Beats | September 6, 2018

A growing market for definitions of the impact investor

Dennis Price
ImpactAlpha Editor

Dennis Price

The World Bank announced that it will announce13 principles of impact investing” at next month’s IMF-World Bank meeting in Indonesia. The International Finance Corp., the bank’s development finance arm, has “created a definition of impact investing to try to stop organisations wrongly using the strategy’s popularity for gain,” reports The Financial Times. The five categories: strategy, structure, portfolio management, exiting investments and verifying achievements.

A roadmap for the impact revolution

  • The Global Impact Investing Network has also announced (in the What’s Next series on ImpactAlpha) that it is developing a set of principles to “clarify, simplify, and normalize behaviors in the impact investing industry,” according to the GIIN’s Amit Bouri. The GIIN plans to release the principles at its October forum in Paris.

  • Combating impact-washing. The multiplying efforts signal growing concerns about “impact washing” as big banks and legacy investment firms roll out green-finance commitments, impact fund announcements and strategies wrapped in acronyms like ESG (for environmental, social and governance) and SDG (for the Sustainable Development Goals). Many impact investors still skew towards larger, safer and higher-yield investments.

  • Elite charade? Anand Giridharada’s new book, “Winners Take All,” skewers elite “changemakers,” including impact investors. But is too many people claiming to want to change the world the real problem? Read, “Big winners want to be changemakers? Hold them to it,” by ImpactAlpha’s David Bank.

Any “principles” need to be broad enough to encourage wide participation, says Australian superannuation fund Christian Super’s Tim McGready, yet “targeted enough to ensure that impact investors are actually demonstrating real, tangible, positive impact that justifies the use of the term.”