Feedback

HEC-Ecole de gestion de l'Université de Liège
HEC-Ecole de gestion de l'Université de Liège
MASTER THESIS
VIEW 103 | DOWNLOAD 5

How to drive impact performance in the impact-first investment fund managed by TELOS Impact, using an impact-based financial, reward scheme in particular?

Download
Thirion, Isaline ULiège
Promotor(s) : Xhauflair, Virginie ULiège
Date of defense : 18-Jun-2019/20-Jun-2019 • Permalink : http://hdl.handle.net/2268.2/6556
Details
Title : How to drive impact performance in the impact-first investment fund managed by TELOS Impact, using an impact-based financial, reward scheme in particular?
Author : Thirion, Isaline ULiège
Date of defense  : 18-Jun-2019/20-Jun-2019
Advisor(s) : Xhauflair, Virginie ULiège
Committee's member(s) : Francis, Yves ULiège
De jonck, Jonathan 
Language : English
Keywords : [en] impact-based financial reward, impact investing, impact fund manager, impact-based carried interest, impact-based bonus, impact-first investments, impact-based incentives
Discipline(s) : Business & economic sciences > Finance
Institution(s) : Université de Liège, Liège, Belgique
Degree: Master en sciences de gestion, à finalité spécialisée en Social Enterprise Management
Faculty: Master thesis of the HEC-Ecole de gestion de l'Université de Liège

Abstract

[en] This project was carried out for Telos Impact, a Brussels-based independent impact advisory firm that was recently mandated by some of its clients to set up and manage an impact investing fund on their behalf, Fund SI. The fund is an evergreen, impact-first fund pursuing an investment strategy aimed at delivering strong positive environmental impact. As investment manager of Fund SI, Telos Impact is entitled to a compensation in the form of a fixed part paid annually, as well as a variable part that is yet to be defined. Whilst traditional variable compensation schemes typically reward fund managers for their financial performance, the framework for Telos Impact should, in line with the fund’s fundamental impact strategy, incentivise the investment manager on their impact performance as well. This research aims to determine an optimal variable compensation scheme for Telos Impact as investment manager of Fund SI, in which the impact performance of the fund would be appropriately weighted.
Some pioneer impact funds have designed innovative structures for their variable compensation to be tied to the fund’s impact performance. Nevertheless, the concept of impact-based financial reward schemes is very novel and was never well documented. Therefore, this research relies on the data provided by twenty-two interviews conducted with impact investing fund managers, impact advisors and experts in order to gather their insights on those schemes. We first identify frameworks that may be used to structure an impact-based financial reward scheme, in the form of a carried interest or a bonus. Then, based on interviewees’ experiences, opinions and recommendations, we investigate how an impact-based financial reward scheme may contribute to securing the fund manager’s focus on the fund’s impact performance.
We find that an impact-based financial reward scheme may be valuable as it ensures fund manager’s commitment to impact, to the extent that it is based on a sufficiently reliable impact assessment methodology and appropriately mitigates risks related to impact-based incentives. The findings allow to make a recommendation to Telos Impact for an impact-based financial reward scheme that would best fit the context of Fund SI and incentivise the investment management team to strengthen the fund’s impact performance.


File(s)

Document(s)

File
Access _Thesis FINAL no appendices.pdf
Description:
Size: 844.85 kB
Format: Adobe PDF

Annexe(s)

File
Access _Appendices.pdf
Description:
Size: 882.47 kB
Format: Adobe PDF

Author

  • Thirion, Isaline ULiège Université de Liège > Master sc. gest., à fin.

Promotor(s)

Committee's member(s)

  • Total number of views 103
  • Total number of downloads 5










All documents available on MatheO are protected by copyright and subject to the usual rules for fair use.
The University of Liège does not guarantee the scientific quality of these students' works or the accuracy of all the information they contain.