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Other - APRIL 16, 2019

World Bank arm launches ‘impact investment’ standards — UBS, KKR, Partners Group among early adopters

by Released

Some 60 investors and institutions managing $350 billion in assets invested for impact adopted the nine operating principles for impact investments laid out by the International Finance Corp, a member of the World Bank Group.

The Operating Principles for Impact Management is a market standard for impact investing in which investors seek to generate positive impact for society alongside financial returns in a disciplined and transparent way. The principles bring greater transparency, credibility, and discipline to the impact investing market.

The organizations adopting the principles collectively hold more than $350 billion in assets invested for impact, which they commit to manage in accordance with the principles. Future investments for impact will also adhere to the principles. The principles provide a clear common market standard for what constitutes an impact investment, addressing concerns about “impact-washing.” IFC led the development of the principles, in collaboration with leading asset managers, asset owners, asset allocators, development banks, and financial institutions, including a three-month public stakeholder consultation.

“We believe there is now potential to bring impact investing into the mainstream,” said IFC CEO Philippe Le Houérou. “Our ambitions are very high — we want much more money managed for impact because there’s no time to lose to deliver on the billions to trillions agenda.”

In a new report, Creating Impact: The Promise of Impact Investing, IFC estimates investor appetite for impact investment could today be as much as $26 trillion. This includes $5 trillion in private markets involving private equity, non-sovereign debt, and venture capital, and as much as $21 trillion in publicly traded stocks and bonds.

To fulfill this potential, impact investing needs to offer investors a transparent basis on which they can invest their money to achieve positive measurable outcomes for society in addition to financial returns. The principles facilitate this process by creating clarity and consistency regarding what constitutes investments managed for impact to bolster confidence in the market.

IFC is the one of the oldest and the largest impact investors, demonstrating it is possible to achieve significant development impact while generating solid financial returns. On average, IFC’s realized equity returns from 1988 to 2016 compared well to returns from the MSCI Emerging Market Index.

The principles draw on IFC’s experience in investing in emerging markets to achieve strong development impact and financial returns. They reflect best practices across a range of public and private institutions. They integrate impact considerations into all phases of the investment lifecycle: strategy, origination and structuring, portfolio management, exit, and independent verification. Critically, they call for annual disclosure as to how signatories implement the principles, and independent verification of impact management systems, which will provide credibility to the implementation of the principles.

First Adopters of the Operating Principles for Impact Management

  1. IFC
  2. Actis
  3. Acumen Capital Partners
  4. AlphaMundi Group
  5. Amundi
  6. AXA Investment Managers
  7. Baiterek National Managing Holding JSC
  8. Belgian Investment Company for Developing Countries
  9. Blue like an Orange Sustainable Capital
  10. BlueOrchard Finance Ltd.
  11. BNP Paribas Asset Management
  12. Calvert Impact Capital
  13. Capria Ventures
  14. Cardano Development B.V.
  15. CDC Group plc.
  16. CDP – Cassa Depositi e Prestiti
  17. COFIDES
  18. Community Investment Management
  19. Cordiant Capital
  20. Credit Suisse
  21. DEG – Deutsche Entwicklungs- und Investitionsgesellschaft mbH
  22. Development Bank of Latin America
  23. European Bank for Reconstruction and Development
  24. European Development Finance Institutions
  25. European Investment Bank
  26. FinDev Canada
  27. Finnfund
  28. Flat World Partners
  29. FMO – the Netherlands Development Finance Company
  30. IDB Invest, Member of the Inter-American Development Bank Group
  31. IFC Asset Management Company
  32. IFU – Investment Fund for Developing Countries
  33. Incofin Investment Management
  34. Investisseurs & Partenaires – I&P
  35. Islamic Corporation for the Development of the Private Sector, Member of IsDB Group
  36. Kohlberg Kravis Roberts & Co.
  37. LeapFrog Investments
  38. LGT Impact
  39. LGT Venture Philanthropy
  40. MicroVest Capital Management
  41. Multilateral Investment Guarantee Agency
  42. Norfund
  43. Nuveen
  44. Obviam
  45. Oesterreichische Entwicklungsbank AG
  46. Overseas Private Investment Corp.
  47. Partners Group
  48. Phatisa
  49. Proparco
  50. Prudential Financial
  51. responsAbility
  52. STOA Infra & Energy
  53. Swedfund
  54. Swiss Investment Fund for Emerging Markets
  55. The Rise Fund
  56. The Rock Creek Group
  57. UBS
  58. Water.org
  59. WaterEquity
  60. Zurich Insurance Group Ltd.

 

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