An initiative coordinated by two French investor groups has delivered a guide to impact investing that they say outlines a “demanding definition” for listed and unlisted products.

Sixty asset managers, from the likes of Amundi and AXA Investment Managers to lesser known entities, have signed up to the definition, which focuses on the three concepts of intentionality, additionality, and impact measurement.

The framework is the product of a working group convened in 2019 by FIR, the French sustainable investment forum, and France Invest, the industry association for private equity and venture capital in France. The working group brought together more than 50 individuals, primarily investment professionals, from the listed and unlisted sectors.

According to FIR and France Invest, the initiative was a response to an implicit market need to “define in a pragmatic way, the minimum requirements for an authentic and robust impact investment strategy”.

“With this joint guide, developed by comparing the practices of sophisticated professionals in the listed and unlisted segments, France Invest and the FIR hope to avoid succumbing to empty marketing rhetoric and impact washing,” wrote Mathieu Cornieti, chair of France Invest’s impact commission, and Alexis Masse, chair of FIR, in the introduction to the guide.

“Our aim is simply to outline a satisfactory definition of an impact fund, and what can be expected from such a fund. More testing, research, methodological innovation, in short, progress is required to develop standard practices, but the profile of what constitutes sound practice is already becoming apparent.”

They added: “The funds that meet the guidelines of this report have earned the right to refer to themselves as impact investors.”

In addition to setting out the agreed understanding of impact investing and its characteristics, the report identifies “complex issues that remain open”, such as net impact measurement.

In a section about “challenges for financial practitioners and regulators,” it states that the impact investment market is still in its infancy, with methodology evolving.

“It would be a shame to try and provide a detailed and uniform regulatory framework covering all elements of impact investing at the current time,” the authors write.  

FIR and France Invest said their members would be consulted again for their advice on the matters raised in the document and that a new position statement would be issued in a year.

The report can be found here.

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