Managing positive impact & ESG risk
Positive impact and ESG risk management
Our impact management system combines ensuring positive impact with managing and mitigating potential negative outcomes.
These impact investing industry best practices are integrated into our investment cycle: from setting the objectives in core strategies and policies and thorough potential investee selection to continuous monitoring and management once capital has been deployed. Principles of impact and sustainability are also embedded vertically at all levels within Finance in Motion. They are the cornerstone of corporate policies, in selecting partners and when working with investors. We manage positive impact through applying a comprehensive impact framework, and negative impact by systematically integrating environmental and social criteria.
Our holistic impact management system is aligned with international standards and good practices. These include among others the Operating Principles for Impact Management, the IFC Performance Standards, and key responsible finance initiatives.
Our approach to positive impact
It starts with defining a clear impact mission and a sustainable investment strategy that is aligned with the social and environmental challenges. Our impact strategies build on our extensive experience, numerous impact studies and third-party evidence.
Origination & Structuring
During the due diligence, the level of alignment with the respective impact target is assessed with our Impact Scoring Tool which builds on the 5 Dimensions of Impact (page link). An investment only proceeds if it meets not only the expectations for financial return but equally the expectations for positive impact, as well as key environmental and social requirements. These pre-investment assessments also allow us to set clear impact targets with our investees.
Monitoring & Assessment
Once capital has been deployed, progress is continuously monitored and assessed, building on a range of data sources. This allows us to identify need for further support and steering early on. Continuous dialogue and technical assistance can be deployed to ensure the financing contributes to the fund mission.
A central pillar of our strategy to facilitate long-lasting, systemic change beyond imminent impact is to integrate impact orientation into investees’ business approach. We enter long-term investment relationships to make such transformation happen by, e.g., building experience and capacities in providing financing to a specific target group or for a green purpose.
Our impact management practices are closely aligned with industry standards, particularly the Operating Principles for Impact Management, which Finance in Motion signed in 2019. As a signatory of the Principles, we annually issue a disclosure statement. In 2021, we underwent an independent verification. BlueMark, a specialized impact verification service provider, assessed our impact management system as advanced against the Impact Principles and current industry best practices.Read our disclosure statements
Managing ESG risk
At Finance in Motion, we believe that positive impact can only be sustainable if we manage and mitigate possibly negative impacts. As part of its holistic approach to facilitating systemic impact, Finance in Motion is committed to integrating environmental, social and governance (ESG) criteria into each phase of investment cycle.
We prioritize supporting each of our impact funds in effectively avoiding, minimizing, and mitigating potential ESG risks and impacts associated with their investments. Due to the different investment focus of each fund, such impacts and risks can be substantially different. To that end, Finance in Motion maintains, implements, and continuously hones its ESG risk framework, and tailors it to the respective investment focus and approach of each fund. It is also aligned with international best practice and recognized frameworks, such as the IFC Performance Standards.
As part of the investment process, a thorough ESG risk assessment is undertaken for each investment to identify potentially significant adverse sustainability impacts and assess the investee’s capacity and commitment to addressing and mitigating these impacts. Once capital is deployed, investees’ ESG performance is regularly monitored.