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Accelerating Impact and LuxFLAG, both active actors in impact finance, decided to join forces to develop a stronger foundation for formulating a Social Impact Investing Definition, launching a related Social Investment Framework, and nurturing the development of social investment products. This framework marks a significant milestone in social impact investing, providing a clear and comprehensive definition, establishing eligibility criteria, and nurturing the development of social investment products.
Key Highlights:
- A Shared Definition: The framework defines social impact investing, emphasising the importance of generating substantial positive impact while avoiding or mitigating negative impacts.
- Eligible Activities: By mapping current market practices, a non-exhaustive list of eligible activities related to social themes, such as promoting decent work, adequate living, inclusive and sustainable communities, and standards, has been compiled.
- Exclusions and Safeguards: The framework also includes a suggested list of exclusions and minimum safeguards to ensure social and environmental standards adherence. These measures are designed to avoid or mitigate negative impacts and promote responsible investing practices.
The framework emphasises the importance of key concepts for impact investing: financing activities to generate measured and managed substantial positive impact. This implies that the activity should address an unmet need for a target population while avoiding or mitigating negative impacts and developing a financial return.
This framework is expected to drive greater alignment of capital flows with social objectives, fostering the growth and legitimacy of the social investing ecosystem. By setting clear standards and providing meaningful recognition, the Social Investment Framework encourages more investors to allocate portions of their portfolios to impact investments.
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