Calvert Impact Capital signs on to the Principles for Impact Management

On April 12, 2019, Calvert Impact Capital, along with 60 leading global investment firms, signed the Operating Principles for Impact Management (the Principles). The Principles aim to ensure that impact considerations are integrated into the entire investment lifecycle, from deal sourcing to exit or repayment, and that lessons learned are continuously incorporated into portfolio management. While we have always provided comprehensive impact reporting to our investors on the impact we have on borrowers as well as on the ground in global communities, by adopting these Principles, Calvert Impact Capital commits to disclosing how we manage the impact of our portfolio. These disclosures will be made on an annual basis, beginning next year.

The Principles are as follows:

What does this mean for me as an investor?

We will now be providing even more transparency and reporting to our investors and advisors, on top of our full portfolio list, quarterly portfolio reports, annual impact reports, annual strategy updates, and annual audited financial statements. This new impact management reporting will provide deeper insight into the steps we take to manage the impact of each loan or investment we make, with the level of sophistication and diligence that our investors have come to expect.

What does this mean for Calvert Impact Capital?

We continuously work to improve our impact measurement and management (IMM) practices, ensuring that they evolve along with our strategy and reflect our lessons learned. In 2017, we released our latest strategic plan, introduced our “Build, Grow, Sustain” portfolio strategy, and refreshed the sector theories of change for each of the sectors we invest in.

We included a preview into our new IMM framework, which touches Strategic Intent Principles #1 (Define strategic impact objective(s) consistent with the investment strategy) and #2 (Manage strategic impact and financial returns at portfolio level), in our 2018 Impact Report as well as on our website. Further, we are incorporating a new impact model into our due diligence process, aligned with Principles #3-8, which cover origination and structuring, portfolio management, and impact at exit. The Principles provide an industry-supported framework to report to our investors and broader impact community on our work in these areas. We are dedicated to working alongside other leading industry collaborators and continuing to push the industry forward on IMM best practice.

What does this mean for the impact investing industry?

While the launch of the Principles is of course exciting, the more exciting part comes after the launch, when the 60 investment firms who adopted the Principles disclose within a year how they integrate impact into their investment management processes. When impact management disclosure becomes best practice, firms that have and disclose their robust impact management practices will be preferred by investors, who will have more validated and trusted tools at their disposal to evaluate impact investment options.

These impact management disclosure efforts will help to mitigate against impact washing, as investors will be able to discern between firms that manage impact in line with the Principles and those that simply release flashy impact marketing without the substance behind it to back them up. We look forward to the day when impact is a consideration in every investment decision and are actively working towards realizing this vision.

Want to learn more about the Principles? Check out the website at www.impactprinciples.org. Have a question about how the Principles affect Calvert Impact Capital or about our Impact Measurement and Management Framework more broadly? Send us an email at impact@calvertimpactcapital.org.