Investing for meaningful impact in private markets

Defining our understanding of the requirements to support impact investment – by Matt Christiansen and Diane Mak

 
While the growth of impact investing has accelerated, definitions and approaches vary widely. We expect that greater clarity will be key to the continued rise of assets under management in impact strategies. In this position paper we outline our perspective on some of the key components we believe are needed for generating positive, meaningful impact through private market investments.
 

Key takeaways

• Amid varying definitions of impact investing we believe that a considered, evidence-based and measurable approach aligned with engagement¹ is integral.
• We intentionally focus on companies seeking to offer solutions that have a measurable positive impact on key environmental or social problems, through the delivery of goods and services that are core to their business models.
• In this paper, we introduce three proprietary sustainability typologies²to clarify and define the impact of investments: Significant Positive Impact (our priority typology for private market impact investments), Positive Benefits, and Sustainability Improver.
• We also define four key characteristics that we believe are required for operational management and measurement of impact in private market investments.

 
Our conclusion: With the rapid growth of investor allocations to impact strategies over the past few years reaching over USD 1 trillion³ of assets under management, the opportunity to generate impact at scale has never been greater. It has also become imperative to clearly define expectations around what impact investments should deliver for society. We expect the typologies and characteristics outlined in this position paper to be an important foundation for Allianz Global Investors’ private market impact strategies in generating significant positive impact over the coming years.
 

_{Footnote 1: There is no assurance, representation, warranty or otherwise that engagement, targets/milestones or voting for example (where relevant) by us or any other party will achieve a certain outcome.}

_{Footnote 2: When we refer to our proprietary sustainability typologies, as of the date of this paper, none of the Allianz Global Investors/Allianz Capital Partners private market products are formally offered under these individual typologies. In respect of some of our impact private market strategies, but not all these strategies, such impact strategies have been using our internal proprietary impact scoring system, a component of our impact framework, to distinguish between high positive impact investments (Significant Positive Impact) and low positive impact investments (Positive Benefits). Sustainability Improvers sit outside of our impact strategies. When we refer to the typologies, we provide no assurance, representation, warranty or otherwise that such label or approach will achieve a certain outcome. These labels are subjective and based on our own personal views. None of the typologies have been externally verified or assessed by an independent third party.}

_{Footnote 3: Source: Impact funds grow 40% over last two years, hitting $1 trillion | Pensions & Investments (pionline.com)}
 

Download our impact investing position paper >
 

 

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