Impact investment sourcing and due diligence

Introduction

Impact investing is different from traditional investment. It has dual objectives of both financial and impact returns. The types of investment that impact funds or funds incorporating impact make are different and need to be sourced, screened and reviewed differently. This section provides guidance on how to do that focusing both on general principles as well as more detailed processes that you might want to use.

How to use these resources

Managing impact investments well requires the construction of portfolios that align with the impact investment thesis and where the assets have been selected to build a portfolio with the appropriate risk/return profile – both from a financial and an impact perspective. Start with the reading on planning, mapping and screening and then move onto the readings on deal sourcing and fund manager selection before getting stuck into the readings on due diligence (one brief, two longer and rooted in experience).

Resources in this module

Screening and suitability – how to identify true impact investing opportunities (spot “green washing”), source them and assess their suitability
Due diligence mechanisms and challenges

Glossary of terms

We have put together a glossary of terms for impact investing

Visit our glossary

Filter resources by level:

Screening and suitability – how to identify true impact investing opportunities (spot “green washing”), source them and assess their suitability

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

Due diligence mechanisms and challenges

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

Impact investment sourcing and due diligence

Introduction

How to use these resources

Resources in this module

Screening and suitability – how to identify true impact investing opportunities (spot “green washing”), source them and assess their suitability

Investing for Good

Due diligence mechanisms and challenges

Jed Emerson