What is ‘impact-financial integration’? How does impact-financial integration enable impact-informed decision-making?
This module provides an overview of impact-financial integration and a roadmap for the rest of the course.
- The purpose of impact-financial integration is to build impact management processes that inform decision-making at each stage of the investment process
- In order to integrate impact alongside financial considerations in decision-making processes, investors consider:
- Which investments offer more or less expected impact?
- Which investments offer more or less risk-adjusted financial return?
- How can we use these insights to improve the impact and/or financial performance of our portfolios?
- This curriculum will use a five-step process to help you answer these questions:
- Build an impact rating
- Identify/create a risk-adjusted financial return metric
- Create integrated scatterplots using your impact rating for the x-axis, and your risk-adjusted financial return metric for the y-axis
- Analyze your integrated scatterplots to identify insights that inform investment decision-making
- Measure, manage, and communicate the impact and financial performance of your portfolios
Impact for Decision-Making
For investors new to impact management, it is common to start by considering impact primarily at the beginning and end of the investment process: filtering the pipeline to focus on certain kinds of companies, and reporting on impact post-investment. This approach, however, risks leaving impact, financial returns, or both on the table. Optimizing portfolio performance involves integrating impact alongside financial considerations at every step of the investment process.
Course Overview & Goals
Impact-financial integration is based on three essential questions:
Which investments offer more expected impact?
Which investments are more attractive financially?
How can we use the answers to these questions to improve the performance of our portfolio(s) over time?
This online curriculum is designed to help you build a set of customized impact management tools and investment processes to answer these questions.
Getting Started Kit
Before you start your impact-financial integration journey, it is helpful to take stock of your current impact management practices and priorities.