Impact Management | April 12, 2022

Benchmarks for impact performance promise to help investors drive ‘impact alpha’

Dennis Price
ImpactAlpha Editor

Dennis Price

ImpactAlpha, Apr. 12 – Financial benchmarks such as the S&P 500 give investors something to beat in their own portfolios. “We want investors around the world waking up every day to also think about how they can drive greater impact performance,” says Amit Bouri of the Global Impact Investing Network, which has released an impact performance benchmark for financial inclusion, the first in a series of sector-based benchmarks.

Chief investment officers want a data-driven approach to gauge the impact of their impact investments, Bouri told ImpactAlpha. “Impact measurement and management has moved up the org chart in significance.”

  • Why it matters. Data on the impact of impact investments has proliferated, but “What do you do with it?” asks Bouri. “How do you focus your attention on how to drive greater performance?” The benchmark gives investors a tool to assess whether or not their investment strategies are moving the dial, relative to their peers, on expanding access to finance, for example, and then correct course as necessary. 
  • Informed investments. The pilot benchmark includes investment-level data from ​about a dozen impact investors including BlueOrchard Finance, Community Investment Management and LeapFrog Investments. Of interest: Investments that aim to create high-quality jobs broadly through financial services on average delivered more benefits to women than investments with an explicit gender lens. Impact targets are important, say the GIIN researchers. Tracking both intended and unintended results, “drives more informed investment decisions.”