Impact Reporting: Frequently asked questions (and answers!) from impact investors

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Guest Author

Sarah Gelfand

Impact fund managers are increasingly expected to provide their investors (i.e., institutional investors and allocators) with reporting that offers visibility into their portfolio’s impact results. 

The general purpose of these impacts should be to provide LPs and other stakeholders with the information necessary to understand and evaluate impact performance. But many impact investing practitioners are unsure of what information these reports should include and to what extent it should be integrated with financial reporting. 

This piece addresses some of the most common questions we receive from clients and our recommendations as to best practice. To learn more about BlueMark’s research into best practices for impact reporting, please visit https://bluemarktideline.com/raising-the-bar-2/ 

Q: What is the purpose of impact reporting?

A: Impact reports provide investors with the information they need to evaluate a fund’s progress in achieving the social and environmental impact outcomes targeted by the strategy, including insights into potential negative impacts and impact risks. 

Q: Are there any established standards for impact reporting?

A: There are not currently generally accepted standards for impact reporting the way there are for financial reporting (see: IFRS Foundation and FASB). Impact reporting is inherently more context-dependent and therefore does not lend itself as readily to standardization of data in the way that financial reporting does.

This critical gap is widely recognized in the impact investing market and has been a focus of BlueMark’s recent research.

Market actors interested in contributing to the process of developing impact reporting standards should consider participating in an open consultation hosted by Impact Frontiers that is focused on building consensus around a common approach to verifying impact reporting.

Q: What types of investors should pursue impact reporting?

A: Impact reporting is important for investors managing funds of all sizes, strategies, and stages with an explicit intention to contribute to achieving positive societal outcomes. This includes impact investors as well as sustainability- or ESG-oriented investors that are expected to report progress towards their ESG or sustainability commitments and related impacts.

While the content in the impact report will depend on the nature of the fund strategy and the specific sector or thematic focus, providing investors with regular updates on activities and progress is an accepted best practice.

Q: Should new or smaller impact investors be held to a different standard or market expectation?

A: Preparing impact reports can be time and resource intensive. While new and smaller firms may have limited capacity to prepare these reports, it is important that all market actors are held accountable by providing their investors with visibility into their progress on a regular basis. 

Managers can create more efficiency in the report creation process by using templates — whether created internally or adapted from an external resource (e.g., IMP’s 5 dimensions) — to document consistent and comparable information about each investment. This should help to standardize the overall structure of the report from year to year. Additionally, managers can save time by leveraging internal impact dashboards and reports in their communications with investors. 

Finally, maintaining up-to-date documentation about data sources, metric definitions, and model assumptions can save time when pulling together a report. 

Q: How far along should a fund be in deploying capital and tracking impact results before reporting on impact performance?

A: Managers can and should report on investments in their portfolio prior to having collected any post-investment results. It is still valuable to disclose to investors the impact rationale for a given investment, the specific impact KPIs that will be tracked, and, where possible, information about the baseline values for those KPIs and forward-looking targets. 

Additionally, the report can include commentary about the manager’s plans to support the investment’s impact pursuits.

Q: How frequently should investors provide impact reports for their investors?

A: As a best practice, managers should include updates about impact-related activities whenever providing important financial updates to their investors. Most impact reports are typically prepared on an annual basis. This could be done in line with the common practice, especially among private markets investors, of the annual collection of ESG and impact data from portfolio companies.

Annual reporting allows for charting of changes and progress over time across a set of core measures. Some investments may generate more immediate and measurable outcomes that can be charted annually. However, in other cases, the outcomes being pursued will take time to materialize. In those cases, annual updates on progress towards interim milestones that signpost progress along the way to longer-term outcomes may be more appropriate to relay to investors.

Irrespective of the impact time horizon, annual reporting on impact progress provides a mechanism for managers and investors to stay aligned about the results being generated and managed (both positive and negative).

Additionally, many impact-focused LPs prefer to evaluate financial performance and impact performance together as part of a holistic performance assessment. While preferences vary, synchronized reporting of financial and non-financial reporting allows investors to see the full picture of performance being generated. 

Q: What information should an impact report contain?

A: Impact reports should be produced with the intention of providing LPs and other stakeholders with the information necessary to understand and evaluate impact performance. Just as financial reports provide a way for investors to analyze and manage financial 

performance, impact reports should be designed to allow for similar analysis and engagement.

While there is no universal template for impact reporting, BlueMark has described the key elements of quality impact reports as agreed upon by a diverse group of industry stakeholders. BlueMark has also developed a framework for evaluating impact reporting that lays out the key criteria for quality reporting based on the Completeness and Reliability of the reported information. (Click here to download BlueMark’s framework.)

  • Completeness refers to the scope and relevance of reported information related to an investor’s impact strategy and results at both the portfolio- and investment-level.
  • Reliability refers to the clarity and quality of the data presented in the report, including underlying data management practices and systems.

Q: How short or long should an impact report be?

A: Impact reports tend to be highly variable in length. Some of this variability is due to differences in fund size and maturity, investment strategy, and the amount of impact data available. However, the length of the report isn’t as important as the relevance of the information contained therein. When preparing impact reports, managers should strive to be concise, focusing on the most pertinent information and presenting it in an accessible format. 

Managers can also minimize report length by cross-referencing other documents that summarize key aspects of their impact management approach, impact strategy, and ESG framework.

Q: Who should receive an impact report?

The primary stakeholder of a fund’s impact report is its investors. While some managers also choose to create public impact reports, there may not be complete overlap in the information disclosed across the two reports. In particular, a report to an investor may contain a more complete set of information about an investment’s impact performance, especially for private companies that may be more sensitive to certain information being in the public domain. 

When fund managers do produce two reports – one report just for LPs and one for the general public – the latter is often an abridged version of the former.


By BlueMark, a provider of independent impact verification and intelligence for the impact and sustainable investing markets.

BlueMark is an ImpactAlpha sponsor.