The Practical Guide is a comprehensive resource that distils best practice in impact measurement into five easy-to-understand steps and provides practical tips and rec- ommendations for how to implement impact measurement at the level of the social investor and in the social sector organisations that they support. The guide then goes a step further by focusing on how impact can and should be managed by organisations to achieve even greater impact.
– How to target them?
– How to communicate the strategy to clients and client relationship managers? Capital-raising from private capital sources for VP/social investment is still in the early stages by banks, there is no blueprint for how, when and what to go out to the market with. From the case-studies, we have seen the following options:
The ‘how’ of engagement and participation is also a crucial component of developing a VP/SI strategy, considering the resources available. As the chart below shows, there are a range of external and internal actors to consider in terms of where the project/initiative will sit and who will be involved in order to make it successful:
• Internal universe: there should be intra-bank collaboration efforts around the project/ initiative, including the commercial business units which house a depth of technical expertise on engaged investing as well as client relationships if client capital is being
Type of Bank Option Comment Example
Retail Develop intermediat-
ing internet platform
Low-cost, democratic way to intermediate
BBVA
Create retail ethical/ social product
Excellent way to involve retail and aggregate funds for social investment
Triodos Bank
Private Create bespoke VP/
social investment pro- duct(s) for clients
Allows lower-ticket aggregation of client funds
BNP Paribas, UBS
Obtain client funding for individual deals
Less complexity (regu- latory, other)
Bank Degroof
Investment Approach institutional
and private clients with individual deal/ offerings
Understand investor appetite across various investor groups while the market oppor- tunity is expanding and while developing a principal invest- ing track record and expertise
J.P. Morgan
Options available to raise capital from private sources for VP/SI
PRACTICAL STRATEGIES
FOR ENGAGEMENT
sought; sustainability/corporate social responsibility which has expertise in engaging to generate positive social and environmental impact; the bank’s charitable foundation which provides funding sources that carry significantly less pressure; and business development which can support product innovation, the project management and the development of new VP/SI initiatives72
• External VP/SI market universe: comprises many players and initiatives which the bank will need to be familiar with, including external practitioners (who the bank might want to co-invest or have manage the VP/SI project); external champions; external experts; external networks (of which EVPA is the major European one for VP/SI) and external market and industry wide initiatives which the bank might want to collaborate in and potentially sponsor. With all of these external players there is a need to knowledge-share.
From the case studies, we see that banks have three options in terms of how to manage a VP/SI initiative: 1) Internally manage through an existing business unit, the CSR depart- ment or the Bank’s charitable foundation; 2) Internally manage through a new business unit; and 3) Have the initiative externally managed. These three options are described more in the table below.
In addition to thinking about who is going to run, manage and be involved in the project, there are also the softer issues of how to obtain senior support within the bank and how to communicate the VP/SI project initiative internally and externally. Banks involved in the field who have been interviewed for the field commented that generating a culture of excitement is crucial for the success of the initiative.
72. For more detailed information on the how for corporations and investors engaging with social enterprise, please see ‘A Framework for Action: Social Enterprise and Impact Investing’, United Nations Global Compact and Rockefeller Foundation, June 2012. This outlines several distinct models for investors: institutional impact investing: externally focused models; institutional impact investing: internally focused models; as well as a range of models for corporations involved in social enterprise development including an investment model, a strategic alliance model and an incubation model. Sustainability /CSR FoundationCorporate Commercial Business Units (new or existing) Business Development External Practitioners • Knowledge sharing • Co-investment • External management • Joint venture/Alliance External Networks • Knowledge sharing External Policy-Makers • Policy development and lobbying External Champions
Internal Project Universe
External Experts
• Knowledge sharing • Project design and
implementation assistance External Market-wide Initiatives • Sponsorship • Collaboration External Industry-wide Initiatives • Sponsorship • Collaboration Social Purpose Organisations Clients Investment Investment
Internal and External Actors to Consider when Developing VP/SI strategy
Type Comment Example
Internally manage the VP/ SI project initiative through an existing business unit and/or the CSR depart- ment and/or charitable foundation, collaborating with external actors and bringing in the required skills where necessary
Significant internal costs. High strategic value as obtaining valuable knowl- edge and experience internally. Particularly significant if core busi- ness involved. Large opportunities for staff involvement and develop- ment. Collaboration skills required.
Deutsche Bank, BBVA, Bank Degroof
Internally manage the VP/ SI project initiative by set- ting up a new business unit
Provides key visibility and profile as initiative obtains its own dedicated resourc- ing. Business unit can oper- ate cross-departmentally and cross-functionally. Develop a strong expertise and track record on a nas- cent market through ‘skin in the game’ approach. However, could potentially become a silo/isolated.
J.P. Morgan, Erste Foundation
Have the project/initiative externally managed
Drawing on existing skills, experience and track record which the bank might not have internally.
Particularly relevant if the project beneficiaries will be in the developing world, where the bank may not have the infrastructure internally to manage such an initiative
UBS