Funds: only a third incorporate impact assessment tools
The Svgda Foundation has examined 25 private equity and venture capital funds
Key points
Only a third of active funds in Italia incorporate impact assessment tools into their investment processes. This is according to the Evaluation Lab of the Giordano Dell’Amore Social Venture Foundation, the strategic and operational arm of the Cariplo Foundation in the field of impact investing.
The analysis, carried out using data from the Bank of Italy, examined 25 private equity and venture capital funds operating in Italia, classified in accordance with Articles 8 and 9 of the European SFDR (Sustainable Finance Disclosure Regulation).
Why is impact struggling to take off?
With regard to the integration of impact into decision-making and incentive mechanisms, only 32 per cent of funds state that they consider impact to be a binding criterion in investment decisions, whilst 36 per cent make a portion of the carried interest contingent upon the achievement of specific impact targets.
“To interpret these figures, we must first recognise that impact investing is not an asset class but an investment approach,” points out Marco Gerevini, managing director of the Giordano Dell’Amore Social Venture Foundation - With impact investing, an element of complexity is introduced into a field – that of financial investment – where the priority is return. Not only that: for some impact investments, one is required to forgo part of the return, particularly when investing in the third sector, where there are regulatory constraints on returns. Finally, these are smaller investments; the process generally takes longer overall, including for exits, and measuring the impact can be costly.”
In short, impact investing is not yet for everyone, nor is it for the general investor market. This is partly because it requires a shift from a purely financial approach to risk mitigation towards a deliberate focus on generating a positive impact.
