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Investment appetite growing, but sustainable impact lacking — IDB

The appetite for impact investing continues to grow, despite the pandemic says IDB Invest, a member of the Inter-American Development (IDB) Group.
However, the body is pushing for more sustainable development. Globally, the annual funding gap to meet the sustainable development goals in developing countries is estimated at US$2.5 trillion and at US$650 billion in Latin America and the Caribbean.

The headquarters of the Inter-American Development Bank

IDB Invest, a member of the IDB Group, is a multilateral development bank which aims to promote the economic development of its member countries in Latin America and the Caribbean through the private sector.

IDB Invest finances sustainable companies and projects to achieve financial results and maximise economic, social and environmental development in the region.

The IDB arm says private capital can bridge the investment gap. Development banks are being called to mobilise an increased amount of private resources, from billions to trillions of dollars.

With more investors looking to achieve social and environmental impact alongside financial returns, the industry is moving from “why” investing for impact is important to “how” to embed impact in the investment cycle, according to IDB Invest’s new report, ‘Managing a Portfolio for Impact: IDB Invest’s Impact Management Framework’.

New report promotes the adoption of end-to-end impact management approach.
“As we enter the ‘Decade of Action’ to meet the 2030 Agenda for Sustainable Development, adopting an end-to-end impact management approach is critical,” said IDB Invest CEO James P. Scriven. “IDB Invest works with clients and investors to build, measure and manage a portfolio of financially sustainable investments that contribute toward the UN Sustainable Development Goals (SDGs).”

The new report also showcases how IDB Invest manages its portfolio across the project lifecycle, from targeting high-impact opportunities and rating its expected impact, to measuring, evaluating and disseminating the impact achieved.

The report calls on development finance institutions and asset managers to adopt a solid impact measurement and management foundation as the first step to creating a more inclusive, sustainable and resilient private sector.

With US$12.1 billion portfolio in asset management and 333 clients in 24 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients.