We exist to help solve the biggest global development challenges by investing patient, flexible capital to support private sector growth and innovation. That means our investments seek to make a lasting difference to people’s lives and to play a role in tackling climate change. We pursue this mandate across all our investments, seeking productive, sustainable and inclusive development in everything we do.
We also invest through two portfolios: Catalyst Strategies and Growth. When making a Catalyst investment, we are able be more flexible on the level of risk we take on, compared with our Growth portfolio, in exchange for what we call ‘enhanced development impact’. We invest with the understanding that the greater risks we accept are outweighed by an even greater quality of impact.
This does not mean that more commercially interesting investments cannot deliver the same impact. Rather, it is an expectation that our Catalyst Strategies have a higher minimum threshold of impact in exchange for flexibility on risk-return.
But what exactly do we mean by ‘enhanced development impact’? This paper sets out to explain our approach.
First, we have defined our impact threshold along two key themes: promoting inclusion and climate action. These ultimate impact goals drive our approach to achieving impact.
Second, we’ve set out how we think we can achieve the most transformative and large-scale impact – what we call ‘catalysing markets’. This is when our investments change other business and investor behaviour, so that the impact is multiplied and more far reaching. We explain how we first identify market failures related to achieving our impact goals of inclusion and climate action. And then go on to assess how we can shape markets to overcome these market failures and improve the way they work.
We’re using this framework to help us achieve high standards of impact, and we hope it can also serve as a useful tool to other investors in this space. We’re also committed to learning and adapting our approach to maximise impact and would welcome hearing from others interested in sharing their own experiences.
Watch the video below to find out more about our approach.