<https://mx.coursera.org/lecture/impact-for-sdgs/investor-step-4b-set-investor-contribution-level-rI6SO#lecture>
<http://schema.org/transcript>
"The second part of setting your goals is defining your intentions for your types of investor contribution. The concept of investor contribution acknowledges that investors can play both a positive and negative role in supporting sustainable development and SDGs. Under positive investor contribution, the SDG impact standards currently detail five primary strategic actions investors can take. The first four of which were developed by the Impact Management Project. Signaling that SDG impact matters, means making an investment decision either to invest in or avoid certain investments. In a way that communicates to other investors that you value the sustainable development impact of your investments. Engaging actively, means making significant proactive efforts to engage your expertise and networks to improve the impact performance of your investments. Your engagement can include a wide spectrum of approaches, such as the investors' own team providing management support or taking board seats. Growing new or under supplied capital markets is participating in new or previously overlooked opportunities that offer terms that are more favourable. Or that are otherwise unavailable to investees in the current market. This could include taking on additional complexity, illiquidity, or higher perceived risk. Being flexible on risk-adjusted financial return is a more specific version of growing new or under supplied markets. where the investor recognizes that certain types of investments may require the investor to accept financial returns that are concessionary compared to risk-adjusted market rate returns in order to generate certain kinds of SDG impact. Demonstrating market leadership and contributing to field building: these are investor actions that enable the SDGs, beyond the impact of the investor's direct portfolio. Examples include sharing SDG impact data and lessons publicly, mentoring and enabling others, exploring partnerships for greater SDG impact, supporting industry infrastructure, and promoting policy reforms. Investors can also have negative investor contribution, meaning they can employ strategies that undermine the impacts of their investments. The SDG Impact Standards name some specific examples. They include financial practices that can negatively affect or distort investees' impact. Such as financial analysis methodologies that incentivize short term results over longer-term impact. Or domiciling funds in tax havens, while relying on government funding for emergency support in times of crisis. There are compensation and incentive structures that could disincentivize managing for greater impact. For instance, basing incentives on near term financial returns versus longer time horizons. And finally, there are management practices related to stakeholder considerations, such as elevating the interests of shareholders over those of other stakeholders. While this is not an exhaustive list of practices that can lead to negative investor contribution, it gives a sense of the kinds of activities that might require attention and mitigation. How can you set goals around your investor contribution practices? Engage stakeholders to assess your current practices. How are you motivating staff, investees, potential co-investors, and others to drive toward impact? How might you be inhibiting impact? Engage with your stakeholders on these questions. Identify the most important areas where you can improve your negative practices and strengthen your positive ones. Recognize that contribution happens across all stages of the investment process. Deal selection, diligence, negotiation, portfolio management and exits are all places where investors can integrate positive contributions to influence impact. Be mindful of the riskiest moments for negative contribution. For example, if you advocate for a financial exit that will likely reduce a portfolio company's impact on a material SDG for that investment, you have created a negative investor contribution. There are key moments in which investors naturally hold power, such as when they set the terms of the deal, decide who sits on the governance body of the investee. Accept or reject exit options, or even decide what happens to assets when a company fails. Consider the SDGs and stakeholder needs at these critical moments. Work with your investees to improve their impact management practices. In addition to setting goals through internal practices, many investors also make a commitment to work directly with their portfolio of investees to improve their practices. For example, DBL Ventures and SJF Ventures, two dedicated impact funds in the US, each have a person on their team dedicated to increasing impact in collaboration with the investees in their portfolio. What can you commit to going forward? The investor contribution goals you set should be the norm for your fund's practice not something you happen to do once or twice. Document the types of positive contribution you'll commit to and the negative contributions you commit to working to avoid. Akhil knew that his fund team would take an active role in both signaling and actively engaging through their board seat roles and coaching of individual entrepreneurs in their direct portfolio. His team was willing to deploy capital in lower income markets in India in financial inclusion with some more flexible terms. So realized they were also growing new markets when it came to that SDG. He also wanted to be sure that the deal terms for financial inclusion would help the investees grow strong balance sheets quickly. So he decided to explore opportunities to partner with some local government entities to lower risk for his investees, should they experience a market downturn. Paula knew that her investor contribution in her $20 billion dollar carve out would be primarily in signaling that impact matters. For her investments in climate change, she and the Investment Committee agreed to take a more active engagement role, including filing shareholder actions. So she committed to engage actively for climate change and signaling for the rest of her portfolio. Paula's Investment Committee also committed to fund some first-time managers, particularly for investments related to equity and inclusion. They agreed this was a way to grow new markets. To mitigate negative investor contribution, Paula's team agreed to ask for ratios of management to staff compensation data for new fund investments. And to review their own internal incentive structure, to see if they could add incentives related to achieving measurable impact. Now, consider the goals for your investments, the investment terms you generally use and the ways you engage with investees to determine your own investor contribution practices. Making it real: Engage relevant stakeholders to reflect on your current practices. Which practices may be contributing positively to greater impact, and which practices might be contributing negatively. Set your intentions for positive investor contribution. Review the positive contribution practices and decide for which you will set a goal to incorporate into your investments for each SDG outcome. Commit to reducing negative investor contribution, document what you aim to change going forward. At the end of this step, you will have articulated your goals for investor actions that can support positive and mitigate negative investor contributions going forward."
<https://mx.coursera.org/lecture/impact-for-sdgs/investor-step-4b-set-investor-contribution-level-rI6SO>