Even as impact investing has expanded from a niche strategy into a $500 billion global industry in recent years, it is still relatively young. The industry’s continued growth will rely in part on ensuring a consistent and effective method of impact measurement, especially as investors start demanding information about exactly how their dollars are moving the needle on the issues they target.
But standardizing this piece of the impact investing process is far from simple. From the unique complexity of each initiative to the variety of players proposing solutions, industry alignment has been difficult to achieve—and the high stakes mean development cannot be rushed.
Data has become an integral component of investment decisions, and impact investing is no exception. It’s impossible to know whether an investment is effectively delivering impact without measuring and recording its progress.
This is why investors need reliable, standardized data.
Sophisticated investors use this information to make decisions about specific investments as well as to inform their overall strategy, with the goal of feeling confident that they’re realizing the greatest possible impact with their capital. From a bigger-picture perspective, impact measurement paired with thoughtful reporting builds industry knowledge of what works and what doesn’t. In turn, well-designed reporting illustrates the progress made toward tangible outcomes and helps raise the industry’s profile.
Despite the growing consensus around the need for uniform data, efforts to standardize remain fragmented.
With the Project Output - Impact Measurement Guidelines - our aim is to provide a concise and comprehensive guide for investors and mentors on the various alternatives and frameworks for measuring the impact of their investment and activities.
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Partners @i2 SustainIT
There are a wide range of measurement tools and approaches used within impact investment, and these are used by both investees and investors, as well as third party certifiers (e.g. for ecolabel certification). Research has found that investors tend to use a number of techniques that are suited to their specific needs.
Making real social progress means using the right data—and lots of it—to evaluate outcomes, but caveats and misunderstandings abound, even among professionals in the impact measurement arena. Many organizations simply don’t have a clear, evidence-based idea of how or why their programs work, and different organizations have different ideas of what impact measurement entails. Before making important decisions about allocating resources, organizations need to first identify their impact program, where they want it to be, and how to get it there.
To aid the process we would like to present some of the most recognized and widely used impact measurement frameworks.
Global Impact Investing Network
The Global Impact Investing Network (GIIN) is a not-for-profit organization dedicated to increasing the scale and effectiveness of impact investing. The GIIN builds critical infrastructure and supports activities, education, and research that help accelerate the development of a coherent impact investing industry. For more information, visit their website
GIIN introduces the concept of Impact Measurement and Management - includes identifying and considering the positive and negative effects one’s business actions have on people and the planet, and then figuring out ways to mitigate the negative and maximize the positive in alignment with one’s goals. Impact measurement & management is iterative by nature.
To access practical how-to guidance to help advance your IMM practice, refer to IRIS+ guidance.
Impact Management Project
The Impact Management Project (IMP) provides a forum for organisations to build consensus on how to measure, assess and report impacts on environmental and social issues. IMP convenes a Practitioner Community of over 2,000 organisations to debate and find consensus (norms) on impact management techniques. It also facilitates the IMP Structured Network – an unprecedented collaboration of organisations that, through their specific and complementary expertise, are coordinating efforts to provide complete standards for impact measurement, assessment, and reporting.
IMP defines impact as a change in an outcome caused by an organisation. An impact can be positive or negative, intended or unintended. To understand and measure any impact, the Project introduces the five dimensions of performance.
On the IMP page you can find them! Visit their website
Study of Harvard Business School
The aim of this study was to deepen the understanding of the specific practices and methodologies that established impact investors use to measure the social impact generated by their investments, and to analyse the conditions under which each measurement method is most relevant. The intended audience for this analysis are the impact investors themselves, as well as social sector organizations, traditional funders, and evaluators.
Impact investors employ a number of methods to pursue their objectives. Recognizing that investors vary in their level of maturity and resources – and that their investees may also vary in level of impact measurement sophistication – is important. The Study proposes a framework that caters different integrated measurement models to each stage of investor and investee. Visit their website
Social Impact Investment Taskforce
The Group of Eight (G8) refers to the group of eight highly industrialized nations—France, Germany, Italy, the United Kingdom, Japan, the United States, Canada, and Russia—that hold an annual meeting to foster consensus on global issues like economic growth and crisis management, global security, energy, and terrorism. The Working Group Under the direction of the Social Impact Investment Taskforce, the Impact Measurement Working Group was established, consisting of 24 impact investing and measurement practitioners.
The Working Group has identified four broad phases of impact measurement: Plan, Do, Assess and Review. Along with insight into the impact that an activity is generating, this process generates intelligence that can further enhance the measurement and investment processes. Visit their website
World Business Council for Sustainable Development / International Finance Cooperation
In 2006 WBCSD and IFC have joint forces to create a clear and practical measurement methodology that could be adapted to different business sectors, be used by operations anywhere in the world and be tracked over time. Unlike environmental impact assessments (EIAs) or environmental, social and health impact assessments (ESHIAs) that are normally carried out as part of due diligence to determine future potential impacts arising from a greenfield or brownfield business investment, they wanted to be able to measure actual impacts at any stage in the life cycle of an operation.
The resulting Measuring Impact Framework is designed to help companies understand their contribution to development and use this understanding to inform their operational and long-term investment decisions and have more informed conversations with stakeholders.
Visit their website
The Investment Integration Project
TIIP’s mission is to help institutional investors understand the feedback loops between their investments and the planet’s overarching systems – be they environmental, societal or financial – that make profitable investment opportunities possible. TIIP also provides these investors with the tools to manage the impacts of their investment policies and practices on these systems.
TIIP offers investors a framework for where to focus and how to build an effective approach. Going beyond traditional returns metrics, the framework analyses how to consider and target appropriate goals. The TIIP proposal focuses on “system-level” investments, or big-picture issues like the United Nations’ Sustainable Development Goals. Visit their website
Principles for Responsible Investment
The PRI is the world’s leading proponent of responsible investment. It works: to understand the investment implications of environmental, social and governance (ESG) factors; to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.
The PRI acts in the long-term interests: of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole. The PRI is truly independent. It encourages investors to use responsible investment to enhance returns and better manage risks, but does not operate for its own profit; it engages with global policymakers but is not associated with any government; it is supported by, but not part of, the United Nations.
Responsible investment is an investment strategy which integrates environmental, social, and governance (ESG) factors into investment analysis and decisions. It recognises that ESG factors can have an impact on the financial value of an investment and also that investments have an impact on the world around us. Visit their website
Partners @i2 SustainIT
On 19 October 2020 all partners in the Impact Incubator for Nurturing Sustainability - i2 SustainIT project gathered online for the 2nd project meeting which due to Covid-19 had to be organised virtually, hosted by the project partner from Bulgaria: CEED Bulgaria and supported by Knowledge, Innovation and Strategies Management Club (KISMC). The rest of the project partners: EPN Consulting, IDEC, Worldview Impact Foundation and Creative District participated virtually from UK, Greece and Belgium. The project has been co-funded by the Erasmus+ Programme of the European Union for its 2-years' implementation.
Each partner had the chance to talk about the impact investment and sustainability ecosystem in their country whereas many case studies encouraged interesting discussions comparing the ecosystems in a variety of European regions. Furthermore, the main topic discussed was related to the current situation in each country and the risk management and mitigation plan which is of paramount importance to have the flexibility of adapting quickly to any possible challenges arising due to the pandemic.
The meeting was also focused on discussions about the project management activities led by EPN Consulting; dissemination strategy, financial and administration details. All partners agreed on next steps and the evaluation and quality assurance framework for the project. Another aspect touched during the meeting was about the 3rd meeting supposed to take place in Greece along with the 1st training under the project.
Moreover, CEED Bulgaria which is leading the 1st Intellectual Output of the project - Impact Measurement Guide (IMGuide), presented its structure, tools and each partner's role for supporting its development. Additionally, the project partners had a discussion on the output framework and suggestions for the content of the model and the main concepts, as well as previous and ongoing Erasmus+ projects related to the main topic of i2 SustainIT.
KISMC also opened the floor for discussion on the 2nd Intellectual Output - Design Thinking for Impact Incubation Toolkit (DTi2 Toolkit) and relevant updates to share with the partners. IDEC updated the consortium with progress on the 4th Intellectual Output - Digital Impact Incubator Platform (Di2 Platform).
During each meeting all partners aim to have a proactive catch up on the dissemination activities led by Creative District.
To learn more about the project, check our first blog article for the kick off of i2 SustainIT project: Impact Incubator for Nurturing Sustainability' Virtual Project Kick Off from London [i2 SustainIT].
Partners @i2 SustainIT
We see how in recent years the world of impact investing continues to grow more and more, many people say it is the future that comes to save the present! Everyday, there are more and more courses and trainings around the subject, it is talked about in the DAVOS forum and in all kinds of notable publications in the economic space. But in reality, it is sometimes difficult to understand what impact investing is.
Tesla with its electric cars, vaccines against COVID, Goldman-Sachs saying that they generate impact through investment in telecommunications...
Impact investing seems like a very open concept and in order to facilitate a better understanding of the concept itself, we would like to introduce you a selection of keywords. Therefore, because we want to help you make an impact, we have prepared a glossary that will help you and ease the way to create a better tomorrow.
Impact Investment Terminology
Like all terminology, each of these words has its advantages and disadvantages. Creating a consensus around the meaning of a word means that we can speak a common language, facilitating the understanding of impact investing and attracting new participants or investors.
Partners @i2 SustainIT
'Impact Incubator for Nurturing Sustainability' Virtual Project Kick Off from London, UK [i2 SustainIT]
On 16-17 June 2020 the i2 SustainIT project kicked off with a meeting virtually hosted from London, UK. All partners – the project coordinator EPN Consulting and the project partners KISMC, CEED Bulgaria, IDEC, Worldview Impact Foundation and Creative District – launched Impact Incubator for Nurturing Sustainability - i2 SustainIT [Project No. 2019-1-UK01-KA204-061873].
The project has been successful in the Erasmus+ call in 2019 and consequently co-funded by the Erasmus+ Programme of the European Union for its 2-years' implementation. Erasmus+ is the European Union’s (EU) programme for education, training, youth and sport, with the EU committing £12 billion to the programme between 2014 and 2020.
During the virtual kick off meeting all partners discussed their previous experience in the topics of impact investment and sustainability and agreed on an agenda that would focus on producing quality intellectual outputs that would assist all stakeholders in the impact investment and social entrepreneurship ecosystem.
What is i2 SustainIT?
The Impact Incubator for Nurturing Sustainability [i2 SustainIT] project inspires more connectivity in the social and environmental ecosystem through the United Nations Sustainable Development Goals. The project's duration is 2 years, to be completed in the end of September 2021 with an Impact Investment & Sustainability Conference.
Although the project has a set end date for its implementation under the Erasmus+ Programme of the European Union, we are firmly willing to continue contributing to this topic by using i2 SustainIT as an already established network and community to create social value and assist finding solutions to the world’s problem our society faces.
The i2 SustainIT is a continuation of another project, co-funded by the Erasmus+ programme. The project is BASET – Boost Aid for Social Entrepreneurship through Training with the overall objective to foster social entrepreneurship in Europe through elaborating, testing and providing a set of learning and training instruments to a large group of social entrepreneurship trainers/educators.
The rationale behind continuing BASET is the realisation that such a project focused on social entrepreneurship aiming to provide a higher-scale of impact, will need a more sustainable approach and additional set of instruments to assist educators and investors; in the i2 SustainIT project – mentors and investors. i2 SustainIT focuses on the fact that all target groups need to better communicate with each other and express their needs accordingly, and also that impact investment and sustainability are under-explored topics with significant added value to tackling social and environmental challenges.
In the next section you can read more information about the project's objectives, methodology, results, impact and learn more about the partners involved in this exciting project which will contribute to the social entrepreneurship ecosystem in Europe and beyond.