ImpactAlpha, Oct. 2 – Impact investors have beefed up the case that social and environmental impact can generate competitive financial returns. What hasn’t been well documented is, uh, impact. The increasingly sophisticated practice of impact measurement and management is changing that.
At its investor forum in Amsterdam today, the Global Impact Investing Network is out with two reports that demonstrate how to aggregate and compare impact across sets of investments. One example rolled up 56 clean energy investments made through various instruments and primarily private capital. For each $100,000 invested, more than 2,000 people gained access to energy, more than 3,000 metric tons of greenhouse gas emissions were averted and at least 19 new jobs were created over one year.
It’s been difficult, until now, to aggregate impact results across investments. “Better transparency and comparability of impact performance data makes it easier for investors to screen investments and manage them in a way that helps improve impact outcomes,” says the GIIN’s Sapna Shah. The GIIN’s Rachel Bass will dive deeper in an afternoon session, “Driving shared data.”
- Greater sophistication. The methodology draws on other recent advances in impact measurement and management practice, namely the GIIN’s enhanced IRIS+ metrics catalogue (see, “IRIS+ tool provides guidance to reset expectations for ‘impact performance’”) and Impact Management Project’s five dimensions of impact (what, who, how much, contribution, and risk).
- Impact principles. The advance in impact performance analytics comes as more than 75 investment firms have signed onto the IFC’s Impact Principles, which lay out for investors how to integrate impact into investment processes (see, “Global investment firms adopt IFC principles seeking a market standard for impact investing”).