In October, the International Finance Corporation (IFC, the World Bank’s private sector lending arm) launched its draft Operating Principles for Impact Management , and invited comments on it until the end of December 2018. The principles define impact management as “managing [private] investment funds with the intent to contribute to measurable positive social, economic, or environmental impact, alongside financial returns.” They are consistent with the IFC, World Bank and much of the international community’s focus on leveraging the private sector finance for development, as outlined in the World Bank’s Maximising Finance for Development approach (see Observer Summer 2017). The focus on ‘impact investing’ also reflects the IFC’s increasing interest in this area. As development news website Devex noted in an October article, ‘impact investing’ has seen a five-fold increase to $228 billion since 2013.
As the IFC claims to have been the first impact investor, its own challenges are instructive as the development community becomes more closely involved in supporting impact investing and private finance as solutions to long-standing development issues (see Observer Summer 2018). In addition to general questions about impact investing, long-standing criticisms about the IFC’s project selection, (mis-)incentives and harms caused by some of its investments, as well as the “declining performance” of its development outcomes are notable.
To those interested in problematising the assumptions underlying the ‘impact investment’ paradigm and concerned about the increasing financialisation of development processes, the consultation provides an opportunity to feed into the design of what could become a sector benchmark.