IDD evaluates the core impact-related aspects of an investment: the potential social and environmental impact, impact objectives, indicators, and risks. A robust impact measurement and management system is crucial for regular impact assessment and management. Governance and ethical standards are integral parts of IDD and should be firmly established on the investor side, too. To include as many perspectives as possible, the interest groups, in particularly beneficiaries, should be involved in the IDD. This comprehensive assessment empowers impact investors to align their investments with their values and objectives and to achieve the intended positive impact.
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Shared Principles, Groundbreaking Impact: The Key Role of Unified Principles in Impact Due Diligence
Impact due diligence (IDD) is a cornerstone in the realm of impact investing. It serves as a meticulous means of analysing and evaluating the social and environmental impact of potential investments. Its aim is not only to identify investments that generate financial returns, but also bring about measurable positive contribution to social and environmental challenges. Through this stringent screening, investments that promote sustainable social transformation can be selected.
Cornelia
Nyssing
Senior Project Manager
Main Aspects of Impact Due Diligence
Shared Principles for Greater Transparency, Efficiency and Credibility
Developed by the German Federal Impact Investing Initiative and supported by a wide network of experts, these principles establish a universal foundation applicable across asset classes and throughout the entire investment process.
This standardized framework enhances transparency, enabling investors to make well-informed decisions and facilitating equitable collaboration between investors and investment recipients. Moreover, standardized principles in IDD foster trust in the process and bolster the credibility of the outcomes achieved.
Advancement of the IDD Principles
The IDD Principles serve as a dynamic tool fostering exchange and learning within the impact investing ecosystem. They encourage stakeholders to delve into the topic, stimulate further elaboration, and undergo continuous refinement to remain pertinent and effective in the evolving landscape of impact investing.
Bertelsmann Stiftung supported the development of the Impact Due Diligence Principles as part of its cooperation project IMMPACT.
With IMMPACT, we are laying the foundation for the Impact Economy of tomorrow. When positive social and environmental changes go hand in hand with financial success, the path is clear for a future where businesses and financial markets act with impact in mind.
IMMPACT helps impact founders and impact investors to unleash their full impact potential. We strengthen their competencies and establish uniform evaluation standards in the German impact-oriented startup ecosystem – thus making impact measurement and management (IMM) more accessible.
With the right tools – including our own Impact Maturity Model – and centralized information, we ensure that everyone in the ecosystem speaks the same language. Because only when we understand each other can we walk the path together.
A collaboration between the Bertelsmann Foundation, PHINEO, the Bundesinitiative Impact Investing, and the Social Entrepreneurship Network Germany (SEND).
