JP Morgan Private Bank (PB) has published a case study on its Global Impact Fund (GIF) – an impact investing fund-of-funds – and introduced the GIF’s new IMPACT tool, which were both developed with Tideline, an impact investment consulting firm.
The GIF, which closed in March 2021 with more than $150m in capital commitments, has made allocations to seven buy-out, growth- and venture-stage private equity strategies to date. JP Morgan PB and Tideline are also committed to diversity objectives in the GIF and have achieved a 49% capital allocation to fund managers that are diverse-led or -owned.
The case study includes two specific examples of IMPACT in action based on two managers in the GIF portfolio: Trill Impact, a European-based private equity buyout manager, and Elevar Equity, an emerging markets venture capital firm.
“A thoughtful approach to impact investing requires a rigorous approach to impact management and measurement,” Jessica Matthews, managing director and global head of sustainable investing, JP Morgan PB, said in a statement.
Due diligence enhancement
IMPACT is designed as a ratings approach to improve fund diligence and builds on other common impact investing tools and frameworks, such as the UN sustainable development goals (SDGs). It allows JP Morgan PB to compare and contrast the impact characteristics of funds across disparate themes.
The tool includes four core pillars of analysis: strategic intent, impact integration, ESG+ and contribution. Each impact fund manager in the investment pipeline is scored or assessed against these pillars to provide an additional input into manager selection.
IMPACT supports the consistent consideration of impact from manager screening through impact due diligence and ongoing monitoring throughout the life of the investment.
As such, IMPACT constitutes a market-aligned approach to impact fund diligence, uniquely suited for the role asset allocators play in making sense of various investment strategies and products and ensuring the market scales with impact integrity.
Individual manager selection and the ultimate construction of the portfolio was completed through the rigorous due diligence process of J.P. Morgan Private Bank’s alternative investments team, enhanced by IMPACT.
Investment themes
JP Morgan PB launched the GIF in 2020 with the goal of committing client capital across three investment themes that are aligned with the SDGs. First, inclusive growth, such as advancing the shift toward equal economic opportunity through access to financial services, quality education and training, and promoting inclusive business practices by investing in human capital.
Second, climate solutions, including promoting agricultural and energy efficiency, sustainable water use, climate resilience, and the renewable energy transition.
Finally, health and wellness, which involves increasing access to quality, affordable healthcare and treatments, and better food security.
“As the impact investing industry continues to grow and mature, institutional allocators like JP Morgan PB need a way to differentiate between a variety of fund managers and commit capital only to those with a truly rigorous approach to impact investing and impact management,” Ben Thornley, managing partner at Tideline, said in the statement.
