Developed by the founding members of the Positive Impact Initiative and released in 2017, the Principles define Positive Impact Business & Finance as “that which serves to deliver a positive contribution to one or more of the three pillars of sustainable development (economic, environmental and social), once any potential negative impacts to any of the pillars have been duly identified and mitigated.”
This definition is inclusive – it is relevant to all sectors of the economy, and to all types of financing. The Positive Impact Initiative posits that a common understanding of impact across the investment chain is needed to enable finance and its public and private stakeholders to analyse, manage and deliver impact across the economy.
The definition is also holistic – it covers the three economic, environmental and social pillars of sustainable development at the heart of the SDGs, from both positive and negative impact angles. The Positive Impact Initiative posits that a holistic approach to sustainability is needed to manage and optimize the interlinkages between sustainability topics.
The Principles establish the need for appropriate impact analysis and management processes as well as the need for transparency on both the processes and outcomes of impact analysis and management.
Finally, the Principles establish the need for distinct indicators for impact assessment, i.e. to benchmark and rate impact performance.
By virtue of their inclusive, holistic, transparent and results-oriented nature, the Principles for Positive Impact Finance provide a unique framework to enable financial institutions and their public and private stakeholders to transition to an impact-based economy that can deliver on people’s needs and aspirations within planetary and economic boundaries.
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Frequently Asked Questions
Who are the Principles for?
The Principles for Positive Impact Finance are a set of guidelines for:
- financiers to identify, promote and communicate about Positive Impact Finance across their portfolios;
- investors and donors to holistically evaluate the impacts of their investments and orient their investment choices and engagements accordingly;
- auditors and raters to provide financiers, investors and their stakeholders with the verification, certification and rating services needed to promote the development of Positive Impact Finance.
The Principles are also intended to help:
- corporates and other economic stakeholders structure SDG-focused business opportunities and business models, and identify financial institutions capable of accompanying their efforts;
- governments to leverage their interventions with the private sector (for instance by issuing impact-based tenders and requests for proposals and choosing its private sector implementation partners based on the Principles) and adjusting public policies strategically to maximise the leverage of public funds;
- civil society to identify and develop the kind of technical expertise that will be most helpful to the above parties as they seek to establish new, impact based business models.
How can they be used or applied?
Applying the principles means undertaking holistic impact analysis and management. This can be done at portfolio, corporate, asset or project level. The PII has developed a set of resources and tools to assist with this, namely:
- The Impact Radar
- The Impact Mappings
- Model Frameworks for Holistic Impact Analysis
- Tools for Holistic Impact Analysis
How do the Principles relate to other standards?
By virtue of their inclusive, holistic and transparent nature, the Principles can be seen as a ‘meta’ framework that can connect to most if not all impact-related standards:
- Industry-specific standards: Holistic impact analysis can be applied at the portfolio and corporate levels. The Principles can therefore serve to comply with industry-specific standards such as the Principles for Responsible Banking.
- Product-specific standards: The Principles can also support compliance with product-specific standards such as the Green Bond Principles, since holistic impact analysis can be applied to individual underlying projects and assets, or at the corporate level, to understand the broader context of individual projects and assets.
- Topic-specific standards: Holistic impact analysis implies a cross-cutting view of sustainability issues. Data gathered for topic-specific standards can therefore feed into the PII approach and help support the transition from a single-topic approach to an SDG-wide approach.
- Reporting standards: Holistic impact analysis at the corporate and portfolio levels implies an objective identification of most significant impact areas and the collection of multiple data. Both can be used to support disclosures via market standards such as GRI.
How can I validate my methodology and or my products as compliant with the Principles for Positive Impact Finance? Will UNEP FI provide certification?
UNEP FI is a standard setting body. It is not a certifying entity. Auditors can be called on to provide third party assurances on your methodology and/or a specific product. A set of Model Frameworks are available to provide guidance on how to align with the Principles in the context of corporate finance and investments with unspecified use of proceeds, and project finance. The Impact Analysis Tools for impact analysis can also be referenced for guidance. The UNEP FI Secretariat can be called on for further interpretative guidance.