2023 Impact Principles Disclosure and Verification
May 17, 2023
Calvert Impact is a founding Signatory to the Operating Principles for Impact Management (the Impact Principles), a framework adopted by over 170 leading global impact investors, managing nearly half of the total assets in the impact investing market, to-date*. Signatories of the Impact Principles commit to integrating impact measurement and management (IMM) best practice throughout the entire investment lifecycle, from strategy to deal sourcing to exit or repayment, and ensure that lessons learned are continuously incorporated into portfolio management.
See pg. 21 of the Impact Disclosure and Verifier’s Statement for more information
Signatories commit to disclosing these IMM practices annually and submit their practices for periodic independent verification, ensuring accurate and transparent disclosures and mitigating against impact washing. This release constitutes Calvert Impact’s fourth annual Disclosure Statement and includes the results of our second independent verification, conducted by BlueMark, a leading provider of impact verification services for investors and companies. This Disclosure Statement pertains to the portfolio of the Community Investment Note® issued by Calvert Impact Capital and and the portfolio of the Cut Carbon Note issued by Calvert Impact Climate, both subsidiaries of Calvert Impact. The total Covered Assets managed in alignment with the Impact Principles is US$514.9 million as of December 31, 2022.
For the Community Investment Note® portfolio, BlueMark’s verification results emphasized the strength of our clearly defined impact strategy; our Impact Scorecard as a standardized tool to assess expected impact as well as investor contribution, documenting where our capital can provide flexible financing, resource mobilization, technical assistance, or a signaling effect to other investors; our annual impact monitoring process; and our clear approach to considering and documenting sustained impact at the exit or repayment stage. The Community Investment Note® portfolio received Advanced ratings (the highest score possible) across all the Impact Principles, something only a handful of global investors have achieved.
These robust impact management practices guide how we manage the Community Investment Note® portfolio and the impact performance of our portfolio partners. For example, our Impact Scorecard has enabled us to conduct robust and consistent impact due diligence across the entire portfolio and has also helped us build a database of expected impact, upon which we have developed expected and actualized impact performance benchmarks. We use these benchmarks to compare the expected impact of new transactions in our pipeline and engage potential portfolio partners in conversations on how to strengthen their practices, including their own impact measurement practice. While many of our portfolio partners have strong IMM practices of their own, we also support emerging fund managers who sometimes lack experience in collecting impact data from their clients. We help these managers design processes such as end client surveys or embed impact data collection into their current processes.
This impact score database has also enabled us to examine the relationship between different dimensions of impact (i.e., what is the relationship between our investor contribution and a partner’s scale of impact?) as well as the relationship between impact performance and financial performance.
Another practice we have been pioneering is the use of “exit interviews”. Whenever a portfolio partner chooses to repay a loan we request an interview with the key management staff involved and ask them to reflect on the relationship – what worked, what was the impact of our engagement, what needed improvement. We publish key takeaways from these interviews as Success Stories on our website, particularly when we want to share the story of a portfolio partner who we’ve financed for years or even decades. In several instances, these interviews have also allowed both teams to reflect on new, creative ways in which we can continue to work together. These lessons learned inform our overall portfolio strategy and help us identify areas where our capital is more valuable – and thus has greater potential to create outsized impact.
The Impact Principles were designed to measure integrity and increase transparency, and we know our annual disclosure and periodic independent verification provide critical impact insights and comfort for our investors that our IMM practices remain robust. As leaders in the impact investing industry, we encourage the continued adoption of the Impact Principles by both asset managers and asset owners, and as always, look forward to your feedback and questions.