By Evelyn Donatelli
On Thursday, Oct. 11, the IFC set a new global minimum standard for “Credible Impact Investing” at the International Monetary Conference (IMF) in Bali, Indonesia, in a release of a draft of its Operating Principles for Impact Management. In an article on the topic, Forbes defined impact investing as “investing with the goal of environmental and social impact in addition to financial return”, which succinctly encapsulates the symbiotic combination that I and so many others find attractive about the field. In fact, over just the past year, money in the impact investing field has doubled, from $114 billion to $228 billion AUM, excluding ESG investments, which are measured separately. ESG investments (Investments in accordance with Environmental, Social, Governmental principles), represent a larger, but slower growing pool, with over $22 trillion AUM and a 17% CAGR (according to McKinsey 2016 estimates). The IMF’s new consultation draft standards include 9 principles focusing on strategizing how to maintain discipline across firms’ approach to impact investing portfolios, part of a larger effort to streamline and advance private sector investment in impact investments. Comment period is open for stakeholders through the end of the month.
This new minimum strives to prevent “impact washing,” the use of impact positioning to raise capital without any social or environmental benefit. A sign of the progress of meaningful impact investing, Leapfrog Founder and CEO Andy Kuper commented that a minimum global standard for impact investors would have been inconceivable a decade ago.