Institutional asset owners (IAOs), who wield immense financial clout, are increasingly interested in aligning their investment approaches with broader social and environmental objectives. They are beginning to explore ways to embed positive impact objectives alongside financial targets within their institutional investment philosophies, policies and strategies. The intent is to maximize long-term value preservation and creation for their beneficiaries, thus stewarding their fiduciary responsibilities.
While financial returns are an unquestionable priority, the GIIN sees an increasing number of IAOs seeking to generate measurable positive outcomes that serve the interests of their beneficiaries while also delivering on their targeted financial outcomes and obligations. Some more experienced practitioners are looking for ways to embed these outcomes into their overall strategy rather than treating impact investing as an exclusive category (or "carve-out") of assets. This paper outlines how adopting an impact lens could be a solution, with the following key features:
- defining an impact priority important to the interest of the beneficiaries,
- putting a strategy in place to systematically identify investment opportunities across the portfolio, and
- making investments that deliver both financial return and positive real-world outcomes aligned with the chosen impact priority.
This paper provides a brief overview of an impact lens and lays out a series of cases that demonstrate the three features listed above. For IAOs interested in beginning or expanding their impact investing efforts, this paper offers a starting point and seeks to help practitioners visualize a path to integrate impact thinking into the management of their portfolio. The cases offer approaches that can be combined by any IAO wanting to develop a holistic approach to embed impact investments within its portfolio.
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