April 22, 2020
Finnfund’s alignment with Operating Principles for Impact Management
Finnfund was one of the first signatories to the Operating Principles for Impact Management and still is the only Finnish company among its over 90 signatories.
Principle 9 requires the signatories to publicly disclose their alignment with the Principles. Finnfund is pleased to disclose its statement for public scrutiny.
From impact measurement to impact management
During the few past years, impact investment has gained prominence and increasing attention. However, there have been some confusion and differing views on what exactly we mean, when we talk about impact investing.
The nine Principles create a framework and global standards for what constitutes impact investing. The nine principles help investors to ensure that their investments are made with an intent to contribute to measurable positive social and environmental impacts, alongside financial returns. Importantly, the Principles drive the shift from impact measurement to impact management, for using the impact data to make better investment decisions and guarantee that impact is a central consideration in the investment process from the beginning to exit.
Impact measurement and management is an ongoing process
We believe that the hard work and robust processes we have created over years for impact measurement and management are paying off. At the core of our mandate is to enhance socio-economic development in developing countries. We have identified key sectors that we believe are especially conducive for private sector operations and important for furthering the Sustainable Development Goals, such as renewable energy, sustainable forestry, sustainable agriculture and financial institutions.
For each of these sectors we have created Theories of Change. They guide our impact thinking when we assess investments before financing decision, monitor projects annually, and commission specific impact studies. The Theories of Change, or impact pathways, describe how our financing and other inputs lead to changes in a company’s performance, generating direct, indirect and wider economic, social and environmental impacts.
“Our Board of Directors encouraged us to further deepen our impact system, especially its feedback loop to the decision making”, says Finnfund’s Senior Development Impact Adviser Juho Uusihakala. “We are developing a methodology to test and revisit our ex-ante assessments, so called DeatAlive, that analyses the robustness of our ex ante assessments. This will bring more information on how to assess the credibility of our impact assessments at the decisions making stage.”
There is certainly room for improvement, and we look forward to your comments and the independent verification of our systems scheduled for next spring.Operating Principles for Impact Management (pdf)
Senior Development Impact Adviser Juho Uusihakala, juho.uusihakala (a) finnfund.fi, tel. +358 50 549 3198