Best practice for investors | Big Society Capital

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Best practice for investors

This summary guide takes investors through developing and implementing their own approach to social investment.

Intermediaries ensure that organisations tackling major social issues have access to appropriate and affordable finance to help them thrive and grow. Financial performance and social impact go hand in hand. This summary guide takes investors through developing and implementing their own approach to social investment.

The full guide, The Good Investor, developed by Investing for Good in collaboration with our social investor partners, can be found here.


STEP 1:  Planning

Whatever form your intermediary takes, start thinking about your social objectives from the beginning and reflect this in your governance documents, your investment policy and your investment criteria.

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STEP 2:  Screening

When you have set up your intermediary, screen potential investees before entering into expensive and time-consuming analysis and due diligence. Screening serves to refine the pipeline of investments, and to be clear internally about the focus and purpose of investing.

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STEP 3:  Analysis

Carry out impact analysis alongside financial due diligence.

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STEP 4:  Due diligence

Processes for due diligence need to be transparent and clear.

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STEP 5:  Investment decision making

Making social investment decisions involves considering trade-offs between impact generation, impact risk, financial risk and financial return.

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STEP 6:  Investment deal-making

Once you have approved the investment, include social impact considerations in the process of negotiating the investment deal.

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STEP 7:  Monitoring and evaluation

Monitoring and evaluating impact allows you to assess past and current performance and informs future decisions.

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STEP 8:  Reporting

Investors being held to the same standards as their investees implies asking the same questions as those outlined in the monitoring and evaluation section.

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