Investing in and managing impact assets
Introduction
How to use these resources
Resources in this module
Glossary of terms
We have put together a glossary of terms for impact investing
Filter resources by level:
Determining impact investment strategy
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Impact Investing Principles for Pensions
Impact Investing Institute
Reading time: 20 minutes
Together with leading practitioners from across the pensions sector, the Impact Investing Institute has developed four Impact Investing Principles for Pensions. They are a practical guide to impact investing and provide four concrete steps pension schemes can take to pursue an impact investing strategy.
Introductory
✔ Recommended
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Impact Investing: Strategy and Action
Rockerfeller Philanthropy Advisors
Reading time: 40 minutes
This is a 38-page guide that explains how to take practical steps towards implementing your first impact investment and builds on RPA’s introductory guide. It breaks the process down into three stages; 1 Prepare; What do you wish to achieve? 2 Build; Where do you land on the impact investing spectrum of risk and engagement? 3 Refine; Make your first investment. Further resources and a glossary are included at the end.
What the reviewer found helpful:“A very informative and easy read. I enjoyed the real life case studies which provided interest and broke up the report.”
Rebecca Lagan
Advanced
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Impact Investing from Ideas to Practice: How to evaluate Impact Investing Fund Managers
World Economic Forum Investors Industries
Reading time: 10 minutes
The report considers 4 factors that should be considered when evaluating an impact investing fund manager, recognising that focusing on their track record might not be practical given that the sector is still in its early stages. The report identifies and explains 4 key factors, providing asset owners and advisors with practical advice about what aspects of a fund manager’s organisation to consider in their evaluation. Under each key factor is a list of relevant key questions asset owners might consider.
What the reviewer found helpful:“The report provided interesting insight into how fund managers’ background, organisational structures and governance affect their investing style and decision-making processes.”
Yinni Hu
Intermediate
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Impact Investing Made Simple
Pensions and Lifetimes Savings Association (PLSA)
Reading time: 45 minutes
A 20-page guide to introduce anyone involved in investing for retirement to the concept of impact investment. It presents the opportunity to make a positive impact on people and the planet through investment, while also generating healthy returns for pension savers. The guide looks at the growing importance of ESG investment, UK regulations for pensions and the UN Sustainable Development Goals. It seeks to outline why impact investing will drive future growth, concluding that sustainability is an imperative, not an option for pension funds.
What the reviewer found helpful:“I liked the gentle gearing up of the significance of the issue throughout the report. I doubt that a pension trustee could read this through without some serious reflection.”
Rebecca Lagan
Introductory
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The Case for Impact Investing – What Pension Funds Need Know
Impact Investing Institute
Reading time: 1 hour (webinar)
This webinar explores why investing with impact is a smart decision for your pension fund and how pension funds can start thinking about making a change while delivering a substantial financial returns, today. The session was hosted by the Impact Investing Institute’s CEO Sarah Gordon, in discussion with Emma Howard Boyd, Chair of the Environment Agency, which successfully runs a pension scheme with a strong focus on responsible and sustainable investment, and David Blood, co-founder and Senior Partner of Generation Investment Management, who has 16 years of experience in successful sustainable investment.
Introductory
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Investing with impact in the endowment: Why do it and how to get started
Impact Investing Institute
Reading time: 90 minutes (20 minutes for section 6)
This is a lengthy and highly detailed practical guide for those managing charitable endowments to better understand how to invest with impact in a way that aligns with their mission and values. It outlines what is meant by impact investing, why foundations would benefit from this approach, useful products and tools for both public and private markets, and a set of actionable steps to kick-start the process of impact investing. Case studies are included in the appendix and peppered throughout for those who benefit from examples. Readers might want to first read the report: ‘Can Charities Invest their Endowment with Impact?’ to ease them in.
What the reviewer found helpful:“This guide breaks down impact investing in a really accessible way, and the tables on pages 21 and 37 visually simplify investment decision making for charities” Anna Martinovic
Specific section to read:
All (especially section 6)
Intermediate
✔ Recommended
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How DFIs and NABs can partner to move more capital for impact in local markets
Impact Investing Institute
Reading time: 10 minutes
The document considers how Impact investing market builders can collaborate with DFIs to leverage sources of finance, expertise and solutions to support economic development. Emphasis is placed on the possibilities for innovation, breaking down silos and filling gaps in the market to create more targeted social investment. Insights are the given from 3 DFIs in the UK, Nigeria and the Netherlands.
What the reviewer found helpful:“A useful paper for anyone wanting to place DFIs within in the impact ecosystem, and to learn about opportunities for collaboration with them”- Anna Martinovic
Introductory
Impact investment risk, return and portfolio effect
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Risk, Return & Impact: Understanding Diversification and Performance Within an Impact Investing Portfolio
Community Wealth
Reading time: 45 minutes
This fifteen-page brief focuses on how best to understand risk, return (financial, social and environmental) and impact. It begins by explaining basic concepts and building a picture of the impact investing landscape. Then addresses the question of “What is risk?” explaining the various subcategories and points relevant to impact assets. Return is then considered, focusing on what constitutes market-rate returns and the balance between doing good and doing well. The final third of the brief is dedicated to understanding impact and the new efficient frontier created when adding impact as a third dimension to the traditional two dimensions of risk and return.
What the reviewer found helpful:“I liked the questioning approach of the brief. It helped to engage my brain on the issue before delving into the answers put forward.”
Rebecca Lagan
Intermediate
Fiduciary duty and regulation
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Impact Investing by Pension Funds: Fiduciary Duty – the Legal Context
Impact Investing Institute
Reading time: 60 minutes
A 24-page paper focusing on the duties of pension scheme trustees when making investment decisions. A gentle introduction to the changing world and its impact considerations is followed by a detailed discussion of the legal context of trustees’ fiduciary duty, summarising the way different legal sources and principles interact in relation to the investment of pension fund assets. The paper includes case studies and academic analysis and covers further considerations for both defined benefit and defined contribution schemes, concluding that the law permits impact factors to be taken into account in investment decision making.
What the reviewer found helpful:“A complex and pressing issue, thoroughly and concisely covered in a very readable paper.”
Rebecca Lagan
Advanced
✔ Recommended
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Pension Funds and Social Investment
Department for Digital, Culture, Media & Sport
Reading time: 30 minutes
This report is the Government’s final response to the Law Commission’s paper on how far pension funds should consider the social impact when making investment decisions. The report acknowledges the Law Commission’s findings on barriers that are preventing pension schemes from more easily investing in opportunities with wider social benefits, and outlines the Government’s actions and plans towards removing these barriers. Included in the report are recommendations for the Government, regulators and the wider industry, including changes to the regulatory framework and to FCA guidance.
What the reviewer found helpful:“This paper provided useful insight into the Government’s position and approach regarding the potential for pension funds to invest with impact, and how policy can address barriers to such investment.”
Yinni Hu
Advanced
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Fiduciary Duty in a Changing World: Impact Investing – the Why and How
Impact Investing Institute
Reading time: 1 hour (webinar)
How should pension funds, which hold some of the largest pools of capital in the world but have strict fiduciary duties, approach impact investment?
Introductory
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Can Charities Invest their Endowment with Impact?
Impact Investing Institute
Reading time: 15 minutes
This short report sets out the case for charities to move their investment strategies for their endowments away from a ‘classic investment approach’ and towards impact investing. It does so by offering both mission-related reasoning and financially material factors. The thorough list of FAQs at the end cover the how investing endowments with impact aligns with charities’ legal duties and the law, and potential legal considerations for trustees to be aware of. This advice has been reviewed by several legal firms.
What the reviewer found helpful:“The paper convincingly explains the growing impetus for impact investing, particularly for those who are already familiar with charity law” Anna Martinovic
Introductory