NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, May 14, 2019

By Jennifer Pryce

What, exactly, is an impact investor? This question has been the subject of much debate and until recently, there has been a lack of objective standards to measure investors against their self-applied monikers of “impact-first” impact investors, “finance-first” impact investors, and everything in between.

With the launch of the Operating Principles for Impact (“the Principles”) last month, this is starting to change. The Principles don’t attempt to define what impact is, but rather how it is incorporated. They provide a common framework to evaluate and compare an asset manager’s respective impact measurement and management systems and processes. The nine Principles address all stages of the investment lifecycle: strategy, origination and structuring, portfolio management, and exit.  They also require an independent verification of impact processes to ensure integrity and accountability and stipulate that lessons learned are continuously incorporated into portfolio management.

Photo courtesy of reynermedia.