What is EII?

Equality Impact Investing (EII) is a form of social impact investing that explicitly aims to reduce inequality and advance human rights. It applies the equality and human rights movement’s internationally recognised aims, principles and standards to social impact investing goals, strategies and impact measurement across the full spectrum of capital.

Why is Equality Impact Investing needed?

What can it achieve?

Inequality is damaging us as individuals and collectively. Different people and groups are being discriminated against in structures, processes and outcomes across cultural, political, civic, economic and social spheres and on the basis of their characteristics. It is also undermining our collective endeavours to build thriving democracies, stable societies, inclusive economies and sustain our shared planet.

However such inequality is not inevitable. The EIIP was established out of a recognition that organisational practices can either perpetuate or move against inequality – both its causes and effects. By using EII, organisational practices can be influenced and driven by social impact investors. It is in their power to improve outcomes for people and groups currently experiencing or at risk of discrimination and inequality; increase exposure of systemic inequality; and develop alternatives that advance equality.

what is equality impact investing?

definitions and principles

Source: Equality Impact Investing: From Principles to Practice

Equality impact investing is a form of social impact investing that aims to deliver positive equality impact. That impact needs to be intentional, positive and significant.

Inequality is unfair differences that impact on different people’s or groups’ ability to realise their human rights and freedoms. It is a multi-dimensional challenge that can be seen and measured in the differences between what resources people have, and what they are actually able to be and do. These differences result from structural and/or individual discrimination, disadvantage or abuse.

Advancing equality is about setting and achieving positive objectives and goals that enable individual or systemic change. Reducing inequality involves, at the least, limiting its negative impact on people but, optimally, also acting on its drivers and root causes.

What does equality impact investing involve and require in practice?

Social impact investing is generally accepted as making investments that ‘intentionally target specific social objectives along with a financial return and measure the achievement of both’ (G8 Social Impact Investment Taskforce, 2014).

Image: Bridges Fund Management and Impact Management Project

Setting and measuring equality impact goals: In setting and measuring progress on equality impact goals, equality impact investors should draw on measurement frameworks based on the internationally recognised standards and practice of the wider equality and human rights movement. These measurement frameworks are multi-dimensional and look at inequality between different people and groups, in different areas of their lives e.g. work, education, participation in their life outcomes, their treatment in policy and institutional process, and in their legal and social status. Progress on equality can be measured both in terms of improvements in people’s outcomes, treatment and status, but also the extent to which the drivers or causes of their inequality is being addressed.

Using EII Strategies: EII can be easily integrated into existing investment processes and so does not require new systems. Investors can draw on one or more of five equality impact strategies, which, can overlap and are:

Capital to marginalised entrepreneurs
Investment capital is channelled to entrepreneurs that face one or more forms of inequality or discrimination based on their individual characteristics and status. This strategy tackles inequalities such as underrepresentation of marginalised groups as entrepreneurs, an important and influential group in society, and also evidence of a “credit gap” for women and ethnic minority entrepreneurs attributed in part to discrimination.
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Target ventures with good equality and diversity practice
Investors focus on ensuring their investees are both optimising leadership and employee diversity (based on characteristics or statuses such as age, disability, gender, ethnicity, religion or belief and sexual orientation) in their organisational make-up, and also considering the equality impact of their wider operations, products and services.
This includes addressing the equality impact in their direct operational processes e.g. in recruitment and workforce related practice, marketing and communications, sales and distribution channels, procurement and their wider value chains (e.g. supplier workforce practices).
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Target inequality mitigating organisations
Inequality mitigating organisations or initiatives aim to either ensure minimum basic standards in how these people and groups are treated (the human rights “floor”; such as tackling extreme poverty) and/or seek to limit the effects of discrimination and inequality still further (raising the ceiling; such as building the confidence and resilience of marginalised groups to deal with additional barriers or challenges they may face in employment because of their status or characteristics). In general though, they do not focus on the wider causes or drivers of the discrimination or inequality they are seeking to mitigate.
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Target equality transformative organisations
Equality transformative organisations or initiatives seek to identify and/or address the root causes or structures of inequality, as well as develop alternatives, with a view to supporting long term transformative change.
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Improve investors own make up and practice
Investors consider the equality impacts of their own operational practices and diversity and take active steps in improving their equality impacts as an organisation and throughout their investment process.
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Learn more about EII on the EIIP Knowledge Hub