Operating Principles for Impact Investing - new market standard?

While the European Commission is still working on a general definition on the topic of "sustainability", and in Austria working groups on the same topic are being convened, the International Finance Corporation published the first market standards for impact investing in April 2019.
The newly created market standard for impact investing by the IFC, a member of the World Bank Group, was able to win well-known signatories right from the start - we think that's quite a good start!

Operating Principles for Impact Management
These principles describe the main features of the management of investment funds with the intention of contributing to measurable positive social, economic or environmental impacts in addition to financial returns. They are intended to prevent impact investing from becoming an inflationary term, to make people think and to provide investors with a first good insight and framework for checking their investment ideas regarding positive impact:

1. Define strategic impact objective(s), consistent with the investment strategy.
2. Manage strategic impact on a portfolio basis.
3. Establish the Manager’s contribution to the achievement of impact.
4. Assess the expected impact of each investment, based on a systematic approach.
5. Assess, address, monitor, and manage potential negative impacts of each investment.
6. Monitor the progress of each investment in achieving impact against expectations and respond appropriately.
7. Conduct exits considering the effect on sustained impact.
8. Review, document, and improve decisions and processes based on the achievement of impact and lessons learned.
9. Publicly disclose alignment with the Principles and provide regular independent verification of the alignment.

What sounds nice and simple is, when implementing - anyone who works in the ​​asset management knows that - anything but simple. If I am just taking a closer look at point 4 I start sweating, because "(social) impact" usually is anything but easy to measure.
Because these principles have been designed to be suitable for a variety of institutions and funds, they can be implemented through various impact management systems. This is making it easier, at least for the managing side. The principles do not dictate what kind of impact should be targeted or how it should be measured and reported. However, this in turn makes things more complicated for investors, as impact investments are hardly comparable.

First signatories of the Impact Principles
On April 12, the first 60 international organizations signed up to these "principles", which were presented for the first time at the IMF World Bank Group spring meeting in Washington D.C. We are pleased that it is proof that impact investing is becoming increasingly important. When creating a clear common market standard and thereby gaining greater credibility, discipline and, of course, transparency, the constitution of these principles was certainly an important first step and deserves a lot of recognition. Probably just a first step, because in detail there is still great need for discussion.

OeEB is the only signatory from Austria

We went through the list of signers and found prominent names. Including - after all - one Austrian company, the Development Bank of Austria (OeEB), which has been creating positive, sustainable impact for years through the projects they support.

What makes us less happy is that so far no other Austrian institutions have committed themselves to the new standards. In Austria, the topic of impact investing is obviously still in its infancy. Here we identify urgent need to catch up - also and especially on the part of politicians, which must create urgently a suitable framework for (semi-)institutional investors.