![]() In total, the 9 Principles (see Figure 1 below) that fall under these five main elements are considered the key building blocks for a robust impact management system. Within each of these five main elements, the Principles have been defined by a heading, supplemented by a short descriptive text. The elements of the process are: strategy, origination and structuring, portfolio management, exit, and independent verification. Investing for Impact: Operating Principles for Impact Management define an end-to-end process. A variety of tools, approaches, and measurement frameworks may be used to implement the Principles. The Principles may be implemented through different impact management systems and are designed to be fit for purpose for a range of institutions and funds. Institutions and fund managers that only invest for impact may adopt the Principles at the corporate or fund manager level. Managers that offer a range of investment strategies may adopt the Principles for assets which they choose to identify as impact investments. The Principles may be adopted at the corporate, line of business, or fund level. Asset owners may use the Principles to screen impact investment opportunities and/or ensure that their impact funds are managed in a robust fashion. ![]() They draw on emerging best practices from a range of impact asset managers, asset owners, asset allocators, and development finance institutions, and may be updated periodically. The Principles provide a reference point against which the impact management systems of funds and institutions may be assessed. Impact investments have the potential to make a significant contribution to important outcomes by addressing challenges related to, for example, economic inequality, access to clean water and sanitation, agriculture productivity, and natural resource conservation. Investing for Impact: Operating Principles for Impact Management (the Principles) have been developed by a group of asset owners, managers, and allocators to describe essential features of managing investments into companies or organizations with the intent to contribute to measurable positive social or environmental impact, alongside financial returns. The Principles provide clear a common market standard for what constitutes an impact investment, helping to mitigate the potential for “impact-washing.” Purpose ![]() The organizations that adopted the Principles on Apcollectively hold over $350 billion in assets invested for impact, which they commit to manage in accordance with the Principles. They also call for annual disclosure, including independent verification, which will provide credibility to the market. They integrate impact considerations into all phases of the investment lifecycle: strategy, origination and structuring, portfolio management, exit, and independent verification. The Principles reflect best practices across a range of public and private institutions. To address this challenge, the International Finance Corporation (IFC), in consultation with a core group of stakeholders-impact asset managers, asset owners, asset allocators, and development banks and financial institutions-has developed “Operating Principles for Impact Management.” These Principles establish a common discipline and market consensus around the management of investments for impact and help shape and develop this market. This has created complexity and confusion, as well as a lack of clear distinction between impact investing and other forms of responsible investing. Despite the increased interest in and number of product launches claiming to be impact investments, there has been no common discipline for how to manage investments for impact and the systems needed to support this. The question for many investors is how to grow the level of investments targeting impact. Many are adopting the Sustainable Development Goals (SDGs), and other widely recognized goals such as the Paris Climate Agreement (COP21) as a reference point to illustrate the relationship between their investments and impact goals. A growing number of investors are incorporating impact investments into portfolios. Impact investing has emerged as a significant opportunity to mobilize both public and private capital into investments that target measurable positive social and environmental impact alongside financial returns. Operating Principles for Impact Management: A new market standard for impact investing These investors collectively hold over $350 billion in assets invested for impact, which they commit to manage in accordance with the Principles. On April 12, 2019, 60 global investors came together to adopt and launch the Operating Principles for Impact Management-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.
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