Impact investment sourcing and due diligence
Introduction
How to use these resources
Resources in this module
Glossary of terms
We have put together a glossary of terms for impact investing
Filter resources by level:
Screening and suitability – how to identify true impact investing opportunities (spot “green washing”), source them and assess their suitability
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The Good Investor – Planning, screening and mapping
Investing for Good
Reading time: 20 minutes
Practical guidelines on how to plan an impact fund. Screening considers how to refine the pipeline of investment and be clear about the purpose and focus of the fund. Mapping helps understand eligibility and suitability for investment.
What the reviewer found helpful:“Written in 2012 but still feels highly relevant and refreshingly practical.”
Chris Cullen
Intermediate
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Guide for Impact Investing Fund Managers: Deal Sourcing and Selection
Global Impact Investing Network
Reading time: 10 minutes
This article provides practical guidance for funds looking to source and select impact investing deals with potential investees. It touches on how funds can market and present themselves effectively, and what to consider when evaluating potential investees. A list of key questions is provided as a starting point for criteria that should be featured in any strategy funds developed for narrowing down their investment opportunities.
What the reviewer found helpful:“Great insight into the key considerations for funds looking to source potential impact investees”
Yinni Hu
Advanced
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How to evaluate impact investing fund managers
World Economic Forum
Reading time: 40 minutes
WEF proposes an alternative approach to adopt when evaluating impact managers in light of the evolution as opposed to the ‘traditional’ approach of due diligence focused on the fund manager’s track record The alternative approach put forward by WEF centres around asking critical questions about how: People: How are decisions made and by whom?; Mission: How does the fund manager combine impact and finance? ; Business model: How does the fund finance its operations?; and Practised governance: How is the fund organization actually governed?
What the reviewer found helpful:“The analysis under each element of the proposed alternative approach”
Kate Munuka
Introductory
Due diligence mechanisms and challenges
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Guide for Impact Investing Fund Managers: Conducting due diligence
Global Impact Investing Network
Reading time: 7 minutes
Discusses the importance of a standardised due diligence process and why it is helpful. Suggestions for key questions an investor should ask to help manage risk.
What the reviewer found helpful:“Notes the value of an impact committee to ensure impact risk is considered in depth.”
Chris Cullen
Introductory
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Impact due diligence guide
Pacific Community Ventures
Reading time: 60 minutes
This is a comprehensive and detailed guide intended for developing and implementing due diligence processes that assess anticipated impacts. It includes detailed recommendations, case studies, example questions and key considerations for various steps in the due diligence process, and provides a framework for incorporating impact measurement and management in the processes leading up to making impact investments. The report includes a combination of theoretical guiding principles and practical, technical and process-related guidance.
What the reviewer found helpful:“While being a long and comprehensive report, the paper is logically divided into clear sections, making it easier for impact investing practitioners to find the most relevant information for them.”
Yinni Hu
Advanced
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Impact Assets Handbook for investors (Chapter 7)
Jed Emerson
Reading time: 2-3 hours
Provides a framework and tools for investors to adopt and adapt to develop a due diligence process and analyse investment opportunities in the impact investing space
What the reviewer found helpful:“The framework and analysis include both financial and impact considerations.”
Kate Munuka
Intermediate