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IDB Invest pushes investors for more rigorous impact management in a post-COVID world

  • New report sheds light on how to adopt an end-to-end impact management approach, as interest in impact investing increases during pandemic

The appetite for impact investing continues to grow, despite the coronavirus pandemic. With more investors looking to achieve economic, social and environmental impact alongside market-rate financial returns, the industry is moving from “why” investing for impact is important to “how” to embed impact into investment processes, according to IDB Invest, the private sector institution of the IDB Group.

To support this trend, common standards for impact management and reporting are key, according to a new report, Managing a Portfolio for Impact: IDB Invest’s Impact Management Framework.

“As we enter the ‘Decade of Action’ to meet the 2030 Agenda for Sustainable Development, adopting an end-to-end impact management approach is critical,” said IDB Invest CEO James P. Scriven. “IDB Invest works with clients and investors to build, measure and manage a portfolio of financially sustainable investments that contribute toward the UN Sustainable Development Goals (SDGs).”

The new report showcases how IDB Invest manages its portfolio across the project lifecycle, from targeting high-impact sector opportunities and rating the expected impact of each investment, to measuring, evaluating and disseminating the impact achieved.

Globally, the annual funding gap to meet the SDGs in developing countries is estimated at $2.5 trillion and at $650 billion in Latin America and the Caribbean. Private capital can bridge that gap. Multilateral development banks are called to mobilize an increased amount of private resources, from billions to trillions of dollars. This is even more important considering the growing funding needs to address the impact of COVID-19.

“In 2008, IDB Invest was the first multilateral development bank to adopt a portfolio approach for private sector operations, combining impact and financial management into decision-making,”

said Alessandro Maffioli, IDB Invest Development Effectiveness Division Chief. “Our track record can help inform broader market practices and serve as a building block toward developing common standards.”

Through its end-to-end Impact Management Framework, IDB Invest helps clients and co-investors measure their contributions to the SDGs and respond to mounting stakeholder demand for greater accountability and transparency around economic, social and environmental impact.

This is especially relevant as the coronavirus pandemic has put a spotlight on the social aspects of environmental, social and corporate governance (ESG) practices in particular, centering on how companies treat their employees, customers, communities and other stakeholders.

The report calls on a range of development finance institutions and asset managers to adopt a solid impact measurement and management foundation as the first step to creating a more inclusive, sustainable and resilient private sector.

About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $12.1 billion in asset management and 333 clients in 24 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.