We design every project to add value beyond financing helping our clients to be more aware of social returns on investment and to become more competitive, resilient and sustainable. Across all our projects, IDB Invest looks at how we can make a positive contribution to society. This notion of adding value beyond financing is the cornerstone of IDB Invest’s Development Effectiveness Framework, a comprehensive approach centering on learning and continuous improvement throughout the operational cycle. Our approach is driven by four main objectives:
- Helping to identify financially viable projects with the highest potential impact
- Supporting the preparation and supervision of IDB Invest’s operations to ensure their relevance, efficiency, effectiveness, and evaluability
- Ensuring the generation and diffusion of knowledge from IDB Invest’s operational experience
- Ensuring timely and transparent reporting on development impact to IDB Invest’s stakeholders
The Operating Principles for Impact Management provide a framework to guide investors on the integration of impact considerations throughout the investment lifecycle. As a signatory to the Principles, IDB Invest publicly discloses, on an annual basis, the alignment of our impact management systems with the Principles and, at regular intervals, arranges for independent verification of this alignment.
The following documents are IDB Invest’s disclosure statement and an independent verification of alignment provided by the IDB Group’s independent Office of the Executive Auditor.
Although we assess the outcome of every project in our portfolio, some are selected for more in-depth evaluation in partnership with our clients. We use impact evaluations and innovation testing to determine whether a new product or approach is effective and whether it can be improved, replicated or scaled up.
Just as companies are becoming increasingly data-driven in their decision-making, innovation testing helps us to generate evidence and maximize the value of the knowledge we’re accumulating. Of course, doing a thorough impact evaluation is an investment of both time and resources. We select the projects we evaluate carefully and always keep our clients’ interests in mind. We start by asking key questions, such as:
- Is the project representative of existing or potential lines of business? The more representative it is, the more widely we will be able to apply and disseminate the knowledge we accumulate and the good practices we identify.
- Does the project involve innovative business solutions with a development impact? By learning which solutions work—and, just as importantly, which ones don’t—we can add value and help clients to implement the right ones.
- How relevant is the project or operation? Sometimes the sheer size or prominence of an investment demands a thorough evaluation. This provides a greater level of accountability to stakeholders and can inform public debate.
Ultimately, we provide our clients with the technical guidance needed to execute a project and conduct a well-designed evaluation or do innovation testing; this helps them perform at a higher level and helps us achieve greater development impact.
In 2016, IDB Invest launched our Development Effectiveness Framework, a state-of-the-art contribution to the development finance industry.
The DELTA Tool (for Development Effectiveness Learning, Tracking and Assessment), which has set a new benchmark for other organizations committed to development tracks each project at every step of the project cycle. It allows us to standardize how we score and analyze different aspects, such as:
- How well does the project align with the IDB Group’s development priorities?
What are the potential economic returns for IDB Invest and for the client?
To what extent will the project produce social benefits?
How can its development impact be accurately assessed and verified?
Beyond the DELTA, Development Effectiveness Framework includes various tools to support the investment process from beginning to end, helping to steer our portfolio toward projects that reinforce the IDB Group’s overarching goals. These include projects that benefit poor, vulnerable or excluded populations, strengthen women’s economic opportunities, tackle climate change, provide financing to smaller businesses or improve products and services to better meet people’s needs. We also conduct data analytics to give clients important information that they can use to improve their business, grow more sustainably, and strengthen their brand.
Above all, our approach is designed to ensure that we are capturing and effectively applying learning throughout the project cycle. IDB Invest’s shareholders and partners, meanwhile, have access to timely and transparent reporting.
Once a project reaches maturity, we conduct a rigorous evaluation to determine how relevant, effective, efficient, and sustainable the project has been. Such evaluations also assess the added value IDB Invest brought to the project. This information helps us at IDB Invest—as well as our partners, shareholders, and clients— to maximize impact by learning from experience and improving our future performance.
For more information on our assessment tools, see our 2016 Development Effectiveness Overview.