in agriculture, as well as a leading name in food and agriculture internationally – had, however, brought about a shift towards a different culture and becoming “goal driven”.

“I see the corporate foundation as a kind of Trojan horse to speed up this process,” said Mol (pictured), adding that she could provide a “showcase” to make the new direction of the company more visible.

In the case of the Rabo group, the social purpose is to support some of the poorest 2 billion people in the world, three quarters of whom live in rural areas and depend on agriculture for their income.

Speaking earlier today at the C Summit, an online conference co-hosted by EVPA and Dafne for corporate social investors, Mol explained how the bank, the foundation and a separate impact fund are working together to help small farmers and their organizations to develop.

The missing link is really important

The foundation, established in 1974, provides low-interest loans of an average amount of € 250,000 to farmer cooperatives in 22 developing countries, where they otherwise cannot access funding as they are deemed to be too risky.

Another corporate social investor, the Rabo Rural Fund, was established in 2011 to fill a funding gap – serving those who have gone beyond grants, microloans and soft loans but are not eligible for a bank loan. standard. Investors in the fund may then be eligible for “normal” financial loans from Rabobank’s local partner banks, or other local commercial lenders.

After a “long and fairly intense process,” the Rural Fund recently secured an additional € 20 million from Rabo’s board of directors, Mol said. It now grants loans ranging from € 250,000 to € 2.5 million to fill the so-called “really large” intermediate financing gap.

Join the dots

The key was to “connect the dots” along the value chain for the owned companies, Mol said. For example, a microfinance institution and a coffee cooperative in Nicaragua received a loan of € 1.5 from the foundation for the microfinance component and a commercial finance loan of € 1.5 million from the Rural Fund for the component. Coffee. “The next step would be to move on to trade and commodity finance, either with Rabo or with another bank,” he said.

Rabo’s teams also supported Tony’s Chocolonely, now one of the best-known chocolate brands in the Netherlands, through his work to make chocolate 100% slave-free. The Rabo Foundation finances some cocoa cooperatives in Côte d’Ivoire; the Rural Fund finances traders to source cocoa and bring it to factories; and Tony’s Chocolonely itself is a client of Rabobank in the Netherlands.

However, such successful examples were still relatively unusual, Mol said. The deep alignment between the foundation, the fund and the bank had only started recently, in part thanks to the additional € 20 million for the Rural Fund.

Although the foundation and the Rabo Rural Fund are separate legal entities, a supervisory board sits at the same time

But, although the foundation and the fund are separate legal entities, a supervisory board sits on both. Various departments have also become better linked, making “the business flow, the network flow, the knowledge flow, the ecosystem flow blend much more cohesive,” according to Mol.

Discussing the benefits of supporting a pipeline at scale, Summit C attendees highlighted the ability of a separate entity to innovate outside of core business goals, the reputation and brand benefits for the parent company, and opportunities to glean information on potential customers.

However, some also highlighted the danger of “cleaning up the impact” of companies by the work of their corporate social investor, as well as the challenge of uniting profit-oriented and impact-oriented staff. around a collective strategy.

“The word must come from above,” said one participant. “You really have to educate [staff], to sell the story.

Pioneer Post is a media partner of the C Summit, which takes place online December 3-4. Find all of our reports on the event here.