Data structure
| Interviews’ excerpts | First order concepts | Second order themes | Aggregate dimension |
|---|---|---|---|
| There’s a question around what exactly constitutes impact litigation. Within that category, I’d probably put things that include the litigation against governance, for example, challenging their policies. And whether those are compliant with the government’s legal obligations. But I think other people would also put in that category the kind of private tortious law claims that seek to gain damages from multinational companies for the alleged role in or failure to provide a remedy for issues including environmental damage and personal injury. (L1) I don’t think impact really is defined. (L3) | Impact-related definition | Loss of focus | Impact Litigation Causes |
| I always keep ESG and Impact separate because they are two different things. (L2) They often trivially confuse ESG and Impact, sustainability and impact. (I1) | Impact vs ESG vs Sustainability | ||
| So now it is obvious that there is a lot of confusion because there has not been time for a cultural change to settle down. (I1) But still, it’s important, I think, to sensitize everyone on these topics. (I3) | Cultural gaps | ||
| There’s a huge area of self-declaring and presentational approaches to impact investing, where I would question how much of that presentation really results in serious substantive impact as opposed to something that’s got a theory attached to it. And part of that is to do with the monetization of impact. (L3) Intentionality is not a statement. (I1) One of the risks is the habitual propensity to tell the market about events that are ameliorative to what you are, which at best as a jurist is the so-called dolo bonus, i.e. the pill to sell the product and sometimes instead is done with guilt if not malice. (L2) | The fairy-tale risk | Ambiguous promises | |
| A transparency of processes in the start-up phase of fund setup helps to counter any challenges related to the phenomenon of greenwashing. (L2) I’d certainly say that impact washing is everywhere. (L3) | Washing phenomenon | ||
| However, I imagine that any legal problems, in terms of precisely impact risk, non-delivery of impact and then confrontation on a whole set of terms that were part of the contractual package where we measure and define mutual obligations, then you can have a controversy. (I1) This is because it was about a controversy precisely on these different expectations of the delivery of the impact. (I2) | Missed expectations | ||
| There is the problem of start-ups, precisely dilution, and so a fear of dilution of founders. (I2) The redeemable equity is something that I think would be very suitable in the Impact investing industry because it would protect from that impact risk from that excessive and even immediate or too fast dilution of the founders and therefore also lead to reduce with the risk of litigation, at least we investors with the founders. (I2) | Risk of dilution | ||
| Another issue that we are working a lot on is that of creating transparent chains of data collection. (L2) Subsequent to entry into the company we give ourselves six months with the target [company] to close the value chain and define the indicators and to a further addendum will be signed which at this point will become part of the overall Investment Agreement in which the indicators are defined. Why do we do this work subsequently? Because the evaluation of what are the indicators, the dimensions of outcomes, require further reflection by the enterprise. It requires some training, it requires some accompaniment and it is not something that is done in our opinion in a month because it risks that the target [company] is not aware of what it is doing more. (I1) | I manage, therefore I do | Measurement and Reporting Tools | Prospective Solutions |
| By collaborating with other SGRs we realized that the processes are different and in my opinion it’s important that the definition of processes comes before even the measurement, that it becomes a key element that is invasive for the target and for the SGR. (I1) So from a political side, there should be more clarity on definitions and how to achieve measurement, so clarity on the processes from the scouting. (I1) | Focus on processes | ||
| I think it’s about kind of having this package which is kind of set out in the LISIs [Legal Innovation for Sustainable Investments] guiding principles. (L1) | Guiding principles | ||
| The problem is that all the resources that are on ESG are much more adapted to big corporates. (I3) We try as much as possible to avoid external elements always because the more the monitoring process is inherent with the business itself the more you reduce litigation events within investment agreements. (I1) | Tailored instruments | ||
| “Double governance” at the level of the financial entity and governance in the target. We always ask to have an involvement in the governance of the company. (I1) Well, look, the interventions start from the most mundane ways of creating within the board, specific expertise of ESG or sustainability committees. (L2) | Governing the impact | Participatory Governance Models | |
| I think there’s a big area there for the development of documentation, governance, and governance approaches that really match up that commercial operation to the impact and the social part of it. (L3) | Merging commercial and social souls | ||
| We really spend time talking to other funds especially because today everybody is doing the same business. (I1) There’s this tricky balance to try and achieve between opening yourself up enough in order to get the real feedback and the input from external stakeholders into strategy and plans for implementation. (L1) | Trustful interactions | ||
| The political authorities should challenge the provider for not delivering on the important impact aspects of the contract. (L3) We clarify what the impact areas that we’re going to work on will be, what the impact objectives are and then obviously a mission drift clause that we include in a statute at the beginning of the investment, as it is difficult to change it later We try to define the mission and then link it to the mission drift from business plans as well as statements that become part of the investment agreement. (I1) | Impact centrality | Impact-centered contracts | |
| From a from a legal perspective, what you’re always trying to do is put in place the right kind of contractual provisions and contractual levers to make sure that you’ve got this kind of framework in place, under which you can make sure that you have this framework that’s you know, rigid enough so everyone knows kind of what the end goals are and that it’s not going to change and but also flexible enough to make sure that when unexpected things do come up, and they can be put in place and obviously part of that may well be to put in place provisions that say, you know, certain monitoring techniques, for example, need to be employed. (L1) With the companies in the portfolio, we often put clauses linked to impact, saying, for instance, if you were to abandon the impact or if the impact wasn’t strong enough anymore, we wouldn’t be allowed to exit. (I3) | Clear investment terms | ||
| The critical element is just to anticipate the further evolution that will necessarily come of the regulatory framework and its application because slowly the techniques, the knowledge, the awareness of the regulators of those who will have to investigate for fraud and so on will grow. (L2) I think that more and more lawyers are interested in the impact space. And I think there’s also a kind of generational thing in terms of junior lawyers in particular, feeling more empowered to speak up about things that they feel passionate about. (L1) | Proactive than reactive approach | Action |
| Interviews’ excerpts | First order concepts | Second order themes | Aggregate dimension |
|---|---|---|---|
| There’s a question around what exactly constitutes impact litigation. Within that category, I’d probably put things that include the litigation against governance, for example, challenging their policies. And whether those are compliant with the government’s legal obligations. But I think other people would also put in that category the kind of private tortious law claims that seek to gain damages from multinational companies for the alleged role in or failure to provide a remedy for issues including environmental damage and personal injury. (L1) | Impact-related definition | Loss of focus | Impact Litigation Causes |
| I always keep ESG and Impact separate because they are two different things. (L2) | Impact vs ESG vs Sustainability | ||
| So now it is obvious that there is a lot of confusion because there has not been time for a cultural change to settle down. (I1) | Cultural gaps | ||
| There’s a huge area of self-declaring and presentational approaches to impact investing, where I would question how much of that presentation really results in serious substantive impact as opposed to something that’s got a theory attached to it. And part of that is to do with the monetization of impact. (L3) | The fairy-tale risk | Ambiguous promises | |
| A transparency of processes in the start-up phase of fund setup helps to counter any challenges related to the phenomenon of greenwashing. (L2) | Washing phenomenon | ||
| However, I imagine that any legal problems, in terms of precisely impact risk, non-delivery of impact and then confrontation on a whole set of terms that were part of the contractual package where we measure and define mutual obligations, then you can have a controversy. (I1) | Missed expectations | ||
| There is the problem of start-ups, precisely dilution, and so a fear of dilution of founders. (I2) | Risk of dilution | ||
| Another issue that we are working a lot on is that of creating transparent chains of data collection. (L2) | I manage, therefore I do | Measurement and Reporting Tools | Prospective Solutions |
| By collaborating with other SGRs we realized that the processes are different and in my opinion it’s important that the definition of processes comes before even the measurement, that it becomes a key element that is invasive for the target and for the SGR. (I1) | Focus on processes | ||
| I think it’s about kind of having this package which is kind of set out in the LISIs [Legal Innovation for Sustainable Investments] guiding principles. (L1) | Guiding principles | ||
| The problem is that all the resources that are on ESG are much more adapted to big corporates. (I3) | Tailored instruments | ||
| “Double governance” at the level of the financial entity and governance in the target. We always ask to have an involvement in the governance of the company. (I1) | Governing the impact | Participatory Governance Models | |
| I think there’s a big area there for the development of documentation, governance, and governance approaches that really match up that commercial operation to the impact and the social part of it. (L3) | Merging commercial and social souls | ||
| We really spend time talking to other funds especially because today everybody is doing the same business. (I1) | Trustful interactions | ||
| The political authorities should challenge the provider for not delivering on the important impact aspects of the contract. (L3) | Impact centrality | Impact-centered contracts | |
| From a from a legal perspective, what you’re always trying to do is put in place the right kind of contractual provisions and contractual levers to make sure that you’ve got this kind of framework in place, under which you can make sure that you have this framework that’s you know, rigid enough so everyone knows kind of what the end goals are and that it’s not going to change and but also flexible enough to make sure that when unexpected things do come up, and they can be put in place and obviously part of that may well be to put in place provisions that say, you know, certain monitoring techniques, for example, need to be employed. (L1) | Clear investment terms | ||
| The critical element is just to anticipate the further evolution that will necessarily come of the regulatory framework and its application because slowly the techniques, the knowledge, the awareness of the regulators of those who will have to investigate for fraud and so on will grow. (L2) | Proactive than reactive approach | Action |
Source(s): Authors’ elaboration
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