Operating principles for impact management

Question 1

Definition of impact investment

Answer 1

the intent to contribute to measurable positive social or environmental impact, alongside financial returns

Question 2

Principle 1

Answer 2

Define strategic impact objective(s) consistent with investment strategy. Ensure there is a credible basis for achieving the objectives and the scale of the impact is proportionate to the size of the portfolio

Question 3

Principle 2

Answer 3

Manage strategic impact on a portfolio basis. Consider aligning staff incentive systems with achievement of impact, as well as financial performance.

Question 4

Principle 3

Answer 4

Establish and document the manager’s contribution to the achievement of impact, stated in clear terms and supported by evidence

Question 5

Principle 4

Answer 5

Assess and quantify the expected impact of each investment based on a systematic approach. Answer fundamental questions: what is the intended impact, who experiences it, how significant is it, what is the likelihood of success? Consider opportunities to increase the impact. Also consider indirect and systemic impacts

Question 6

Principle 5

Answer 6

Assess, address, monitor and manage potential negative impacts of each investment. Seek to identify and avoid or mitigate and manage SG risks. Engage with investee to take action and then monitor their performance

Question 7

Principle 6

Answer 7

Monitor the progress of each investment in achieving impact against expectation and respond appropriately. If the investment is no longer expected to achieve its intended impacts, take action.

Question 8

Principle 7

Answer 8

Conduct exits considering the effect on sustained impact

Question 9

Principles 8

Answer 9

Review, document and improve decisions and processes based on the achievement of impact and lessons learned

Question 10

Principle 9

Answer 10

Publicly disclose (on an annual basis) alignment with the principles and provide regular independent verification of the alignment