Reporting From Washington D.C, USA – The International Finance Corporation (IFC), a member of the World Bank Group, at the weekend disclosed that about 60 investors have agree to adopt the Operating Principles for Impact Management, a market standard for impact investment in which investors would seek to collectively hold over $350 billion in assets invested in accordance with the Principles.
The Principles ,according to the IFC, would bring greater transparency, credibility, and discipline to the impact investing market as well as generate positive impact for society alongside financial returns in a disciplined and transparent way.
IFC CEO Philippe Le Houérou in a chat with international journalist at the ongoing World Bank and International Monetary Fund (IMF) in Washington D.C, USA , said future investments for impact will also adhere to the Principles as it provides a clear common market standard for what constitutes an impact investment, addressing concerns about “impact-washing.”
IFC, Le Houérou, noted led the development of the Principles, in collaboration with leading asset managers, asset owners, asset allocators, development banks, and financial institutions, including a three-month public stakeholder consultation.
“We believe there is now potential to bring impact investing into the mainstream.Our ambitions are very high – we want much more money managed for impact because there’s no time to lose to deliver on the billions to trillions agenda,’’he added.
Among the companies that struck the management principle deal are IFC, Actis, Acumen Capital Partners AlphaMundi Group, Amundi, AXA Investment Managers, Baiterek National Managing Holding JSC, . Others include Belgian Investment Company for Developing Countries (BIO), Blue like an Orange Sustainable Capital, BlueOrchard Finance Ltd, and BNP Paribas Asset Management to mention but a few”
“IFC estimates investor appetite for impact investment may have risen to as much as $26 trillion. This includes $5 trillion in private markets involving private equity, non-sovereign debt, and venture capital, and as much as $21 trillion in publicly traded stocks and bonds.
“To fulfill this potential, impact investing needs to offer investors a transparent basis on which they can invest their money to achieve positive measurable outcomes for society in addition to financial returns.
“The Principles launched by the IFC will facilitate this process by creating clarity and consistency regarding what constitutes investments managed for impact to bolster confidence in the market”, he said.
He said: “IFC is the one of the oldest and the largest impact investors working to show it’s possible to achieve significant development impact while generating solid financial returns, having realised equity returns from 1988 to 2016 compared well to returns from the MSCI Emerging Market Index.
“The Principles draw on IFC’s experience in investing in emerging markets to achieve strong development impact and financial returns. They reflect best practices across a range of public and private institutions. They integrate impact considerations into all phases of the investment lifecycle: strategy origination and structuring, portfolio management, exit, and independent verification.
“Critically, they call for annual disclosure as to how signatories implement the Principles, and independent verification of impact management systems, which will provide credibility to the implementation of the Principles”.