The Principles for Positive Impact Finance

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 Principles for Positive Impact Finance aims to provide the basis for this.

The Principles provide a consensual and rigorous definition of positive impact finance (Principle 1): it is 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 addressed.
 
The Principles acknowledge the need for adequate impact analysis and management processes and methodologies (Principle 2), and include a requirement for transparency on both process and outcomes (Principle 3), as a basis for meaningful rating of positive impact finance (Principle 4). Download the Principles for Positive Impact Finance brochure:

Tools for holistic impact analysis and management

The Positive Impact Initiative has devised several tools to help the financial sector analyse and manage impacts. Building from the high-level Principles, PII offers an Impact Radar, Model Frameworks for different business lines and types of assets, all the way to a set of impact analysis tools currently undergoing testing and soon to be released as prototypes. Please see an overview of the tools below.

In 2020, the PII will continue to work with practitioners, experts and partners to strengthen the prototype tools. Please contact us if you would like to support this effort.
 
The Impact Radar offers a holistic set of impact areas.

The radar captures the core elements of the Sustainable Development Goals in a way that is applicable to business. It is anchored in international definitions and standards. It is global, neutral and practical.

The Model Frameworks provide guidance on integrating impact into business processes and decision-making, spanning different business lines and asset types. They can be used by financial institutions, as well as by third parties such as auditors. Download the Model Frameworks here:
 

 
The Impact Analysis Tools are being designed for banks and investors to use within their existing processes and IT systems. The prototypes will become available in January 2020.
The Tool for Impact Analysis in Corporate Finance and Investments focuses on corporate finance and unspecified use of  proceeds. It has been conceived to identify, assess and monitor corporate impact, with a view to determining companies’ impact status and possibilities. The Tool for Impact Identification in Bank Portfolios will allow banks to determine their areas of most significant impact, a requirement under the UNEP FI Principles for Responsible Banking as a basis for setting meaningful performance targets.

The Positive Impact Initiative is generously supported by the European Commission.

PRINCIPLE ONE: Definition

Positive Impact Finance is that which serves to finance Positive Impact Business. It is 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. By virtue of this holistic appraisal of sustainability issues, Positive Impact Finance constitutes a direct response to the challenge of financing the Sustainable Development Goals (SDGs).

PRINCIPLE TWO: Frameworks

To promote the delivery of Positive Impact Finance, entities (financial or non financial) need adequate processes, methodologies, and tools, to identify and monitor the positive impact of the activities, projects, programmes, and/or entities to be financed or invested in.

PRINCIPLE THREE: Transparency

Entities (financial or non financial) providing Positive Impact Finance should provide transparency and disclosure on:

  • The activities, projects, programs, and/or entities financed considered Positive Impact, the intended positive impacts thereof (as per Principle 1);
  • The processes they have in place to determine eligibility, and to monitor and to verify impacts (as per Principle 2);
  • The impacts achieved by the activities, projects, programs, and/or entities financed (as per Principle 4).

PRINCIPLE FOUR: Assessment

The assessment of Positive Impact Finance delivered by entities (financial or non financial), should be based on the actual impacts achieved.