The Four Faces of Impact: Which Manager Are You?

The Four Faces of Impact: Which Manager Are You? 

Imagine an institutional investor evaluating potential funds for investment. After extensive due diligence, they shortlist three funds that offer comparable risk-adjusted financial returns, along with robust impact practices and high impact potential.  

To assess impact performance, the investor reviews fund managers' latest impact reports—if available—only to find inconsistent structures and content. Some reports read like promotional materials, filled with compelling stories, while others take a data-heavy, accounting-like approach to impact metrics.  

With each manager interpreting and communicating impact in their own way, how can the investor decide which fund to invest in? 

An experienced investor with in-house impact expertise is likely to conduct impact due diligence and make the investment decisions directly. In other cases—more common in practice— investors often rely on an impact partner to evaluate the fund’s impact considerations and performance. 

At Phenix, we’ve conducted numerous on-site and desk-based impact due diligence assessments across asset classes and markets on behalf of large institutional investors. Drawing from this experience, we developed the Four Faces of Impact—a matrix designed to classify managers through a comprehensive assessment of their funds. 

• The horizontal axis, Impact Storytelling, reflects the fund manager’s ability to effectively communicate their impact narrative, whether through impact reports, qualitative stories, or other forms of storytelling (e.g., verbal or visual). Our experience indicates that the extent and form of storytelling are influenced by both the asset class (e.g., private versus public markets) and regulatory and political developments. Further, some institutional investors need to communicate their impact narrative in a simple way to their stakeholders—such as board members and pension beneficiaries—who often have limited or varying levels of understanding of impact concepts.  
• The vertical axis, Impact Potential and Foundation, covers three key dimensions: impact practice, performance reporting and impact potential. It reflects the strength and alignment of impact practices and performance reporting with leading market standards and guidance, such as the Impact Principles and Impact Performance Reporting Norms. Further, it considers the fund’s potential for scale and depth of impact, often evaluated using IMP’s Five Dimensions of Impact. The degree of alignment across these dimensions also varies depending on the asset classes.  

A Deep Dive into Fund Manager Archetype 

These four archetypes of fund managers are designed to classify them at a specific point in time. As managers often oversee multiple funds, their classification may vary depending on the specific fund being evaluated. While many managers aspire to be Impact Champions, the reality exist along a spectrum. In our experience, we often encounter The Silent Impact Achievers, The Impact Learners, and the Impact Illusionists — each on their own unique impact journey. 

The Four Faces of Impact

• Face 1: Impact Champion (Top right)  
  Key characteristics: Fund managers with high impact potential, robust impact practices, transparent and comprehensive reporting, and a compelling impact narrative.  
  Potential for investor contribution:  Include these managers in your portfolio to maximize contribution to positive social and environmental impacts, while gaining insights into industry best practices.  
• Face 2: Silent Impact Achiever (Top left)
  Key characteristics: Fund managers with high impact potential, robust impact practices, and transparent reporting, but ineffective impact storytelling.  
  Potential for investor contribution: Support these managers in improving their storytelling to better highlight their impact. 
• Face 3: Impact Learner (Bottom left) 
  Key characteristics: Early-stage fund managers with lower impact potential, developing impact foundations, and an underdeveloped impact narrative.  
  Potential for investor contribution:  Help these managers in adopting best practices, strengthening their impact foundations, and crafting a compelling impact narrative. 
• Face 4: Impact Illusionist (Bottom right) 
  Key characteristics: Fund managers with strong storytelling skills but weak impact foundations, potentially creating the illusion of impact (impact washing) without delivering positive outcomes. These fund managers are often thematic (e.g., decarbonization etc.) or ESG and sustainability focused.  
  Potential for investor contribution:  Engage with these managers to mitigate the risk of impact washing by supporting them in building strong impact foundations and selecting high-impact investment opportunities. 

Impact Risks Across the Matrix 

This classification of fund managers also offers insights into impact risks. The Five Dimensions of Impact defines impact risk as the likelihood that impact will be different than expected and classifies it into ten types—such as risks related to the strength of evidence and the extent to which community needs are considered. In our experience, the probability of impact risks – such as evidence risk - increase as we progress from Impact Champion to Impact Learner or Illusionist on the matrix.  

Does storytelling have a role to play in impact reporting? By Matt Ripley, Impact Frontiers 

Fund managers often invest significant time and effort into crafting impact reports - largely because, historically, there has been no clear, shared understanding of what ‘good’ impact reporting actually looks like. The result? Reports that often feel more burdensome than necessary for managers and less useful than they should be for investors. 

In April 2024, the Impact Performance Reporting Norms were published following an 18-month public consultation led by Impact Frontiers. The Reporting Norms establish a consensus on how asset managers in private markets can report their impact performance to asset owners. 

Now being piloted by more than 100 investors worldwide, the process is beginning to reveal what investors actually find most valuable in impact reporting. One perhaps surprising insight: many investors place significant value on case studies - seeing them as a powerful way to bring impact to life and support decision-making. 

At the same time, investors are often sceptical of case studies when it’s unclear whether they represent typical performance or have been cherry-picked to showcase only success stories. The Reporting Norms seek to address this tension by providing recommendations to managers about not just what information to include, but also how to present it transparently. That includes clearly disclosing: 

• How the case study was selected – for example, whether the investee was chosen based on an objective criterion, such as representing the largest investment(s) in the portfolio, or simply because it was the only investment with sufficient available data. 
• What message the manager hopes to convey by including it – for example, using a best-case example to help communicate questions like: “What does a high-impact investment look like?” and “What factors contributed to its success?” 

This kind of transparency helps case studies resonate with investors, offering a credible and compelling narrative of change that complements other performance disclosures. So, effective storytelling through case studies isn’t in opposition to good impact reporting — it can be an integral part of it, if done well. 

The Four Faces of Impact matrix offer a practical lens for navigating the diverse landscape of fund managers. By recognizing these archetypes, investors can prioritize greater transparency and accountability in their impact due diligence, ultimately encouraging managers to strive to become Impact Champions. We believe this will contribute to a future where more fund managers evolve into Impact Champions, making this a norm than an exception.