How investors are safeguarding impact post-exit

Most impact investors are choosing acquirers that pledge to maintain an asset's positive impact, according to a GIIN report.

The majority of market-rate impact investors are taking measures to preserve the positive impact of assets after they have exited, according to research on impact measurement and management from the Global Impact Investing Network.

GIIN has canvassed opinion from 308 impact investors on a range of topics as part of its GIINsight series of reports. The new report is the third in the series; the previous two examined the characteristics of impact investors, and how investors are allocating impact capital across geographies, sectors, stages of business and asset classes.

While the most common approach (58 percent) to preserving impact is by investing in assets in which the positive impact is deeply embedded, most investors are also choosing acquirers that explicitly intend to maintain impact (52 percent).

The report also found that a greater proportion of private equity-focused investors ensure mission alignment after exit than private debt-focused investors (83 percent versus 69 percent).

GIIN also asked respondents about how staff are incentivised to deliver impact. While the majority of respondents (80 percent) indicated that their staff are “intrinsically motivated by impact” as individuals, a far smaller proportion (36 percent) factored impact delivery into performance evaluations. Even fewer tie impact targets into financial compensation for some (16 percent) or all (13 percent) members of staff.

Thirty percent of insurance companies and pensions funds have no mechanism to incentive staff to deliver on impact goals. Of those that do, 60 percent link impact to employee performance evaluations and 30 percent tie a proportion of  compensation to the achievement of impact targets for some staff.