exercise this dynamic approach to assess how they can most efficiently achieve their optimal impact and financial performance. This dynamic decision-making highlights growing maturation within the industry as impact investors are becoming more sophisticated in their approaches to performance management and capital allocation.
Drawing on data from six of the industry’s existing financial performance studies, this report also offers a synthesis of impact investment financial performance and additionally analyzes the GIIN’s 2020 Annual Impact Investor Survey responses of 161 impact investors seeking risk-adjusted, market-rate returns. This report also highlights practical examples of leading impact investors, including: Anthos Fund & Asset Management, IDP Foundation, Inc., Incofin Investment Management, UBS Global Wealth Management & UBS Optimus Foundation, and Vox Capital, offering an inside look at how various facets influence their decisions on capital allocation and performance management.
The report confirms earlier findings from the GIIN’s research around financial performance of private debt, private equity, and real assets and expands on this research to focus on various facets of impact investment performance, including risk, financial return, and impact.
https://thegiin.org/assets/Impact%20Investing%20Decision%20making_Insights%20on%20Financial%20Performance.pdf
NAVIGATING IMPACT MEASUREMENT AND MANAGEMENT HOW TO INTEGRATE IMPACT THROUGHOUT THE INVESTMENT JOURNEY
2021, European Venture Philanthropy Association.
Picón Martínez A., Gaggiotti G., Gianoncelli A.
This report summarises the main elements to be taken into account to measure and manage impact throughout the investment strategy and the investment process, linking each phase to the relevant steps of the EVPA five-step framework.
To clarify how the EVPA five-step process and other IMM initiatives are linked and complement each other, this publication also refers to different principles or standards throughout the investment journey, such as the Dimensions of impact of the Impact Management Project, the Operating Principles of Impact Management, the Principles of Social Value and the SDG Impact Standards.
https://evpa.eu.com/download/start/EVPA_Navigating_IMM_report_2021.pdf
INSTITUTIONAL ASSET OWNERS: APPROACHES TO SETTING SOCIAL AND ENVIRONMENTAL GOALS
2021, Global Impact Investing Network.
Dean Hand, Sophia Sunderji, Uma Kommineni
Institutional asset owners are increasingly interested in incorporating social and environmental factors into their portfolios and investments strategies. The pandemic, the climate crisis, and other social and environmental challenges have all signaled a fundamental need for change — to allocate more capital into investment products that incorporate some consideration for the real-world outcomes that the investments generate.
Institutional asset owners have an immense opportunity to generate change, as they possess both the capital and scale to address the world’s most pressing social and environmental challenges while meeting their fiduciary duty. In order to achieve this potential, institutional asset owners must set impact priorities and targets; however, many face challenges doing so. This research brief is the first in a series, focused on helping such asset owners do this work more efficiently and effectively.
The report dives into these investors’ approaches to setting impact priorities and targets — unpacking challenges they face when assessing impact priorities, identifying ways of turning these challenges into opportunities to achieve greater impact, and outlining next steps investors can take to set targets and integrate social and environmental priorities into their investment processes. Specifically, the report offers insights and practical examples into how institutional asset owners are integrating real-world outcomes, or impact, into their portfolios and investment strategies alongside risk and return and within a fiduciary context.
https://thegiin.org/assets/Institutional%20Asset%20Owners_Approaches%20to%20setting%20social%20and%20environmental%20goals.pdf
IMPACT INVESTING: REVIEW AND RESEARCH AGENDA
2021, Journal of Small Business and Entrepreneurship.
Agrawal Anirudh, Hockerts Kai
Impact investing is an emerging alternative asset class. In the last few years, the investment in impact investing has grown many folds, however the research has not kept pace with the growing practitioner interest. The lack of knowledge about the field coupled with the lack of knowledge production of field might be dangerous in the long run. This is a systematic review of impact investing. This systematic review involves study of 85 published articles and reports. This literature was collected using the harzing’s publish or perish academic search engine and cross-checked against databases such as JSTOR and Web of Science. This review has four major contributions. First, the study reveals a unique longitudinal perspective on how the field is evolving and moving from pre-paradigm stage to the stage of proper scientific inquiry. It reveals that the field is evolving, as the reviewed literatures find that a higher number of empirical works were published recently. Second, the field impact investing is unique on six characteristics namely (1) capital invested, (2) degree of engagement with the investee, (3) process of selection, (4) social and commercial outcomes, (5) reporting outcomes, and (6) government role. Third, it reveals that the scholarship in the field has been mostly exploratory. Only recently the field is engaging in confirmatory studies. The research methods have used existing databases or existing single or multiple case studies. Finally, the field has to delve deeper into concepts like selection process, stakeholder management, opportunity recognition, and performance reporting to move the field forward and generate applied knowledge.
https://research.cbs.dk/files/61429775/anirudh_agrawal_et_al_impact_investing_acceptedversion.pdf
IMPACT INVESTING AND PHILANTHROPIC FOUNDATIONS: STRATEGIES DEPLOYED WHEN ALIGNING FIDUCIARY DUTY AND SOCIAL MISSION
2021, Journal of Sustainable Finance & Investment.
Badri Zolfaghari
This article investigates the factors that prevent and facilitate impact investing strategies for philanthropic foundations to align their capital with their mission. Using qualitative data from foundations in both the US and South Africa, we identify five factors (i.e. mandate and country legislation, internal skills capacities, supporting infrastructure, market capacity and strong leadership) that pertain to the international foundations located in the North, and three factors pertaining to foundations in the South (i.e. understanding of fiduciary duty, the role of financial advisors and tax legislation) which influence the deployment and uptake of impact investing strategies. Findings also suggest that the adoption of a total portfolio management approach is the most adequate strategy to align fiduciary duty and mission, and therefore resolve this ethical tension that can be present in foundations.
