Discover our article "Impact investing: a breadth of opportunity" published on Media Planet

The Pope Francis rarely makes headlines of financial newspapers. Media Planet dared to highlight the Catholic leader's vision of "putting the economy at the service of peoples", a vision shared by the social investment sector.

Investing for Good took part in the writing of "The Future of Impact Investing", a special edition of Media Planet published on Sept 28th 2018 as a supplement of The Guardian. Discover below the article "A breadth of opportunity" written by Geoff Burnand, CEO at Investing for Good.

To access the full publication, click here.

Impact Investing: a breadth of opportunity

Delivering the resources to achieve the Sustainable Development Goals in the next twelve 12 years requires concerted action at scale, so the recent involvement of mainstream financial institutions into impact investing is welcome. But beyond the positive headlines, many issues have yet to be satisfactorily addressed. Why is there not more competition among investors for projects explicitly focused on achieving the SDGs and the 2030 agenda? Are impact investors cherry picking deals? And in future times of duress, will investors maintain their commitment?

A greater opportunity set

One sign of the maturing market is a significant broadening of impact opportunities, hitherto disproportionately focused on microfinance, energy and social housing. Press freedom, for example – key to the development of peaceful, just and democratic societies – is now gaining mainstream appeal as an impact opportunity.

Eighty-seven per cent of the world’s population – about 6 billion people – live in countries without an independent press. Not only do peace, justice and strong institutions provide direct benefits to people in their everyday lives, they also underpin a wide range of SDGs.

How can you eradicate poverty (SDG 1) and hunger (SDG2) if you cannot create peaceful societies? How do you achieve gender equality (SDG5) without access to justice? How do you provide access to clean water (SDG6) or affordable energy (SDG7) without responsive institutions?

According to the UN, corruption, bribery, theft and tax evasion cost developing countries $1.26 trillion per year. Investing in independent news organisations can act as a strong brake on bribery and corruption and in both the public and private sector.

Impact investing in the arts

Another impact investment opportunity is a response to an adverse consequence of London’s rampant development. Although London is a city with extraordinary cultural vibrancy, 3,500 sites of creative production are projected to be lost by 2020 to short or expiring leases, to the actioning of landlord development clauses, or to the expiration of ‘meanwhile’ spaces. Few creative workspaces are owner-occupied and workspace operators often face major barriers to securing or renewing leases. They are often up against commercial developers and they lack access to financial support to take on development opportunities.

A new impact investing model, a creative land trust, based on a similar model in San Francisco, will acquire properties that will be leased to operators, thereby safeguarding affordability and long-term stability for London’s creatives.

Blended finance using grants from the public sector to underpin significant private finance investment will protect 1,800 creative workspaces and create 1,000 new ones, securing these spaces in perpetuity. London as a whole will benefit from the regeneration of under-invested sites through a stimulation of local business growth, preservation of the waning number of light industrial spaces, and the boost to the city’s world-class artistic and cultural value.

Impact investing for sexual and reproductive rights

Finally, sexual and reproductive rights for all, including the underserved, is a fundamental human right. Investing with impact capital in organisations that provide a range of health services including contraception, breast, and cervical cancer screenings, HIV prevention and treatment and safe abortion can provide millions of life-saving services annually. In many instances, these organisations have developed repayable social enterprise models that help meet the increased demand for reproductive health services and are gaining support from impact investors to implement sustainable growth strategies.

The right balance

The range of these examples reflects the diversity of opportunity that impact investing now presents. However, its future is dependent on achieving the appropriate balance between encouraging further institutional investment on the one hand, without on the other compromising the value created by those organisations dedicated to delivering a world with greater equality. Bridging the gap between the fundamental investment expectations of mainstream capital and the reality of impact investing needs innovation, expertise and a nuanced approach. Investment models that blend public and private finance optimally allow impact driven organisations to be financed by additional sources of capital while retaining the integrity of their mission.

Integrating SDGs in business and investment strategies - Moving beyond the thematic box-ticking exercise

Often more a communication tool than a strategy tool

The use of the UN Sustainable Development Goals (SDGs) and their 17 colourful boxes has now become mainstream in the communication materials of many companies, funds and asset managers. However, it is less clear if they are used as a tool to drive companies’ strategies or to select and measure the impact of investments. In reality, a recent study by PwC found that most companies and investors actually use already established elements of their CSR or responsible investment policies, and reference them against SDGs where they can. SDG13 (Climate Action) is still the one most broadly presented as a priority – even if in many instances the new SDG lens has indeed pushed companies to widen their focus and discover additional priorities to address today’s global issues.

The business and investor case for SDG integration

It’s worth reminding that the SDGs were not originally intended to form the basis of a corporate strategy or an investment process. Most of the 169 indicators used to measure progress against the 17 SDGs are directed at global challenges that investors and companies have no direct mechanism to address. However, it is also widely acknowledged that companies can make essential contributions to the SDGs, by minimising negative impacts of their activities on society and the environment, and by providing products and services with positive impacts. In the same vein, there is a strong case for investors to focus on opportunities aligned with the SDGs –to better address the values of their clients, develop sustainable financial products that enable them to stand out in the marketplace, and more importantly to raise new capital to help close the “SDG financing gap”, which the UN estimates to be at USD 5-7 trillion annually. A recent report by Citi Group, titled “UN Sustainable Development Goals: Pathways to Success” identifies a wide range of impactful investment opportunities for each goal.

The temptation of “cherry-picking” and “SDG-washing” in the absence of a consistent reporting framework

The problem is that there is not, for the moment, any consistent reporting framework for companies and investors to measure and report on their contribution to the SDGs. In this context, it can be relatively easy to use existing CSR and ESG methodologies and to add the SDGs on top. It is also easy to apply positive SDG filters to business activities and portfolios, or to select specific goals and targets that a company or investor wants their audience to focus on – without an objective assessment of negative impacts. As such, trying to compare organisations’ performance and hold them accountable for the SDGs would be a cumbersome exercise.

Moving forward, organisations should avoid “cherry picking” or randomly selecting which goals they’re going to focus on. Digging deeper into the targets of the different SDGs will reveal just how connected to the business they are and how they will affect performance over the short and longer term. That insight requires a more robust and sophisticated level of reporting on the SDGs than currently exists. For example, one could think that SDG16 (Peace, Justice and Strong Institutions) is not very relevant for most businesses and more the responsibility of governments. Yet one of the key targets within that goal is 16.5, which aims to “substantially reduce corruption and bribery in all their forms” – a governance imperative for any global company.

There are some efforts worth following, such as the UN Global Compact and GRI’s Analysis of the Goals and Targets – which lists all possible relevant business actions to help achieve each target. This has the potential to encourage more and more companies to move away from a simple box-ticking exercise and to identify and act and report on the full range of SDG targets that link with their activities and value chains. Similarly, the investment community recognises there is a need to better understand how it can measure contributions and progress toward achieving the SDGs.

What gets measured, gets done – but how can that be done?

If stakeholders wish to compare performance between investors, companies or sectors, they will need to use comparable metrics – so the need for agreed performance metrics for the SDGs could never be stronger. The challenge here is – how to avoid imposing a heavy reporting burden on those organisations that are doing the work, and how to keep metrics lean and simple, when faced with the breadth and depth of the SDGs?

Even the most advanced organisations and asset managers, which have started applying intentionality and additionality criteria, and developing theories of change, only often manage to produce outreach- and output-level indicators, such as number of people reached, or products distributed, or qualitative information. They still struggle to produce outcome-level indicators, in terms of changes brought in people’s lives, on society or the environment. For example, how do you measure the impact of building handwashing facilities in a specific location, in terms of hygiene behaviour change, and then in terms of reduced water-borne diseases? There is also the concern not to bother operational managers with extra reporting requirements, especially small and medium enterprises with limited capacity for data collection.

It’s worth noting that most detailed reporting tends to be related to operations and indicators where there is already decent track record of reporting – often because of regulation or existing measurement frameworks such as GRI or CDP, or because business contributions are more obvious and easier to capture. But apart from obvious indicators such as reduction in GHG emissions (Climate Action), percentage of women in management positions (Gender Equality) and number of jobs created (Decent Work and Economic Growth), overall business and investor reporting on SDG-related indicators is often still at a qualitative or anecdotal level.

As relevant disclosure standards and guidelines emerge, such as the SDG Compass online inventory of business disclosures, we expect that more and more companies and investors will be able to measure and report on their progress in relation to specific SDG targets. Rather than establishing new heavy data collection and reporting systems, this type of initiative should help them identify existing data that can be used to demonstrate performance on the SDG targets – for example, existing information in purchasing systems about traceability of raw materials, which can be linked to the sustainable management of forests (SDG target 15.2). And if data is too difficult to find, they can still be encouraged to report as precisely as possible on their management approach – by providing narrative information on how and why they identify, analyse and respond to their actual and potential contributions to the different goals and targets.

ESG: A Maturing Market

With the increasing acceptance of ESG investing as a mainstream investment theme, investors are no longer short of ESG funds to choose from. As investor choice has grown, the spotlight has gradually shifted from seeking to increase the availability of such funds to a greater scrutiny of their ESG credentials.

‘Environmental, social and governance’: the label covers a huge amount of ground. It is no surprise then that there are considerable differences in its interpretation and its application to any given investment. McDonalds, for example, has made huge efforts in beef sustainability and is a leader in recycling. Nonetheless it remains a significant contributor to environmental problems and obesity. One man’s meat is another man’s poison.

Even putting aside individual (or institutional) preferences, the relativist approach taken by some ESG funds means that a company needn’t be ‘good’ per se to make the grade; it simply needs to be better than its sectoral competitors. This has led to the inclusion of oil majors, tobacco companies and defence contractors within a number of ESG-labelled funds.

It is clear that the label given to a particular ESG fund should be treated with caution. The due diligence required to validate the ESG credentials of a fund is typically beyond most investors, whether in terms of resource or inclination.

One report* claimed that 74% of respondents “would be shocked if a fund claiming to be ‘ethical’ turned out to be investing in companies that negatively impact people and the environment.” But given the flexibility of interpretation in this area, it would be surprising if there were not significant gaps between investor expectations and reality.

Inevitably there are concerns that this gap between expectation and reality (in some cases, a brazen attempt to ‘greenwash’) could presage a set-back for the industry. A more likely outcome is that increased awareness and publicity will drive gradual qualitative improvements.

Overall, this development can be viewed as a positive - the importance of ESG investing is by and large no longer in question; instead the debate is focusing on the quality of those investments. It will be interesting to see where this leads. More widespread adoption of a small number of tried and trusted methodologies? Standardisation driven by regulatory oversight? An increased role for trusted and independent third party intermediaries to assess ESG credentials?

Ben Ferry

*Castlefield Consumer Survey, October 2015.

Tackling homelessness with coffee: interview with Cemal Ezel, founder of Change Please

Quantifying homelessness is not straightforward. It is a growing social issue however, as it is estimated that the number of people sleeping rough has more than doubled in the UK since 2010, now reaching 4000 people every night. We are launching a thematic month on this subject, to promote the work of great social enterprises with innovative approaches to support homeless communities. We will also raise some questions about impact measurement, as organisations working with homeless communities face specific challenges.

Change Please, backed by the founder of the Big Issue magazine, started with an observation: Londoners love coffee. And coffee could make a difference. After having trained homeless as baristas, the organisation provides them with a temporary accomodation and a job: selling ethically-sourced coffee in the streets.

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Can you say a few words on Change Please? How do you differentiate from other organisations dealing with the same issue of homelessness?

I was moved to set up Change Please after seeing the power that social enterprise could have in effecting social change. I visited a ‘Silent Tea-House’ while on a holiday in Vietnam and I was so impressed by the commercial and social good that the enterprise was doing. It changed my opinion on how business could be a force for good. On the same trip, I completed the ‘rocking-chair test,’ where I was invited to consider my life at 90 and reflect on what I had achieved. I could see that I would not be happy living a life solely in the commercial world.

Change Please is unique because our model immediately lifts people out of homelessness through a sustainable employment model with the living wage, support with accommodation, mental wellbeing, opening bank accounts and accommodation. We do not seek to replicate the work of other organisations and we are very proud of our partnerships with organisations tacking homelessness.

What are you proud to have achieved with Change Please? What’s your next big objective?

There are so many areas of success that Change Please has had and so many achievements that it is difficult to know where to begin! It was five years ago that I first had the idea of Change Please and homelessness after meeting some people experiencing homelessness and seeing how much they had to offer.

The most difficult first step was turning the idea into reality and knowing where to look for support. Fortunately, there was so much around and I discovered a whole new world of people wanting to help and make a difference.

We have had many successes with individuals that we have supported on their journey out of homelessness and this has been extremely fulfilling to see. I have also been impressed with how many people from different backgrounds that we have managed to bring together from different backgrounds to help us reduce homelessness.

Our next big objective is to expand throughout the UK and abroad and launch our training academies. We recently received Charitable status and this will help us achieve our mission of ending homelessness once and for all.

What challenges do you face when measuring the impact you have on the homeless community?

We have been incredibly grateful to have received support from industry leaders, Can-Invest, TSIP and Northampton University for measuring our impact. This meant that we were able to design some very powerful and useful tools for monitoring our impact and putting it into the context of other organisations in the sector.

Originally, we were finding that impact was an ‘extra’ piece of our work and we found we were not making it a regular part of our operational work. We have now over-come this, and it is now embedded into our operations.

As well as this, communicating with our Beneficiaries about the need for impact monitoring, without making it too invasive was more difficult at the beginning of our journey. We now find it easier but we have to make clear its importance to each new Beneficiary that we take on.

Any news that you would like to share with us?

We are now in the third year of our operations and will be launching three exciting new projects; our retail based expansion in Manchester where we will be opening eight new sites; our retail expansion in London where we will be launching eight new sites on TFL and locations and finally the launch of our Training Academy.The Training Academy is a huge step in our development and will allow us to train and recruit even more people experiencing homelessness as Baristas.

We are always on the lookout for people to join us in supporting our mission and help end homelessness once and for all.

Investor Alignment

For social ventures generating repeat revenues and seeking new sources of income, impact investment could represent a good fit. Money received can help diversify the funding pool beyond existing contract or earned income as well as enable longer term planning.

The proceeds can even be put to work to establish new on-mission activities that will eventually yield a surplus that funds the core service provision. A virtuous funding circle, if you will.

No matter what form of finance is needed and the work undertaken in preparation, all paths will ultimately lead to having to secure commitments from investors. Social ventures are rarely alone in this undertaking and should be aided by a partner organisation armed with the knowledge of what is required. In some ways ventures’ work attracting investors is doubly difficult. As well as requiring the ability to manage and forecast future cashflows to show that future obligations to investors can be repaid, social ventures must also demonstrate social impact through an impact framework and report against it. And to win the trust of investors at the outset, social venture leaders require a multitude of skills; they must present well, demonstrate belief, passion and understanding of their model (in equal measure) and convince those on the other side of the table they can deliver on a bold strategic vision.

This diversity of interest in socially-motivated investment poses a challenge in terms of how to structure the proposition to attract the widest pool. Whilst it would be mistake to treat all investors as a homogenous group, they nonetheless have certain points in common. Investors ideally want to see features in the investment that reduce their risk (such as supportive structuring mechanisms such as underwriting, partial guarantees and accompanying grants), be offered a menu of different risk-return profiles and additional means to protect them in the form of ‘covenants’. Liquidity is often prized but elusive in practice (tradability can be enough to tick that box). Indeed given the difficulty in finding a subsequent buyer their investment is usually part of a ‘buy and hold’ strategy. Some will do a great deal of due diligence before they invest, testing a wide range of assumptions and several rounds of probing questioning. 

Once investment has been successfully won, monitoring and evaluation begins. Some investments have a specific requirement to produce a social impact report at predetermined stages of the investment, usually annually. Here the goalposts on what needs to be measured are not usually moved, as they can be in the grant world. Performed well, the impact results should provide lessons that are no less valuable to help with programme refinement and strategy. In the termsheet however impact investors may prefer to see the funds marked as for general (social) purposes rather than earmarked for a specific project. This allows social ventures greater flexibility than with restricted finance, allowing them to either pursue new opportunities as they arise or to use the funds more defensively if the market backdrop changes. If a social venture finds the business plan isn’t working, an investor is likely to be open to you finding one that’s more likely to succeed. For all of the seeming complexities of this market, it’s easy to lose sight of one thing. The investors that back social ventures have already demonstrated that they are on your side, as a highly aligned subgroup of a wider group that is supportive and impact-favouring. 

Alex Jarman

Blockchain and impact

When the first digital currency, hit a record value of nearly $20,000 (only to drastically fall a few weeks later) the interest of the masses was captured. Crypto-currencies and its underlying technology Blockchain became a top subject of discussion for more than the fondly named “crypto-geek community”.

Many resources explain very well how it works. We recommend this article from Stanford Social Innovation Review which also suggests a few possible applications of this technology to the social sector and inspiring initiatives around the world.

Now, we would like to present you one of these exciting initiatives that we have been involved with in the past months: Impak Finance. The mission of this Canadian organisation is “to support the growth of an economy that has a positive social impact”.

To do so, Impak Finance’s team is developing an innovative service which will give the possibility to individuals, enterprises and investors to create positive social impact by choosing to spend, invest and shop in an ecosystem of carefully selected organisations chosen for the positive impact they generate. Their Impak coin supports the initiative by being designed to avoid volatility and by building loyalty through rewarding collaboration and spending in the Impak ecosystem.

We have been involved in the definition of Impak Finance’s impact strategy and the creation of the selection criteria and process of these impactful organisations. The great challenge is to manage to create a selection process which simplifies to the maximum the impact concepts and assessment questions so that a wider audience can get involve with the initiative, while keeping an academically satisfying methodology. Both Impak Finance and us feel fortunate that our work has coincided with the launch of the Impact Management Project, which has the same purpose of finding a consensus on how to speak about impact, measure and manage it, in the simplest way. We have used the findings of the project to structure our thinking. Impact assessment is never a straightforward journey and we are staying focused to learn from the growth of the ecosystem and to adapt the selection process. In the meantime, if you are an impactful organisation, getting involved with the ecosystem would give you a greater visibility and makes you a member of a community aligned behind the common objective of creating more social impact. The selection process will start soon, register your interest here.

Today, many want to have a positive impact. The language and principles underpinned by the Impact Management Project or the use of the UN Sustainable Development Goals are just the first step to a change for newcomers in the social economy. Whether in the fintech or more generally in the “profit with purpose” space, we offer support to organisations seeking stronger alignment with the impact sector.

Investing for Good now a Certified B Corporation®!

We are delighted to start 2018 by announcing that Investing for Good recently earned B Corp status and has joined the community of over 2,000 existing B Corporations in more than 50 countries.

What is a Certified B Corp?

B Corps are companies meeting high standards of overall social and environmental performance, transparency and accountability and aspiring to use the power of business to solve social and environmental problems. They do not aim at becoming the Best in the World but the Best for the World®. B Corps are certified by the non-profit B Lab.

B Corp™ is…

A certification: like fair trade or organic, but for the whole company. 
An approach: a better way to do business -- better for workers, communities, the environment
A community: a community of practice to increase our individual and collective impact
A movement: Leaders of a global movement of people using business as a force for good™
 

What does becoming a B Corp mean to us?

“Investing for Good”. Yes, our purpose-driven mission is quite explicit in our name. Our legal status as a “community interest company” (CIC) also testifies that we are a social enterprise. Why becoming a B Corporation then? Wasn’t it convincing enough?

The legal status and the B Corp Certification are complementary for us. The CIC status is a legal form that supports our work in pursuing socially and environmentally driven goals in addition to financial profit. It also offers some guarantees to ensure there is no mission drift (for instance an asset lock, restriction on dividend).

The B Corp certification is a very different story. Being a B Corp™ means to us:

Being part of a community and a movement

We are happy to join this community of organisations that share with us common values and goals. As some of our partners and clients are B Corps, we feel now part of the same B Corp family! We are a small team and it is important for us to be surrounded by other purpose-driven organisations, this is also why we share our offices with other organisations committed in social or environmental impact!

We are also proud to be part of a growing global movement of people using business as a force for good and we believe that this collective voice is another way of making change happen.

Being assessed by a third party and recognized for our social performance

As a certified social impact auditor, it was an interesting and important experience to jump into our clients’ shoes and play the game of an external evaluation, too. As we give recommendations to other organisations on how they should improve their social commitment, we need to set an example to be credible, and a third-party assessment gives us this credibility.

As all B Corps, obviously we did not wait for B Lab’s certification to take action towards better social responsibility as it is in our DNA. Since our creation in 2004, we have sought constant improvement of our impact, by allocating greater resource to areas where our work confers positive impact but also by tackling our weaknesses and cutting back on activities that are not consistent with our own theory of change. This led us to strategic changes: one year ago for example, we established a new independent board and recruited external non-executives who come from within and outside of the impact investment sector.

The certification process, however, offered us a great opportunity to be challenged! And it is not over: we have an appointment with B Lab® in 2 years to ensure we can still be considered as B Corp™ and to see how we improved our certification score>

“Be the change that you wish to see in the world”, said Gandhi.

Like us, in 2018, B the change and join the community!

More information on B Corp™

Investing for Good meets Good Finance

Investing for Good is listed on goodfinance.org.uk, a website whose mission is to help charities and social enterprises navigate the world of social investment.

Good Finance provides a searchable directory of social investment advisers and funders, in addition providing useful case studies to show how mission-led organisations are using social investment to scale up their activities and their impact

Good Finance is jointly funded by Access Foundation, Big Society Capital and DCMS.

The Sound of Social Investment

The intersection between the arts space and social investment is not fully realised. Yet many of the social investors Investing for Good works now realise that if they support social ventures, it is not a great leap to support artistic ones that also confer social value? A triple bottom line of social, financial and artistic return? That’s compelling. In the UK context could an influx of funding of this nature help to replace a hole in the arts budget for the arts, needed after the drastic cuts of recent years?

Looking more narrowly at the music space, charities working in the field have traditionally performed a wide range of functions from supporting grassroots, community-based programs to publicising good causes, to benefit concerts, to educating festivalgoers about environmental sustainability. One that stands out is Help Musicians UK, the leading charity supporting and empowering musicians to have successful careers and lives. In Place of War also does some vital work in places of conflict, as does Musicians without Borders. Music Venue Trust too – a charity that campaigns to overturn closure of small venues across the UK. Long-term they plan to acquire the freeholds of as many of these vital venues as possible.

How to access finance?

In terms of currently accessible finance for those working in music, the main providers of project funding are the Arts Council and the PRS for Music Foundation. The PRS for Music Foundation is entirely music focused and offers small grants. Creative Industry Finance has helped independent record labels, recording studios, producers and artists with advice to create or strengthen their business plan and also offer access to affordable loans. Help Musicians UK match fund crowdfunding campaigns on PledgeMusic. On their website, they also have a particularly useful Funding Wizard tool which can help musicians identify organisations that might support their project. Start ups can find access to new incubator models, perhaps via a soft loan but more likely just grant support at present. Early growth stage organisations can obtain investment and business support from ACE Creative Industry Finance, Esmee Fairbairn Finance Fund and a new programme called Prosper.

Unlocking social investment

Whilst grant funding is where the greatest need is and probably always will be, how can we unlock additional capital in the form of social investment? For now impact investment is most immediately accessible to larger organisations - music venues, live music events or labels that have a social mission through flexible, cheap loans. In some ways impact investors are stricter, as not only do you have to show that you can repay their loan but you also need to be able to demonstrate that you are achieving social outcomes and commit to measuring them. Yet this comes with benefits if you meet the criteria. The money is usually cheaper, more flexible and unrestricted. Usually you need to satisfy three key criteria:

1. You must have social objectives and ideally have these be set out in your legal documents
2. A high percentage of your revenue should come from trading
3. You must be able to demonstrate the social outcomes achieved

The last point can’t be overstated. Without a proper framework for measuring impact, all you have is noise...

Case Study

The Arts Impact Fund is a good example of impact investment working in practice.  A £7m initiative with government backing, co-conceived by Investing for Good and set up to demonstrate the potential for impact investment in arts.  Its structure reflects the importance of measuring the artistic and social outcomes generated by investees. The Arts Impact Fund receives investment from both ‘finance first’ investors such as banks and ‘impact-first’ investors that may include foundations.  It’s small in the world of funds but with a very structure based on blended finance.  The fund offers repayable finance on soft terms to arts organisations that can show that they are sustainable, have strong artistic ambitions and positive impact on society. By investing in the arts they want to support more organisations to become enterprising and resilient. 

Alex Jarman

Finding a Way Through: Who can Interpret Impact Investing for Investors and Recipients?

Interest in impact investing has never been greater. Institutional investors have been developing their approach to environmental, social and governance (ESG) issues over many years. Now they are beginning to realise that negative screening is not the only or indeed the best approach to satisfying the demands of clients to be more proactive as responsible investors. Options include positive screening, engagement and impact investing – and the latter is the most pro-active approach.

According to Tideline, nine out of 10 of the largest U.S. asset managers have launched or are exploring strategies for impact investment. https://news.impactalpha.com/major-asset-managers-moving-slowly-but-surely-toward-impact-investing-aa37fc4c8fc0 Should we take this at face value and believe that asset managers are committed to the concept of impact investment? Or are they seeing this as another box to tick to back up their ESG credentials? The reality is no doubt a mixture of both!

People who are genuinely concerned to be responsible investors need to make sure that they are not just helping big investment institutions to ‘greenwash’ their portfolios. Understanding impact investment as a potential responsible investor and being able to access suitable investment opportunities is key. Identifying the risks and choosing appropriate investments brings different challenges to those posed by more traditional investing.

At the same time, organisations that need investment have to ensure that they are identified as suitable recipients. How do they ensure they are ready for potential investors and know how to approach impact investment? For many charities, social enterprises and NGOs this may be the first time they engage with the world of investment so the risks and challenges are also significant for them.

One of the important roles that Investing for Good plays is to act as an experienced intermediary between the very different worlds of investment managers and social enterprises, charities and NGOs. Language, culture, approach to business, timelines and expectations all need to be carefully explored, explained and developed in order for a fruitful, long term relationship to be brokered. Both parties need to understand:

• The distinction between impact measurement and management;
• what outcomes they both need (financial and social/environmental);
• How financial and social/environmental returns can be balanced;
• What data needs to be collected, analysed and shared.

Investing for Good was founded in 2004 on the basis of a simple insight: that the positive use of money can change the world. We were inspired by a new class of investments that mobilised the power of finance to catalyse social good. We believe that helping organisations from very different worlds to understand how they can work together for mutual benefit and helping them to prepare for impact investment is going to be an increasingly important role.

Sally Britton, Chair of Board