ImpactAlpha, May 24 – Impact-curious asset allocators and managers are eager for standards, performance assurance and benchmarks. Gaps in market infrastructure for impact management and performance are leaving both capital and impact on the table. To meet expectations, standard setters are distilling best practices into actionable tools and benchmarks.
Benchmark for best practices
Almost 130 investors have signed onto Operating Principles for Impact Management, introduced in 2019 by the International Finance Corp. Signatories commit to disclosing and verifying alignment with the standards for best practices in impact measurement and management. BlueMark has aggregated findings from more than 30 verifications for investors, from CDC Group to Leapfrog Investments, into the BlueMark Practice Benchmark to differentiate between practice leaders and practice learners.
“By establishing a shared consensus on best practices in impact management, we have created a valuable tool that we hope market participants can use to improve their own practices and to see where they stand against their peers,” says BlueMark’s Christina Leijonhufvud (BlueMark is an ImpactAlpha sponsor).
Compass, a new tool from the Global Impact Investment Network, offers a standardized methodology to compare impact across investments and funds. Investment impact, for example, can be normalized across scale (for example, increased access to clean drinking water for 46,000 individuals during a one-year period); pace (contributions toward an annual increase of 12% in individuals with access to clean drinking water); and efficiency (for every $100,000 invested, 610 additional individuals gained access to clean drinking water).
By making impact information credible and comparable, writes Rachel Bass, “the GIIN expects to see more capital to flow toward impact and, even more critically, more impact to result from each dollar of capital invested.”