Impact management and measurement system for an institutional investor in South Africa

Introduction

The rise of responsible investing has placed environmental, social, and governance (ESG) considerations, along with broader impact management, at the heart of institutional investment strategy. As global standards evolve, asset owners and managers are under increasing pressure to demonstrate not only their commitment to ESG principles but also their ability to measure and manage their impact with rigour and transparency.

In South Africa, a leading institutional investor recognised the need to critically assess its existing ESG and Impact Management systems to remain aligned with global good practice. The investor sought to strengthen its ability to evaluate how ESG and impact considerations are integrated across its investment portfolio, particularly to monitoring and reporting performance against its defined objectives.

To support this strategic initiative, the investor commissioned IBIS (now SLR and hereafter referred to as SLR) to conduct a comprehensive review of its ESG and Impact Management and Measurement System (IMMS), to identify gaps, benchmark against international frameworks, and recommend enhancements in line with emerging global trends.

Challenge

The institutional investor had established a foundational framework for integrating ESG and impact considerations across its investment processes. However, as global frameworks and investor expectations matured, the organisation recognised several challenges that risked limiting its effectiveness and credibility in the space.

Firstly, the lack of standardised, actionable metrics across asset classes made it difficult to measure ESG and impact outcomes consistently. The organisation needed a system that could support a more structured and comparable evaluation of impact performance, tailored to the South African context but benchmarked against international norms.

Secondly, the existing system lacked a robust mechanism for monitoring and evaluating (M&E) the progress of investments against defined ESG and impact objectives. While policies were in place, the investor wanted to transition from a largely principles-based approach to a performance-driven approach, grounded in data, evidence, and feedback loops.

In addition, the investor faced a strategic imperative to ensure that its practices remained aligned with emerging global standards such as the Impact Management Project (IMP), Operating Principles for Impact Management (OPIM), and relevant disclosures under international ESG taxonomies. This required a critical look at both governance structures and practical implementation across the investment lifecycle—from due diligence to exit.

Solution

SLR adopted a tailored and collaborative approach to address the investor’s needs, applying its deep expertise in sustainability, ESG integration, and impact assessment. The engagement involved a multi-phase process:

1. Benchmarking and Gap Analysis
   SLR began by conducting a thorough review of the investor’s existing ESG and impact management system, comparing it against leading international frameworks such as the IMP, OPIM, and the IFC’s Performance Standards. This allowed SLR to identify alignment with good practice, as well as areas requiring enhancement.
2. Stakeholder Engagement
   To ensure that recommendations were contextually appropriate and actionable, SLR conducted interviews and workshops with key internal stakeholders, including investment managers, ESG officers, and compliance teams. This engagement helped to surface practical challenges in implementation and foster buy-in for future system upgrades.
3. Customised Recommendations
   Based on the findings, SLR developed a set of targeted, prioritised recommendations for strengthening the investor’s impact management and measurement capabilities. These included suggestions for:

• Refining impact objectives and aligning them with measurable outcomes.
• Enhancing data collection processes across the investment cycle.
• Integrating ESG and impact considerations into decision-making tools.
• Developing clear internal governance mechanisms to oversee implementation and review.

Strategic Roadmap
Finally, SLR provided a phased implementation roadmap, enabling the investor to enhance its systems over time while balancing operational constraints and change management considerations.

Impact

The review delivered by SLR positioned the institutional investor to take a significant step forward in its ESG and impact integration journey. By adopting a more structured and performance-focused approach, the investor is now better equipped to:

• Monitor and evaluate ESG and impact outcomes credibly and consistently.
• Demonstrate alignment with global good practice to stakeholders, including regulators, beneficiaries, and international partners.
• Respond proactively to the evolving global landscape of sustainable finance, including emerging ESG disclosure mandates and investor expectations.

The implementation roadmap provided by SLR is enabling the investor to gradually embed enhanced ESG and impact practices throughout its investment lifecycle. This ensures not only compliance with global standards but also the ability to actively drive positive social and environmental outcomes through its portfolio, contributing to broader national and global development goals.

Ultimately, the engagement has allowed the investor to solidify its reputation as a forward-thinking, impact-conscious institution, reinforcing its role as a leader in responsible investing within the South African and African financial sectors.