We set sustainable objectives at the Fund and portfolio level and assess each potential transaction against measurable social and environmental investment standards. Then, we systematically review progress made against these objectives. Our sustainability approach is overviewed by our sustainability committee which brings together renowned international figures.
Internal resources: drawing on the investment team members’ experience of Development Finance Institutions
The internal evaluation of the sustainability impacts of the transactions over their life cycle, performed by the investment team, is one of the key components of Blue like an Orange’s systematic assessment procedure of every transaction. Thus, the ESG assessment is fully integrated during the whole investment process, from screening to monitoring. This integration guarantees the “no trade-off” principle between market level rates of financial returns and sustainable development outcomes.
The integration of ESG impact assessment within the investment process is facilitated by the fact that the majority of the team, especially the investment team members, can draw on their experience of working for Development Finance Institutions, the International Finance Corporation (IFC), the World Bank in particular and in the cooperative banking sector.
Setting “Reach Targets” for the fund
Blue like an Orange sets “Reach Targets” in order to manage more specifically the Fund’s contribution to SDGs in our key sectors: sustainable infrastructure, access to finance and access to social services (comprised of healthcare, education and agriculture).
A systematic and three-layered ESG and sustainable impact evaluation of the potential deals
Blue like an Orange conducts a systematic ESG and sustainable impact assessment of each potential investment against objectives. This three-layered evaluation systematically includes reviews by independent parties and is required to meet minimum thresholds in order to proceed with the investment. The outcome of this assessment constitutes a specific section of the memorandum prepared for the Investment Committees and discussed among its members.
Independent ESG evaluation according to the IFC performance standards
For each potential deal, Blue like an Orange first carries a full Environmental, Social, and Governance review according to the IFC Performance Standards for each potential deal systematically using both internal and external assessment. The external assessment is provided by a team of IDB experts that is independent from IDB investment team, when IDB is a co-investor. Otherwise, Blue like an Orange systematically hires external consultants.
Following the independent assessment of the potential investment against these standards, Blue like an Orange (and IDB Invest when it is a co-investor) develops an Environmental and Social Action Plan with the borrower, which is required to comply with it and is a condition for loan signature.
“Shadow SDG Indicators” potential impact
To track progress made on the implementation of the SDGs, each of the 17 SDGs is further decomposed into different Targets. Every Target is then assessed through several Indicators. The list of Indicators is regularly updated and agreed upon by the United Nations Statistical Commission.
Blue like an Orange has an explicit focus on mobilizing private capital to achieve the UN Sustainable Development Goals (SDGs). Therefore, each potential loan is mapped to the SDGs at Goal, Target and Indicator level. Mapping to the SDG Targets and Indicators level may be challenging, as they have been developed with a public sector focus. Therefore, Blue like an Orange’s investment team, at times with the assistance of external consultants, works with the client to determine — “SDG Shadow Indicators”— that align with the SDG Indicators and are relevant for the company and loan proceeds.
Assessment of the social and environmental benefit through DELTA
When IDB invest is a co-investor with Blue like an Orange, each transaction is evaluated by an independent team at IDB Invest and receives a Development Effectiveness Learning Tracking Assessment score (DELTA score between 0 and 10) to assess the social and sustainable impact of the transaction and the additional benefit of the IDB/Blue like an Orange investment. If the investment scores below 5, it cannot proceed either to IDB Invest or Blue like an Orange Investment Committee. When Blue like an Orange is evaluating a transaction independently, the proprietary DELTA assessment may be carried out on a case-by-case basis by IDB Invest.
Systematic monitoring of each investment’s progress against expectations
Blue like an Orange (and IDB Invest when it is a co-investor) systematically monitors progress made against each investment’s Environmental and Social Action Plan. For each transaction, this Action Plan includes monitoring the annual evolution of the fixed set of “Shadow SDG indicators” which measures the company’s contribution to SDG progress at Goal, Target and Indicator level, as stated in the loan agreement. This will enable to monitor and share the Fund’s progress against the “Reach Targets” with investors. Furthermore, for each company that IBD Invest invests in, it has contractual rights to perform an evaluation of each company’s DELTA Score as well as other indicators on an annual basis. As agreed, Blue like an Orange will obtain updates from IDB Invest regarding these evaluations. Decisions and processes are improved based on the achievement of impact and according to the lessons learned.
Assistance provided to the companies through training programs to help them reach their sustainability targets
The partnership with IDB Invest enables all companies that IDB Invest and Blue like an Orange and IDB Invest invested in, to benefit from continuous support from IDB Invest to help them achieve the expected sustainability impacts. This support consists in training programs provided by IDB Invest which are aimed at specifically helping each company reach their Environmental and Sustainable Action Plan. It also includes the possibility to attend sustainability conferences and workshops organized by IDB Invest.