Impact Investment:
Impact investments are investments made with the intention of generating positive, measurable social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets and target a range of returns from below market to market rate, depending on investors’ strategic goals. (GIIN).
Additionality:
Additionality refers to the positive impact or outcome that would not have occurred without additional resources or capital investment. Additionality accelerates and strengthens the programmatic work of Plan International by adding, for example, a long-term impact dimension.
Derisking:
Derisking strategies are practices aimed at reducing risks associated with investments and financial transactions in developing economies to make investments more attractive to commercial investors and hence scale the impact. Blended finance and guarantees are examples of derisking mechanisms.
Blended finance:
Definition 1: Blended finance is the strategic use of development finance for the mobilization of additional capital towards sustainable development in developing countries. It attracts commercial capital towards projects that contribute to sustainable development, while providing financial returns to investors. (OECD).
Definition 2: Transactions where public or philanthropic funders collaborate with private investors in order to catalyse (additional) impact. (Adventure finance).
Definition 3: Blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development. (Convergence).
Catalytic capital:
Investment capital that is risk-tolerant which aims to unlock impact and additional investment that would not otherwise occur. (Adventure finance).
Philanthropic capital:
Philanthropic capital refers to the financial resources that individuals, organizations, or foundations contribute to charitable causes and social impact initiatives. It encompasses donations, grants, endowments, and other financial resources aimed at addressing societal challenges, supporting nonprofits, and advancing positive change.
Concessional capital:
Concessional capital refers to financial resources provided at below-market rates by major financial institutions, such as development banks and multilateral funds, to developing countries.
It serves as a critical tool to accelerate development objectives in areas such as climate change mitigation, resilience, vaccine deployment, water sanitation, and education.
It targets high-impact projects that would otherwise struggle to proceed without specialized financial support.
Gender Lens Investing:
Gender lens investing is a strategy or approach to investing that takes into consideration gender-based factors across the investment process to advance gender equality and better-informed investment decisions. (GIIN).
Climate finance:
Climate finance refers to the financial resources allocated to activities aimed at mitigating or adapting to the impacts of climate change.
Impact measurement and management (IMM):
The process of identifying the positive and negative effects of a business’ activities on people and the planet and managing these effects towards the business and/or the investor’s social or environmental objectives. (Adventure finance)
Environment, Social and Governance (ESG):
ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. (Adventure finance)
Development finance institution (DFI):
Specialized development banks or subsidiaries that are set up to support private sector development in developing countries. (Adventure finance).
Microfinance institution:
Formal institutions whose major business is the provision of financial services and insurance products to low-income individuals and micro and small businesses. (Adventure finance).
