This summary guide takes investors through developing and implementing their own approach to social investment.
Intermediaries ensure that organisations tackling major social issues have access to appropriate and affordable finance to help them thrive and grow. Financial performance and social impact go hand in hand. This summary guide takes investors through developing and implementing their own approach to social investment.
STEP 1: Planning
Whatever form your intermediary takes, start thinking about your social objectives from the beginning and reflect this in your governance documents, your investment policy and your investment criteria.
STEP 2: Screening
When you have set up your intermediary, screen potential investees before entering into expensive and time-consuming analysis and due diligence. Screening serves to refine the pipeline of investments, and to be clear internally about the focus and purpose of investing.
STEP 3: Analysis
Carry out impact analysis alongside financial due diligence.
STEP 4: Due diligence
Processes for due diligence need to be transparent and clear.
STEP 5: Investment decision making
Making social investment decisions involves considering trade-offs between impact generation, impact risk, financial risk and financial return.
STEP 6: Investment deal-making
Once you have approved the investment, include social impact considerations in the process of negotiating the investment deal.
STEP 7: Monitoring and evaluation
Monitoring and evaluating impact allows you to assess past and current performance and informs future decisions.
STEP 8: Reporting
Investors being held to the same standards as their investees implies asking the same questions as those outlined in the monitoring and evaluation section.