Impact investment guide launched

Global Impact Investing Network launches guide explaining the core characteristics of impact investment such as the use of data and impact management

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The Global Impact Investing Network (GIIN) launched the “Core Characteristics of Impact Investing,” a guide to impact investing. The guide was developed with input from leaders in the impact investing industry and is intended to provide clarity and help investors understand the key elements and practices of impact investing.

“We are launching these Core Characteristics at a critical time in impact investing; the next couple of years will either see it remain on the fringe of the financial markets or press forward into the mainstream,” says Amit Bouri, CEO and co-founder of the GIIN, a nonprofit organization that works to increase the scale and effectiveness of impact investing.

“To tackle issues on the scale of the Sustainable Development Goals and global climate targets, we must think much bigger and engage a much broader set of investors. Scale is essential. But it must be scale with integrity, to ensure we are achieving impact at scale, not just capital at scale. The Core Characteristics provide the greatest clarity to date on the elements that define impact investing, so investors entering the market will know exactly what to strive towards,” says Bouri.

Impact investments are investments that seek to use capital to contribute to improvements in people’s lives and the environment while generating financial returns. Impact investments can be made across asset classes, and the social and environmental performance of investments can be measured. The GIIN also recently released research on the market size of impact investing, which they estimate is about US$502 billion and rapidly growing, according to their Market Sizing Report.

“Our priority is to set appropriate expectations and define practices in a way that is useful to an investor building or deepening an impact investing portfolio, to support greater participation from both new and experienced impact investors,” says Sapna Shah, GIIN Director of Strategy. “The current impact investing market is estimated to be US$502 billion, which means trillions of dollars in the capital markets are still sitting on the sidelines, that could be put to work for people and the planet.”

The GIIN’s Core Characteristics comprise four principles centered on intentionality, the use of evidence and data, impact management and contribution to industry growth.

Impact investing actively sets out to contribute to social or environmental solutions with clear impact objectives and strategies to achieve these goals. This intentionality separates impact investing from other practices that focus on avoiding harm or mitigating risk. Evidence and impact data are utilized in the design of impact strategies. This includes empirical data and research from finance and other industries and disciplines, such as social and environmental sciences. Impact investing requires impact measurement and management of investments towards meeting intended objectives and delivering impact, which includes the use of feedback loops, identifying risks and disclosing actual impact performance data.

Impact investing necessitates shared conventions and standards for describing impact goals, strategies, and performance. Impact investors share non-proprietary and non-private learnings, evidence and data to enable others to benefit from their experiences.

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Date

3 Apr 2019

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