Washington, D.C. —IFC, a member of the World Bank Group, announced today that 60 investors, of which also Incofin Investment Management, have adopted the Operating Principles for Impact Management—a market standard for impact investing in which investors seek to generate positive impact for society alongside financial returns in a disciplined and transparent way. The Principles bring greater transparency, credibility, and discipline to the impact investing market.
The organizations adopting the Principles today collectively hold at least $350 billion in assets invested for impact, which they commit to manage in accordance with the Principles. Future investments for impact will also adhere to the Principles. The Principles provide clear a common market standard for what constitutes an impact investment, addressing concerns about “impact-washing.” IFC led the development of the Principles, in collaboration with leading asset managers, asset owners, asset allocators, development banks, and financial institutions, following a three-month public stakeholder consultation.
“This is history in the making,” said IFC CEO Philippe Le Houérou. “We believe there is now potential to bring impact investing into mainstream. Our ambitions are very high – we want much more money managed for impact because there’s no time to lose to protect our planet and communities around the world.”
In a new report—Creating Impact: The Promise of Impact Investing—IFC estimates investor appetite for impact investment could today be as much as $26 trillion. This includes $5 trillion in private markets involving private equity, nonsovereign 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 adequate financial returns. The Principles launched today facilitate this process by creating clarity and consistency regarding what constitutes managing investments for impact to bolster confidence in the market.
IFC is the one of the oldest and the largest impact investors—demonstrating that it’s possible to achieve significant development impact while generating solid financial returns. On average, IFC’s realized 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, including independent verification, which will provide credibility to the adoption of the Principles.
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
Incofin Investment Management (www.incofin.com) is a global independent impact investment firm, focused on rural and agricultural finance, driven by a desire to promote inclusive progress. It is an AIFM licensed fund manager and has over USD 1 billion in assets under management. Incofin has a team of more than 50 professionals spread over the headquarters in Belgium and local investment teams in India, Colombia, Kenya and Cambodia.
Incofin currently manages the following funds:
- Rural Impulse Fund II (closed-end fund) invests in microfinance institutions that offer financial services in disadvantaged rural areas through debt and equity investments. RIF II focuses on investments in Africa, Asia, and Latin America.
- agRIF is a third generation (closed-end) fund, making equity investments in financial inclusion for the rural sector (smallholder farmers and rural micro-entrepreneurs). agRIF also provides debt investments in agricultural SMEs and agricultural focused financial intermediaries.
- The Fairtrade Access Fund (evergreen fund) contributes to the development of a fair and sustainable agriculture sector by providing working capital and long term financing for small holder farmers. This evergreen fund is open to investors for commitments.
- Incofin CVSO (evergreen co-operative) specialises in debt and equity investments in the impact investments universe. It is a cooperative fund and open to retail investors.
As a leading impact investment firm, Incofin has invested (via equity and debt financing) over USD 2.1 billion in 257 microfinance/financial institutions across 53 countries in Asia, Africa, Latin America and the Caribbean and Eastern Europe.