Bali, Indonesia, October 12, 2018—IFC,
a member of the World Bank Group, is working to make it easier for institutional
investors who hold nearly $100 trillion in assets under management worldwide
to enter the fast-growing impact investing market and contribute to achieving
the Sustainable Development Goals by 2030.
At the Annual
Meetings of the World Bank Group and the International Monetary Fund,
IFC introduced draft principles that are designed to become a market standard
for impact investing—in which investors seek to generate positive impact
for society alongside strong financial returns. IFC, the world’s oldest
and largest impact investor, led the development of the principles, in
partnership with leading asset managers, asset owners, asset allocators,
development banks, and financial institutions.
The market for impact investing—currently $228 billion—has grown fivefold
since 2013 as investors align their investment strategies with the Sustainable
Development Goals and the Paris Climate Agreement. But consensus has not
been established on what constitutes an impact investment. As a result,
many investments billed as impact investments fall short of their hype,
hurting public confidence in the market.
“Now is the time—while the market is still young— to develop common
principles of how to manage investments for impact,” said IFC CEO Philippe
Le Houérou. “Our ambition is to grow the market for impact investing exponentially
by bringing in institutional investors who hold close to $100 trillion
in assets under management.”
draft principles draw on IFC’s
62 years of 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-investing
considerations into all phases of the investment lifecycle: strategy, origination
and structuring, portfolio management, exit, and independent verification.
This will help avoid “impact washing”—the use of misleading claims—and
bolster confidence in the market.
IFC led the development of the principles in
partnership with asset managers,
asset owners, asset allocators, and development banks and financial institutions.
Through the end of 2018, IFC is inviting additional reviews of the draft
principles from investors, companies, academics, civil society and governments.
The principles will be available for investors to sign on to after that.
The final principles and the first set of signatories are expected to be
announced at the Spring Meetings of the World Bank Group and the IMF in
April 2019 in Washington, D.C.
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