Bates Wells are delighted to announce the launch of the Equalising Deal Terms – Investor Key Principles (EDT Principles) today, an initiative co-led by Equality Impact Investing Project (EIIP) and Bates Wells (and supported by the Connect Fund) to address power imbalances and inequality in impact investing relationships.
The EDT Principles are designed to support investors to apply a more equitable approach to the shaping of their investment deal terms, legal processes and documents. This project draws on a 12-month consultation and research process co-led by Rana Zincir Celal (Director of EIIP) and Sung-Hyui Park (Partner at Bates Wells) with wider funder networks as well as the change-making organisations who receive impact investing funding.
The accompanying report, Investee Perceptions of Power Dynamics in Legal Processes, presents the key findings from interviews conducted by Bates Wells with a range of change-making investee organisations in 2023, which contributed towards the development of the EDT Principles. This report reveals how investees experience and view the way investment terms, legal documents and processes are reproducing inequality.
A Reference Group of experienced social investor and change-making organisation representatives – including representatives from Big Society Capital, Access – The Foundation for Social Investment, Create Equity and Big Issue Invest – provided collective guidance and input into the two reports.
Stephen Muers, CEO of Big Society Capital, says:
“The EDT reports highlight the power imbalance and the challenges that many investees face in the legal process, with practical recommendations to work towards better outcomes when documenting investments. We hope that this project can contribute to more equitable investment documents and efficient processes; meaning impact-led organisations can devote more time and resource to their missions and creating social impact.”
Sarah Faber, Co-Lead of the Growth Impact Fund and Investment Director at Big Issue Invest, says:
“Big Issue Invest and the Growth Impact Fund are committed to better supporting social entrepreneurs and removing barriers to those from under-represented communities. The EDT reports helped us crystallise some of the difficulties and power imbalances we were already struggling with during the legal process. The useful framework provided has been of huge practical relevance, helping us to implement real change in our organisations to improve the experience of the social entrepreneurs and the lawyers we work with.”
Keya Advani, Director of Programmes and Policy at the Global Alliance of Impact Lawyers (GAIL), says:
“The EDT project prompts an important critical examination of lawyers’ roles in investment processes and advocates for practices that promote fairness and collaboration, supporting the creation of more equitable investment agreements. Crucially, it does this by drawing on the experiences and feedback of investees, through interviews and a wider consultation process. By embracing an investee-led approach to improving investment documentation, the EDT project provides a useful guide showing how lawyers can play a pivotal role in advancing the objectives of impact investing and fostering positive outcomes for all stakeholders.”
EIIP are hosting a webinar on 17 April at 11am-12:30pm to provide an in-depth introduction to the EDT principles. Sign up here to join and learn more about the project.