Imogen Box, Fellow

In 2015 the United Nations launched the Sustainable Development Goals – a set of 17 goals designed to be a “blueprint to achieve a better and more sustainable future for all”. Chances are, if you’ve found your way to this blog, you’re already familiar with these. You’ve also probably heard about large companies, not traditionally seen as operating in the impact space, reporting on how they align to the SDGs. I’m guessing you’ve raised a skeptical brow and thought to yourself “really?”

The Global Goals for Sustainable Development
United Nations Sustainable Development Goals

First there was green-washing. Then came ESG or Impact washing. The new tool in the corporate marketing handbook, it seems, has become SDG washing. This is when businesses acknowledge the existence of the SDGs and highlight their alignment without actually making any meaningful contribution towards them.

There are two key terms here that form the difference between SDG washing and impact: Alignment and Contribution.

Alignment is more about allocation of capital, but this cannot generate real economic change unless it is done on a huge scale, enough to influence the overall market. Contribution, on the other hand, implies active participation.

For fund managers, this means that it is not enough to invest in impactful companies. You must be able to identify the additional impact that occurs as a result of your investment and measure the extent of this contribution to the SDGs.

So how can you make sure you’re contributing? And how can you show investors that you are?

Like all things that are worth doing, there’s no one simple fix. But let’s try to break it down into three stages.

  1. IMM Framework

There is no way you can know how or indeed if you are contributing without a robust IMM framework in place. This ensures that you take a holistic approach to your investment and impact strategy – understanding the positive impacts and the data you need to capture in order to measure these, but also considering any negative impacts that may occur and taking steps to mitigate them. Equipping communities with the means to grow their own food (SDG 2) is commendable, but less so if it involves harmful pesticides that damage the natural ecosystem (SDG 15). Creating jobs (SDG 8) is all well and good but if they’re all in carbon-based energy production (SDG 7) is your overall impact net-positive?

A robust IMM framework enables you to allocate resources in the most efficient way. Yes, that sounds similar to how I described alignment before. But there’s a subtle difference. Alignment is allocating resources towards others’ impactful activities. No additional impact is created by this allocation.

Instead a more dynamic assessment is required when originating investments. It is not enough to evaluate how impactful a company is at the time of investing. The important assessment is how much more impactful it could be as a result of the investment. This is the fund manager’s contribution and it can be through both financial and non-financial means. Indeed the Impact Management Project identifies four means by which fund managers can contribute: (1) signal that impact matters, (2) engage actively; (3) grow new or undersupplied markets; and (4) provide flexible capital. 

In some cases this could result in investment decisions that seem, at the outset, to not make much sense. But often it is possible to make a greater contribution where impact has not already been established.

  1. Reporting

Reporting on impact is a key way for a fund manager to communicate to its stakeholders the impact they are creating, and particularly how they are contributing to the SDGs. But when everyone is now reporting against the SDGs how can impact fund managers set themselves apart? The answer requires looking past the 17 goals to the 169 targets and 232 measurable indicators that support them. By integrating these into reporting, fund managers can report in a more meaningful way, signalling to investors that they are not just paying lip service to the SDGs, but are serious in their commitment to them.

The other form of reporting that we are seeing emerging is fund managers adopting the concept of Attribution – recognising that they cannot claim responsibility for all the impact of a portfolio company. Currently we see this as claiming a share of the impact in proportion to the size of the investment. Obviously it’s more complex than that, but it’s a good start and signals to investors that the fund manager assesses its own contribution and the additionality of its investment. No doubt as data collection develops, attribution methods will become more sophisticated.

  1. Verification

The final step for fund managers to claim their impact is independent verification. This could be verification of their impact reporting or of their alignment to a set of standards or framework. Indeed, within the Operating Principles for Impact Management, Principle 3 seeks to address the precise issue at hand. It requires that signatories establish a credible, evidence-based narrative on their contribution to the achievement of impact for each investment, during the origination phase of the investment cycle. 

Getting independently verified ensures that impact reporting goes beyond just marketing and is instead a declaration of your commitment to creating impact.

If you want to hear more about our third party verification process or any of our other services, please get in touch and we’ve be happy to set up a conversation. Email us at