Private equity impact investing

Executive Summary:

• Impact investments are investments made into companies, organisations and funds with the intention to generate measurable social and environmental impact alongside financial return.
• Impact strategies can target various environmental or social challenges. As a common framework, impact strategies are often presented as targeting select United Nation 17 Sustainable Development Goals (SDGs).
• Whilst still a nascent investment area, impact investing has grown and evolved markedly in recent years. Seen through standardised impact objectives (UN SDGs) and improvement in impact measurement and tools.
• Impact investments could theoretically arise in any asset class or geography. However, due to its innate investment characteristics, Private Equity investments are often well positioned to efficiently drive meaningful impact outcomes.
• Whilst a growing area with significant opportunities (and capital need), impact investing also has its challenges. These include, limited capital directed to impact investments, limited number of quality PE impact managers, lack of successful track records, limited reliable impact data and the lack of common standardised impact metrics and measurement allowing for comparability and benchmarking.
• Given these challenges in investing in private equity impact investments, JANA currently recommends a more diversified approach to impact investing. This can be done in a fee-effective approach via co-investments (pooled fund), or combination of co-investments and small allocation to primary funds (Fund of Funds).
• JANA continues to expand its coverage of impact strategies.

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