Why Your Hard Work Sits on the Shelf — and What to Do About It

We’ve all been there. The time when the client seems to forget the project ever happened as soon as the final check is cut. The time when your report stuffed full of creative recommendations gets buried by risk-averse leadership. The time when the stakeholder group really does seem engaged by the findings, has lots of conversations, and then…nothing changes.

These stories happen with remarkable frequency. In fact, based on the evidence, there’s ample reason to believe they are the norm rather than the exception. Among more than 120 evaluation and program executives surveyed at private foundations in the U.S. and Canada, more than three-quarters had difficulty commissioning evaluations that result in meaningful insights for the field, their grantees, or the foundation itself, and 70 percent have found it challenging to incorporate evaluation results into the foundation’s future work. A survey of more than 1,600 civil servants in Pakistan and India found that “simply presenting evidence to policymakers doesn’t necessarily improve their decision-making,” with respondents indicating “that they had to make decisions too quickly to consult evidence and that they weren’t rewarded when they did.” No wonder Deloitte’s Reimagining Measurement initiative, which asked more than 125 social sector leaders what changes they most hoped to see in the next decade, identified “more effectively putting decision-making at the center” as the sector’s top priority.

This problem affects everyone working to make the world a better place, but it’s especially salient for those I call “knowledge providers:” researchers, evaluators, data scientists, forecasters, policy analysts, strategic planners, and more. It’s relevant not only to external consultants but also to internal staff whose primary role is analytical in nature. And if the trend continues, we can expect that it’s eventually going to catch up to professionals working in the social sector. Why spend precious money and time seeking information, after all, if it’s unlikely to deliver any value to us?

Frustrating as this phenomenon may be, the reason for it is simple. All too often, we dive deep into a benchmarking report, evidence review, or policy analysis with only a shallow understanding of how the resulting information will be used. It’s not enough merely to have a general understanding of the stakeholder’s motivations for commissioning such a project. If we want this work to be useful, we have to anticipate the most important dilemmas they will face, determine what information would be most helpful in resolving those dilemmas, and then explicitly design any analysis strategy around meeting those information needs. And if we really want our work to be useful, we have to continue supporting decision makers after the final report is delivered, working hand in hand with them to ensure any choices made take into account not only the newly available information but also other important considerations such as their values, goals, perceived obligations, and existing assets. 

In short, knowledge providers need to be problem solvers first, analysts second.

Decision-Driven Data Making

So what should you do if, say, an impact investor wants to set up an impact tracking platform but doesn’t seem to be able to articulate how the results will inform its future plans? Or if you’re tasked with creating a data dashboard for your social enterprise on faith that the included metrics will someday somehow inform something?

The first and most important step is to interrupt the cycle as soon as possible. The further you get toward completing a knowledge product without having the conversation about how it will be used, the more likely you and your collaborators will find yourselves at the end struggling to justify the value of your work. It’s much better to have clarity about decision applications from the very beginning — not only because it helps solidify the connection between the information and the decision in the decision maker’s mind, but also because it will help you design the information-gathering process in a way that will be maximally relevant and useful.

For instance, in the case of the evaluation example above, there are probably a couple of decisions the evaluation could inform. Should the program be renewed, revised, expanded, or sunset? Does the strategy underlying the program’s design need to be adjusted? And if so, how? It’s important to recognize that these decisions, like all decisions, must consider not only what’s happened to date but what we should expect to happen going forward — and what other options may or may not be available to accomplish the organization’s goals.

A good decision consultant will bring these and similar questions to the surface of the conversation before any analytical work gets off the ground. A great decision consultant will go further and engage the client in “rehearsing” the decision-making process at the outset of the project, while leaving room for judgments to change in response to new information. The framework created through this process can then be used to make the actual decision once the evaluation is complete and the findings have been presented to the client.

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This method works because it radically reframes the purpose of gathering information; no longer is it a generalized (and unfocused) exploration to satisfy the stakeholder’s curiosity, but rather a strategy for reducing uncertainty about a specific, important decision. Rehearsing the decision in advance is an important step because it is very difficult to pick out which factors have the most potential to sway the decision one way or another using our intuitions alone (what I call “eyeballing” the decision). Only by trying to make the decision without all the information can we determine what information we actually need. The good news is that, once the most meaningful sources of uncertainty have been identified, the knowledge provider can then design the analysis in a way that is virtually guaranteed to yield actionable insights.

The “Wraparound” Model of Decision Support

Knowledge providers who want to see their work have greater impact might find value in partnering with a decision consultant. I call the general model I propose here a “wraparound” service for knowledge initiatives.

The wraparound service has three phases, as shown in the diagram below. In the initial phase, the decision consultant works with the client to create an inventory of upcoming decisions that might be informed by the knowledge work and sorts those decisions into categories by stakes. Then, as described above, the client “rehearses” the highest-stakes decisions by analyzing them in advance. The goal is not to actually make the decision at this stage, but rather to set up the framework the client will eventually use to make that decision. Depending on the client’s resources and comfort with numbers, this might involve a simple, purely qualitative approach to understanding the decision or the creation of a more complex formal model. The decision consultant facilitates this process with the knowledge provider present so that the latter can be in the loop as the client identifies key sources of uncertainty.

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After the initial framing, the analysis — still the centerpiece of the project — gets underway. The decision consultant serves as a thought partner at the beginning and end of this phase, contributing suggestions and feedback on research questions, analysis methods, and data collection instruments as appropriate to help ensure alignment with the client’s learning objectives. Otherwise, the knowledge provider owns this work and can proceed as it normally would, including offering key takeaways or recommendations to the client.

A normal engagement for a knowledge provider would close out there, with crossed fingers that the end product will have a useful life. With the wraparound service, by contrast, the decision consultant comes back onto the stage for one final act: helping to make the actual decisions. The client, decision consultant, and knowledge provider all convene to make sense of the new information in context with the work that was previously done to analyze each decision, tweaking assumptions and adding new options as appropriate to the context. Then, the client makes the final choice with the decision expert and knowledge provider on hand to answer any questions that come up at the last minute.

Moving Forward Together

Adding a decision support offering to your work is a great way to add value for your clients or employer. It’s important to note, however, that this intervention is most impactful when it can directly inform the planning of knowledge-gathering efforts; therefore, the earlier the decision expert can be brought into the process — ideally, while the project is still in the scoping stage — the more useful they can be.

Not all decisions are rocket science. Sometimes you may get lucky — the implications of, say, a literature review or feasibility study will be so obvious that they don’t require any deeper consideration once the analysis is complete. But banking on that luck is a foolish proposition. How many times have you run into scenarios where, for example:

  • It isn’t clear whether a proposed change is worthwhile because the evidence for the benefit of the new strategy or tactic is weak or inconclusive?

  • A proposed change makes sense assuming that the underlying environment remains stable, but upcoming or potential shifts in the environment throw that assumption into question?

  • A proposed change appears to be beneficial on its own, but carries other implications for the organization and/or other entities that may make the overall impact negative?

In situations like these, a facilitated decision analysis can help stakeholders assess the wisdom of proceeding with the change while thoughtfully considering the alternatives.

Ian David Moss is CEO of Knowledge Empower. Follow him on Twitter at @IanDavidMoss.

Imagine a world in which the impact of every investment is known

When mainstream investors including TPG, Blackrock and UBS announced that they were getting into impact investing a few years ago, many experienced impact investing players and practitioners recognized this as an important moment to solidify the meaning of the term "impact" - or risk its corruption and demise. The Impact Management Project (IMP) was created as a response, led by Bridges Impact+. Beginning in 2016, Bridges skillfully facilitated a consultative process that to date has engaged over 2,000 stakeholders- including a wide array of investors, practitioners and standards bodies across more than 50 countries- to agreement on norms for what the word "impact" means, and how investors relate to different styles of impact investing, particularly as they relate to private sector enterprise and investment.

The collective wisdom of these thousands of practitioners and investors was that there are five dimensions of impact that it is necessary to understand and account for: Who is affected, What is the nature of the change, How Much change is there, what is the Contribution to the change made by the enterprise and/or investment, and what is the Risk that the impact is not or will not be what we think. The shared fundamentals also include a matrix of investor intentions and strategies relative to impact, which is a helpful on-ramp for investors and their advisors to understand their relationship to the impact inherent in a given investment opportunity or portfolio. These shared fundamentals are simple, yet there is a great deal of sophisticated information and nuance rolled up within them, which IMP and others' guidance documents are beginning to reveal.

Having arrived at this remarkable consensus, the Impact Management Project is now moving into its next major stage: adoption. Adoption of the investor matrix and the five dimensions may be both widespread and of good quality and skillful, or widespread but superficial and unskillful, and therein will lie the difference between whether the Impact Management Project and its shared fundamentals of impact will achieve their potential to help economic activity align with widely shared human values of environmental sustainability, health and well-being, or perpetuate the disconnect between economic activity and these values.

In September I was honored to represent Social Value International among the group of anchor partners who have joined arms with the IMP's facilitators to announce the launch the new IMP structured network. Its goal: to accelerate widespread adoption of impact measurement and management norms. "The network consists of nine leading organizations with expertise in data, principles, disclosure standards and benchmarking," one of the organizations, the World Benchmarking Alliance, recently wrote. The network "offers a unique shot at agreeing on standards of practice that might ultimately become generally accepted globally." Clara Barby, Lead Facilitator of the Impact Management Project, was quoted in their recent press release:

 “In financial management, ‘general acceptance’ of norms for how we talk about, measure and manage financial performance enables capital to flow efficiently across value chains and across borders. If we want impact management to become the norm for every enterprise and investor... we need shared principles, reporting standards and benchmarking methods for impact. The IMP network is the first time that such a diverse group of organizations, from across the entire value chain, have chosen to work on content in a deliberately coordinated fashion. This is our best shot at creating an impact management approach that can ultimately become ‘generally accepted’ globally.

Along with Bridges Impact+, the nine global organizations taking the lead in this next stage of the Impact Management Project bring substantial bench strength in key areas: measurement and reporting principles and standards, assurance protocols, and capacity building both for delivering and investing for impact:

  • The Global Impact Investing Network (GIIN)

  • The Global Reporting Initiative (GRI)

  • The Global Steering Group for Impact Investment (GSG)

  • The International Finance Corporation (IFC)

  • The Organization for Economic Co-operation and Development (OECD)

  • The Principles for Responsible Investment (PRI)

  • Social Value International (SVI)

  • The United Nations Development Programme (UNDP)

  • The World Benchmarking Alliance (WBA)

The concrete task that these organizations are charged with is to translate the IMP's agreement about meaning and terms into a conceptual framework, practical guidance and tools such as principles and certifications to help enterprises, investors and advisors who use them not only navigate the impact space, but generate real "impact" through their investment decisions.

But, speaking for myself as an individual and not for these organizations, I believe that the real task before them and all of us is one of continued and ever-wider community engagement.

This is because the IMP's greatest achievement to date has not been its distillation of the collective wisdom, although that was been done excellently when one drills into each of the dimensions; it is the IMP's engagement of thousands of investors and practitioners from around the globe in the process of taking ownership of the meaning of "impact." Potentially, these audiences can help to ensure that the delivery of impact is not expedient and superficial, but authentic and meaningful. Only if many more thousands and ultimately millions if not billions of people actively participate in activating the 5 dimensions, and holding investors and enterprises accountable for them, will the 5 dimensions avoid the fate of becoming perfunctory, on-paper-only hoops for those with money and power to (hire others to) jump through.

The primary of the five dimensions of impact that the IMP's original stage agreed upon was "Who"- who is affected by the investment, particularly those who are traditionally "underserved" (i.e. marginalized populations), where are those whos located, and how important do they feel the effect on them is? But who gets to decide who the "Who" is that matters? How will those Whos participate in defining what effects they are experiencing? If investors find it inconvenient to hear what they say, will those Whos have any ability to call foul?

As this and the other five dimensions of impact are translated into tools investors can employ to inform their decisions, it is up to all of us who care about the impact economy to ensure that this "Who" is thoughtfully defined, and remains central to any product the market understands as impact.

If I see one more post about the lack of progress on impact metrics I'm gonna lose it

I just read another screed about the failure of metrics to solve the mega problem of business and investment destroying the planet. "ESG is like less wife beating," the author complains. I applaud the soundbytiness of that phrasing, actually, because it's great to get people to pay attention to the subject and at the end of the day, crass grabs eyeballs. What's not great is their blanket and wrong assertion that there's been no meaningful progress in ESG systems in the past decade, as though these systems and the people who design them are living off in some fantasy castle in the sky, untouched by society's increasing alarm at the accelerating rate with which business as usual is killing of large percentages of all living species, and doing nothing meaningful about it.

The article in question was sent to me by a longtime friend in the broader social entrepreneurship field, who created what has been for a decade one of the biggest platforms for impact investors and entrepreneurs. He asked me, "is this what metrics are?" "Metrics," I've observed, is a subject he has mostly preferred to avoid, and one that to my knowledge was never on the main stage at his events. I'm simultaneously glad he's getting curious about the topic, and find it impressive that he can be asking that question almost 20 years after we first met early on in our mutual quest to figure out how to get money to invest in people and planet. Could he still be unclear on the difference between metrics, ESG and impact or their relevance to investment intended to benefit people and the planet? I'm usually the first to provide encouragement to folks around these topics, but given his longevity in the wider field, to be completely candid I find it noteworthy that he isn't embarrassed to ask.

The article, like so many others, asserts that "ESG data is not picking up on this information [about whether a business is creating a net positive impact] yet." But, it is.

The Dow Jones Sustainability Index in 2019 asks about the material environmental and social issues facing the business, what kind of scenario planning it is doing around those risks, and what strategies are in place to address these risks– an evolution of its criteria that speaks directly to the concern the author of the article above raises. This evolution may be driven by the same underlying factors that led also to criticism this spring by the world's largest asset manager, Blackrock, of systematic mis-pricing of climate-related risks by investors, or to 30 Central Banks coordinating a standardized way for corporations to publicly disclose their carbon footprints to support investors' ability to understand the way their investments are driving climate change (because to be sure they do not want that exposure). And these examples are just the tip of the iceberg.

I can understand that these advances may feel disjointed. But that too is improving. There is an effort, now in its fourth year, to "provide coherent and end-to-end ‘rules of the road’ for impact management" which the G7 has just endorsed. This "Impact Management Project" has facilitated over two thousand global practitioners, standards bodies and investors to a consensus on what the shared fundamentals of impact are, and this year these fundamentals are being percolated out into principles, disclosure standards, practical seals and certifications, audit criteria, training materials and more, all undergirded by a common conceptual framework. These deliverables are being produced through an unprecedented collaboration of a dozen of the major global impact investing bodies, practitioner networks, development finance standards organizations, and ESG standards bodies (including this one upon which a ton of ESG reporting is based). The shared fundamentals of impact are centered on stakeholders' experiences, especially the most vulnerable, and even ask those stakeholders how important the change they're experiencing is, introducing a form of grassroots valuation into the equation as a counterpoint to the all-powerful financial valuation that has in recent decades left out so much that matters. And all of these efforts can be lumped into the ESG bucket, and all are feeding the investor's capacity to thoughtfully ask about companies' actual impacts, risk management practices, and ability to foresee change and design business models to make things better.

Which is why I have begun to find it more than curious that so many people continue to chant: "Sadly, for those asset owners looking to allocate capital with the intention of generating positive impact, a broadly accepted framework does not yet exist." I call B.S.

The marketplace for impact, and the global economy along with it, can no longer afford to pretend that there has been no agreement about what the right set of information is. There IS agreement.

There is consensus that the following three types of information are needed by managers and investors: (1) the overall, important effects of the company on the world (using one of these dominant, pre-set, trusted checklists), combined with (2) the company's unique, material social and environmental value (as judged using these nuanced criteria), and (3) how the company's financial performance is integrally related to its social and environmental value creation (using this framework).

So readers, beware: those who still in 2019 bemoan the lack of progress decade after decade probably have something to sell you. Or, they might have something they want to keep free from accountability. Or, maybe they're just having a hard time recognizing the change that is happening because the results haven't manifested in a big way yet. But progress there is.

So readers, beware: those who still in 2019 bemoan the lack of progress decade after decade probably have something to sell you. Or, they might have something they want to keep free from accountability. Or, maybe they're just having a hard time recognizing the change that is happening because the results haven't manifested in a big way yet. But progress there is.

Whose interests are truly served by continuing today to act as though there has been no progress toward sound ways of measuring and managing impact?

Though it is not everyone's cup of tea to keep tabs on the somewhat technical evolution of the infrastructure to hold assets accountable for their effects on the planet, the time when professionals in the impact arena could complain about a 'lack of progress in the field' while promoting their groundbreaking impact measurement solution is over.

Today the name of the game is moving from 'what to measure?' to 'how do we use this information to drive results?' Those charged with using ESG information today need to have more "multilingual" skills than in the past around figuring out what they should be looking for, and how to get it from the information they're being provided. While a lot of companies still aren't disclosing, many are, and the problem is no longer that it's the wrong information. The problem is that the reader of the information must know what to look for to get something useful from the information.

Skilled impact analysts are needed to bring value to the information companies and investors are producing. That is a different problem than an ESG reporting problem: it's a human capital problem. We need skilled impact analysts to drive the next phase of the impact economy.

We need skilled impact analysts to drive the next phase of the impact economy.

The next time you hear someone complain about the lack of progress on metrics, how bad existing metrics approaches are, and/or that they have a brand new solution (step right here to purchase!), please check closely whether the solution they propose:

  1. discloses and improves its material ESG issues in accordance with any existing consensus-based standard;

  2. reports in alignment with the IMP shared fundamentals of impact, and shows how it is learning from this information;

  3. discloses the ways the entity's financial performance depends upon these factors, and how this dependency informs its strategy; and

  4. provides information that meets your standards for not only quality of disclosure, but for performance results, regenerative or otherwise.

And if the proposed solution does not do those things, check what the stated rationale for this is. If there isn't one, it's best to move on.

The bottom line is, we do have the tools to understand the impact of the global capital marketplace in all its diverse and terrible glory. Let's own the wonderful fact that we've collectively accomplished this! Sure there's room to keep making it better, and we must, but by George, let's stop muddying the water, and confusing people, and letting them off the hook while they wait until that mythic day when all questions are perfectly settled before they have to start accounting for their impacts on people and the planet.

Instead, recognizing what we do have, let us teach the use of this information to inform decisions to drive the kind of results the world needs now.

***

To grow your skills in asking and answering good questions about ESG & impact, check out the following resources offered by these nonprofit organizations who are working collaboratively to build the field:

"America's top CEOs are no longer putting shareholders before everyone else"​- they say. Here's how to actually do it.

We awoke to the news that the Business Roundtable, a lobbying group for the CEOs of America's top companies (think Amazon, Exxon, and JP Morgan), has made a historic departure from its past governance guidance. While since its inception the Business Roundtable has asserted that shareholders matter more than any other stakeholder in corporate governance, now it asserts that five stakeholder groups are of equal importance. The statement reads (excerpted, bold added):

"We commit to:

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.

  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.

  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.

  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.

  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

"Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country."

FastCompany quickly jumped on the story, interviewing leaders in business management and sustainability about how they'd want to see this translated into action, including someone deemed "the world's number one management thinker." He said, “for me, the key would be to view shareholder value creation as the logical consequence of other things, not something that you can directly pursue....” Other leaders offered specific suggestions, each of which was related at a very high level, but not in a systematic way.

Their suggestions are excellent and worth reading. But the most important one is missing.

The impact investing, impact management and social value movements have evolved to a place where there is shared consensus on what managing as though these five shareholder groups all matter entails, specifically:

  1. Systematic measurement of what the enterprise's impacts are;

  2. Making explicit the intended impacts on stakeholders of resource allocation decisions; and

  3. Disclosure of information about how the company affects not only financial capital but also natural, social and relationship, and human capital, in quantitative terms that are properly contextualized, and relative to the company's stated intentions.

Thousands of investors and practitioners have agreed on these points. It has taken years of facilitated effort, and countless careers devoted to learning how to do this in practice, to arrive at this agreement. So, given this consensus, the missing recommendation is that companies manage and disclose their effects on stakeholders in accordance with this shared consensus.

While as of today there is no one governance body overseeing the disclosure of this information, the Impact Management Project's Structured Network of leading standard bodies is in the process of defining disclosure standards, assurance criteria, and certifications that will enable this to come into existence very soon.

Since not only does successful corporate governance demand the three things above, but also because this consensus about what information about impact must be accounted for now exists, SVT and ISOS recently launched The Conception Forum, to translate this knowledge into practical skills the CFO needs to translate that governance policy statement into the corporation's Enterprise Risk Management system. It is possible to quantify the effects the company has or may have on employees, suppliers, the environment, and communities, and to do so systematically and in a manner that reflects the shared consensus of both seasoned investor and practitioner communities who have pursued stakeholder value creation for decades. Eric Israel, co-founder of The Conception Forum, founding partner of Shell’s Global Sustainability Verification, and former leader of KPMG Global Sustainability Services, PwC Conflict Minerals Services and GRI North America, said, "“This is no longer soft; it becomes part of the financial bottom line. That makes it hard.”

Shareholder value, as it is called, can be quantified and managed via a systematic approach, that illustrates the strategic relationship to financial performance. At the core of this approach is the Integrated Reporting Framework, which again reflects the collective wisdom of executives and investors who've worked for decades to obtain it. This approach can be adopted by any company in any industry, and tied into the disclosure standards around scenario modeling and impact that investors increasingly require in a world facing destabilizing vectors on all sides.

The approach I describe is not proprietary, in fact it will be analogous to financial accounting today; a business discipline in the public domain, that you can study and learn yourself, or learn at school or on the job or from your mentors and consultants. But make no mistake, it will be the operating system underpinning nearly all innovation in the coming years.

So CEOs, there is no time to waste. Get your CFOs up to speed on how to quantify your stakeholder impact in alignment with the consensus, and beat the competition at this new game of business that's good for all.

How to Approach Impact Reporting When You Don't Have a Clue

Whether you are a CEO, Relationship Manager, or Associate, you probably understand that thoughtful communication to stakeholders is critical to achieving your goals. You may even have heard that according to impact measurement and management standards, there is a “right” way to go about it. But what exactly is impact reporting, and how does an organization begin to do it well?

Broadly speaking, impact reports are created in order for organizations to make better decisions. In impact investing, they can ensure that an investor client’s investment goals are being met while demonstrating the array of impacts for other stakeholders that have been generated as a result of an investment. For nonprofits, foundations, and social enterprises, they also provide important insights to integrate into strategic and programmatic decision-making. The benefits of impact reporting can be profound. From aligning communication about the effects all different kinds of stakeholders are experiencing as a result of the investment, to ensuring mission fit and focus, many organizations find that the process of developing impact metrics and publishing an impact report drives improvements in the company’s strategy. 

Having a grasp of the key debates around impact measurement and management (IMM) at large may inform your impact report as well. Published by SVT Group and Middlebury College in 2017, The Pulse of Impact Management provides an examination of key debates currently being discussed in the impact space. 

One key discussion among practitioners is the idea of standardization vs. relevance when it comes to metrics. There are many cases in which investors and investees want to use customized indicators to track impact, or where the metrics prescribed by an impact reporting standard are not sufficiently relevant to a particular project, organization, or investment. Possible was to resolve this include using indicators that are standardized within sectors or industries, as opposed to more general metrics, or by hiring a professional impact analyst who can understand the sameness of or differences between the impact underlying apparently differing measures used by different companies or funds. Whatever the future holds, we can expect a future where reporting will be more expected and consistent due to the standardization efforts of groups like the Impact Management Project

Another issue centers around the frequency of the reporting itself, as there is a lack of guidance around how frequently organizations should publish an impact report. Determining how often to report at this point is a judgment call each organization must make for itself. Because impact outcomes often do not change over short time periods, consider the timeframes that are most beneficial for your stakeholders based on what they may be experiencing, and what decisions users will inform with the reported information. Keeping reports succinct, and only including the most relevant and meaningful information, will help organizations publish reports more frequently. This means understanding what is uniquely important to your stakeholders, and focusing primarily on that information in the report.


As an increasing number of groups begin to put impact reports in front of stakeholders, it is more important than ever that these reports be methodically developed, and that readers are able to understand them. Consult SVT Group, the Impact Management Project, and the International Integrated Reporting Framework for more information about impact reporting.

The Dawn of Impact Investing

By 2008, the impact management field was beginning to stand on steady ground:a common lexicon had developed, impact goals were more explicitly laid out, many feasible and credible impact management strategies-- found in the Catalog of Approaches to Impact Measurement -- had emerged, and a diverse group of investors had taken a keen interest in the impact field. This group, having convened in 2007 with the Rockefeller Foundation, represented “institutions managing trillions of dollars and [wielded] significant influence on the economy.” Realizing the strength of their influence, they dubbed themselves “impact investors” and launched into the impact field to “invest with the intent to achieve not only financial returns but also better environmental and/or social outcomes than would be the case in typical investment.” What could be better than saving the world and making a little coin in the process? However enticing, this idea came packaged with some tough questions:

  1. How can investors know whether they are helping or hindering progress toward an environmentally sustainable, healthy, and dignified economy and world?

  2. How does a portfolio company’s pursuit of their goals affect financial and impact risk, as well as financial returns? 

  3. If there is an added cost associated with pursuing impact, what approach can be used to assess whether it is “worth it?”


Published in 2008, the Catalog of Approaches to Impact Measurement highlighted 25 impact management approaches that impact investors could use to answer these questions. The approaches outlined in the Catalog can be organized broadly by functional type: rating systems, assessment systems, and management systems:

Rating Systems: These systems include a fixed set of indicators that assess an impact investment’s quality or potential quality, and impact is typically  summarized by a score or symbol. Generally, if an organization, firm, or business chooses to certify their intended and realized impact, their operations, governance, environmental protection, empowerment, worker protection, etc. is tracked to see if they satisfy the criteria necessary to earn such a certification. There are only three non-hybrid rating systems in this catalog: The Fair Trade Certification, the Leadership in Energy and Environmental Design Certification (LEED), and the Movement Above the US $1 A Day Threshold Project. For example, for a building to earn LEED certification, an organization needs to complete a checklist “in areas such as site selection, water use, energy efficiency, materials and indoor air quality, waste management and others.” However, most rating systems are also partly assessment systems.

Assessment Systems: These systems assess or evaluate characteristics, practices, and/or results of the portfolio company’s impact.  Only eight of the 25 approaches —Development Outcome Tracking System, Environmental Performance Reporting System, Progress Out of Poverty Index, Real Indicators of Success in Employment (RISE) and Ongoing Assessment of Social Impacts, Social Value Metrics, SROI Analysis, and the SROI Calculator—are strictly assessment systems. 

However, eight other approaches, B Rating System, Charity Analysis Tool (CHAT), Compass Assessment for Investors, Dalberg Approach, Ecological Footprint, Human Impact + Profit (HIP) Framework, Political Return on Investment (PROI), and Social Rating are both rating systems and assessment systems. These hybrid approaches both provide an organization a certification for reaching certain impact goals and the tools to measure and assess the company’s impact (i.e. these tools may show that a company may have an excessive carbon footprint that can be reduced, but has a great social outreach in the neighboring community). Though useful, these systems do, “not provide explicit tools to manage the tracking of operational data by the organization over time.”

Management Systems: Management systems provide tools for organizations to manage detailed operational information about drivers of impact. These approaches both assess and help manage impact. While there are five management system/assessment system hybrids—Trucost, SROI Toolkit, SROI Lite, and SROI Framework—there is only one exclusively management system-like approach in this catalog: the Balanced Scorecard Modified to Include Impact. The Balanced Scorecard measures “social impact, constituents, internal processes, learning and growth, and financial,” as the major categories by which impact is measured, assessed, and managed. 

According to the Global Impact Investing Network (GIIN), there are over USD 502 billion in impact investing assets worldwide, which suggests that impact investing, measurement, and management has become a significant force in the global economy. As society becomes increasingly conscious about the interconnectedness of business and society and environmental impact, the more investors will take the societal and environmental consequences of their investments into account. Though those initial questions are still pertinent, impact management groups, like SVT Group, Impact Management Project, and GIIN have guided others through this complex field and continue to do so as impact management more complex and more difficult to understand.



Impact Management in Practice

Impact investing is a concept that’s buzzing everywhere, from kitchen tables to academic circles to the corporate world. In 2017, the Pulse of Impact Management report was released to synthesize the process of impact management. The following summarizes topics from the report to provide examples that demonstrate the use of impact management in the field.

So what is impact management? According to the Impact Management Project (IMP), “managing the impact of an investment, or portfolio of investments, means taking into account the positive and negative impacts of the underlying enterprises/assets, as well as the investor’s own contribution.” Impact management in an investment context relies on an understanding of the investor’s motivation for managing impact over time, tracking metrics that measure investor goals on an ongoing basis, collecting the information about the changes that are most meaningful to stakeholders, and communicating to external audiences the impact of an investment. Impact management done well increases organizational knowledge and performance, providing practitioners with information to better meet their client’s needs. Since different investors’ and organizations' interests and goals vary, meaningful impact information enables the organization to tailor and refine its initiatives and resource allocation, eventually leading to greater levels of positive impact. A more detailed and in-depth explanation of the impact management process can be read in the Pulse of Impact Management report.

The GIIN’s 2016 report “The Business Value of Impact Measurement” details several examples of how investors are deriving value from knowing the social and environmental performance of their investments. The report includes profiles of a number of investment firms that have learned how to use this information to inform their investments. Align Impact (Align), whose mission is to “increase the effectiveness of their mission-related investments” while delivering “the same risk and return as best-in-class globally diversified asset management strategies.” Align is able to fulfill this mission using a unique due diligence process. The first step screens companies looking for ones that meet seven social and financial criteria. The next step is a comparison of impact profiles for each investment opportunity. The goal is for the investor to be able to decide what they would like to track. The final step is the legal and financial diligence. Research supports that measuring impact appeals to investors and donors, as it offers a way of providing post investment or donation feedback. As a result, the service is better delivered and the organization has a greater ability to compete in the market. 

In addition, consider the advisory firm Incofin Investment Management (Incofin IM), which focuses on investing in microfinance institutions that serve rural and agricultural communities in developing countries. To ensure that Inconfin IM’s initial impact goals are maintained over time, the firm performs an annual analysis of their entire portfolio. During the initial investment process, impact performance is numerically rated. If at any point there is a decrease in performance, Incofin IM engages with the investee to determine if their investment position still fits Incofin IM’s portfolio goals. This ongoing monitoring process is part of the impact management and is valuable because it ensures that impact is maintained after the initial investment.

Impact management is also valuable because it serves as a communication tool between the investors and investees. Initially, it requires a discussion between each party about what is important to the other. This helps to clarify expectations and increases accountability while highlighting areas of need and showcasing progress through reporting. A fulfilling group of metrics for measurement is the necessary foundation for tracking impact progress and performance regularly over time. This is particularly valuable because it allows for comparison between and among investments across various volumes, geographies, and sectors, lightening the burden on all parties involved and freeing up valuable time and financial resources.

Collectively, this discussion has been around the value of impact management and provided examples of its use in practice. Impact management has immense potential to add instrumental  knowledge. It is reliant on established impact goals between the investor and investee, the development of metrics to measure the impact over time, the ability to collect the necessary information from stakeholders, and communication of the impact of the investment via a report. The stronger the metrics, the more valuable the impact management will be. The value is reflected in its ability to reduce a firm's risk, the ability to serve the demands of client’s, and the ability for investors to make more informed strategic decisions.

The Struggle with 'Off the Shelf' Measurement Tools

Historically the purpose of investing has been to generate a financial return. But today, 72% of the U.S. population is interested in investing in environmental, social and governance funds. You may be an asset manager who has clients asking about the environmental and social impact of their portfolios. You may be a member of the C-Suite who has stakeholders asking questions about the environmental and social impact of the firm. You may work for a nonprofit with donors asking for reports on the environmental and social impact of their donation. In each case, there is an expectation from shareholders, clients, funders and our inner selves that investment reporting include an appraisal of environmental and social impact. As a result, investment management firms, businesses, and nonprofits have been seeking ways of assessing this. One way of doing this is with ‘off-the-shelf’ measurement tools. This article will define these tools, and discuss some of the struggles associated with their use. This subject is one of several considered in SVT Group’s Pulse of Impact Management report (2017).

‘Off-the-shelf’ impact measurement tools are a set of pre-made assessment approaches that, ideally, are ready to serve the needs of all clients without much customization. Two such tools that serve as the basis for this analysis at the time of the Pulse of Impact Management’s publication (2017) are the Impact Reporting and Investment Standards (IRIS), launched in 2009, and the Global Impact Investment Rating System (GIIRS), launched in 2009. IRIS was developed by the Global Impact Investing Network (GIIN), and GIIRS was developed by a nonprofit organization called B Lab, two separate entities that were in close communication especially early in their histories. Both tools are intended to evaluate the environmental and social quality of impact investments. The tools’ mutual goal is to provide a common way to assess impact and thereby increase the impact transparency and comparability of impact investments. The issue is that off-the-shelf impact measurement tools with limited customizability struggle to meet practitioners’ need for relevance and added value.

As part of the data collection process for the Pulse of Impact Management report, interviews were conducted with 17 impact investment firms generally known for taking impact measurement and management seriously, to uncover their experience with both off-the-shelf impact measurement tools and other tools. A pattern the Pulse study surfaced was a general distrust and unwillingness to use these off-the-shelf tools. According to the Pulse report, the common explanation for this pattern was that: “IRIS and GIIRS were not able to fully address the broad needs of the impact investor in part because they did not capture many outcomes generated by companies or portfolios of companies, or sufficiently clarify the relationship between outcomes and financial performance for particular companies or portfolios. In addition, social performance was not well-assessed and the tools were not user-friendly.”

In response to this kind of market feedback, these two tools took quite different directions. 

In 2019 IRIS+ was overhauled so that its new incarnation walks users through a guided process of thinking through what impact indicators and metrics might be relevant for their contexts, while still recommending metrics that have been found to be useful by the wider practitioner community within a specific industry or mission area. Although IRIS+ results in a recommended set of pre-determined metrics, it also allows users to create their own metrics. The IRIS+ ‘wizard’ also largely follows the “5 dimensions of impact” that reflect the shared consensus of thousands of practitioners, as defined through the Impact Management Project’s consensus-building process, and so helps users to consider the facets of outcomes and impact deemed crucial by the practitioner community; something that had been missing from the prior version of IRIS. These modifications address market feedback about user friendliness and the quality of outcomes assessment. However, IRIS+ still leaves it up to the user to collect, manage and analyze data collected via the suggested metrics, including understanding how financial performance relates to social/environmental outcomes.

In response to the market’s lukewarm uptake, GIIRS was augmented by something called B Analytics, launched in 2013, which enabled users to drill into the specific components of the score that made up the GIIRS summary score and rating. B Analytics also enabled investors deeper visibility into their holdings, so for example an investor in a fund could check whether the portfolio companies within that fund were consistent with their social and environmental intentions or not (e.g. whether a particular portfolio company within a given fund the investor had invested in had exposure to conflict minerals). While it plans to continue to support B Analytics, ultimately in 2019 B Lab announced that it would no longer maintain GIIRS after the end of the year.

Sara Olsen of SVT Group and Kate Ruff, then a PhD Student at Schulich School of Business, acknowledged the tension between comparability of impact measures and relevance, as quoted in the Pulse report’s conclusions: “the more we rely on common measures to solve the comparison problem, the more we end up compromising the meaningfulness of social impact measures themselves.” This is not to conclude that off-the-shelf impact management tools should be completely ruled out, but rather to offer a perspective on the necessity of enabling users to drill into those aspects of their impact performance that they consider most important, and to combine particular indicators with additional customized information, such as context variables, that enable a given indicator to become more relevant and meaningful to the user. 

Tracking meaningful and contextualized indicators facilitates positive impact while informing managers, investors and others about risks and what drives business value. Experienced impact advisors such as SVT can help companies to determine what information will be valuable for them.

The Good News Might Be the Bad News

The 2019 Annual Impact Investor Survey from the Global Impact Investing Network (GIIN) does away with pleasantries. The tone for the survey is set by Sapna Shah, the GIIN’s managing director, as she states that she finds herself, “impatient at the thought of dwelling [about the future] when we have so much work left to do.” We all know of the inevitability of climate change and unequal access to basic needs that seems to grow daily. This survey provides a status update on the growth in numbers, nature of practices of, and commitment to achieving the combination of financial and positive impact goals on the part of the 266 impact investor organizations that make up the GIIN. 

The first finding of the survey is that, simply put, “the impact investing industry continues to grow and mature.” According to the GIIN, a group of 80 respondent organizations, “grew their impact investing assets from USD 37 billion four years ago to nearly USD 69 billion this year,” with a compound annual growth rate of about 17%. The future is also promising. During 2019, the respondents of this survey, “plan to invest over USD 37 billion into more than 15,000 investments.” These future investments reflect a 13% growth in volume of capital invested and a 14% growth in total investments. Furthermore, as the industry grows, it becomes more diverse. The 266 respondents differ in organization type, headquarter locations, investment focus, target returns, asset allocations, and impact objectives.

The respondents report in line performance with both financial and impact goals, of which impact measurement and management are essential. Over 90% of the organizations that responded to the survey, “reported performance in line with or exceeding both their impact and their financial expectations.” Even 15% outperformed their expectations. Upon deeper reflection, this statistic is alarming. It suggests that there is little room for these organizations to improve since they are hitting all of their targets and impact goals. However, because the GIIN’s managing director explicitly states that there is, “much work left to do,” one begins to wonder if these organizations have set rather unimpressive goals to better their own image as environmentally/socially conscious, without actually holding themselves accountable to improving the health of the planet in absolute terms or improving the well-being of their stakeholders (other than their investors).

Impact measurement and management is at the core of these goals and expectations. Nearly all (98%) of the impact investors actually measure and manage their impact. The respondents of this survey, “make impact investments because they are part of their commitment as responsible investors (85%) and because intentionally pursuing impact is central to their mission (84%).” Many of these organizations do so because their staff is motivated to align their careers and personal goals by working for a mission-driven, impact conscious organization. 

This survey demonstrates impact investors commitment to developing the industry. The GIIN has an, “unabashed vision for a world where finance is a force for good,” and investors play a key role in changing how finance is thought of and how to create a new normal where impact is considered in all investments. The respondents played their part by, “sharing [their] best practices for impact measurement and management (61%), supporting the development of businesses focused on impact (52%), and training finance professionals (43%),” on impact methods. How the market looks depends on the actions of these investors. While they have done much to prepare for a rather uncertain, unnerving future, investors indicate that more effort needs to be put into educating and training finance professionals about impact investing, more businesses need an impact-oriented focus, and more energy needs to go into developing better impact reporting tools and strategies. In other words, “we have so much work left to do.”


How to Draw the Bottom Line(s): Impact Management in 2004

Imagine, if you can, a world where “The Facebook” just went online, and you would be insane NOT to bedazzle your jeans. That world seems far away, as things have changed hugely since 2004. Impact management, which was just beginning to find itself in 2004, has also changed. However, to understand the field today, it is important to understand where impact management came from and what practices looked like circa 2004. The “Double Bottom Line Project Report: Assessing Social Impact in Double Bottom Line Ventures” is a wonderful snapshot of these early impact management practices, as it may have been the very first measurement methods catalog for impact investors.

Targeting an audience of both social investors and entrepreneurs, the Catalog provides summaries of the practices a range of leaders were using to manage impact, as there were not yet established standards in the field. A quick scan of these practices reveals a lack of coordination or common understanding of basic definitions. For example, each enterprise had a different definition of the term ‘impact,’ which could make it difficult to actually manage the stuff! The report’s coauthors put together the Impact Value Chain below to help universalize these key definitions; today’s shared fundamentals of impact reflect the evolution of this early stake in the ground.  

In 2004, there were a number of different investors and double bottom-line companies (companies concerned about impact), ten of which were profiled in the Catalog. Though there was plenty of overlap in both style and function among the practices each used to assess impact, each had a different level of feasibility (”the extent to which [a practice is] useful and applicable in the strenuous environment of a growing venture,” including cost and person-hours from one year to the next), and credibility (how thorough and trustworthy the practice is). 

The practices in the catalog were grouped three ways: those that track outcomes by benchmarks, those that use a rating system, and those focused on cost-benefit analysis: 

Impact Tracking The enterprises in the first grouping—Acumen Fund Scorecard, Social Return Assessment, Ongoing Assessment of Social Impacts, and Poverty and Social Impact Analysis—tracked short and long term outcomes so that investors could manage their impact to reach certain ambitious-yet-feasible goals they have set for themselves. The outcomes that these enterprises track, however, are entirely subjective based off of their own definitions of ‘impact'. For example, the Social Return Assessment approach focused mainly on tracking the number of jobs the enterprise created, which is a good start, but does not address other potential outcomes, both positive and negative that may be created.

Impact Rating The second grouping consisted solely of the Atkisson Compass Assessment for Investors method. This practice used a point scale rating system based off of a compass—North=nature, South=society, East=economy, West=well-being, and synergy (the relationship between the cardinal directions). A company would receive a rating in each of these categories, which would then be compared to other companies to see where their strengths and weaknesses lie. For example, investors might have use these ratings to find which company has the best, most efficient energy usage within a certain sector. 

Cost-Benefit The last group, comprised of Social Return on Investment and Benefit-cost Analysis, expressed social impact in monetary terms, “combining the tools of benefit-cost analysis, the method economists use to assess nonprofit projects and programs, and the tools of financial analysis used in the private sector.” The three major tools of this type of analysis are measuring net present value, benefit-cost ratio, and internal rate of return.

There were many risks to the credibility of these early practices stemming from weak social accounting frameworks: differing definitions of ‘impact,’ seemingly random selections of inputs/output/outcomes unrelated to material impact, and overall weak research designs. However, these practices did lay the groundwork for modern impact management. 

Today, the Impact Management Project (IMP) is providing “a forum for building global consensus on how to measure, report, compare and improve impact performance,” and has produced a more refined, consensus-based definition of impact, but is still based on the approaches evidenced by these early practices. For example, according to the IMP, modern impact managers still track specific information related to certain impact goals (Impact Tracking’); use rating systems to benchmark impact performance (‘Impact Rating’), and compare social and environmental benefits to financial cost (‘Cost-Benefit’), just like in the three groupings above. 

When one understands how impact management looked when it began, and observes what has remained the same and what has changed, one’s confidence in the durability and value of today’s impact management lingo and approaches grows. 

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In 2004, there were a number of different investors and double bottom-line companies (companies concerned about impact), ten of which were profiled in the Catalog. Though there was plenty of overlap in both style and function among the practices each used to assess impact, each had a different level of feasibility (”the extent to which [a practice is] useful and applicable in the strenuous environment of a growing venture,” including cost and person-hours from one year to the next), and credibility (how thorough and trustworthy the practice is). 

The practices in the catalog were grouped three ways: those that track outcomes by benchmarks, those that use a rating system, and those focused on cost-benefit analysis: 

Impact Tracking The enterprises in the first grouping—Acumen Fund Scorecard, Social Return Assessment, Ongoing Assessment of Social Impacts, and Poverty and Social Impact Analysis—tracked short and long term outcomes so that investors could manage their impact to reach certain ambitious-yet-feasible goals they have set for themselves. The outcomes that these enterprises track, however, are entirely subjective based off of their own definitions of ‘impact'. For example, the Social Return Assessment approach focused mainly on tracking the number of jobs the enterprise created, which is a good start, but does not address other potential outcomes, both positive and negative that may be created.

Impact Rating The second grouping consisted solely of the Atkisson Compass Assessment for Investors method. This practice used a point scale rating system based off of a compass—North=nature, South=society, East=economy, West=well-being, and synergy (the relationship between the cardinal directions). A company would receive a rating in each of these categories, which would then be compared to other companies to see where their strengths and weaknesses lie. For example, investors might have use these ratings to find which company has the best, most efficient energy usage within a certain sector. 

Cost-Benefit The last group, comprised of Social Return on Investment and Benefit-cost Analysis, expressed social impact in monetary terms, “combining the tools of benefit-cost analysis, the method economists use to assess nonprofit projects and programs, and the tools of financial analysis used in the private sector.” The three major tools of this type of analysis are measuring net present value, benefit-cost ratio, and internal rate of return.

There were many risks to the credibility of these early practices stemming from weak social accounting frameworks: differing definitions of ‘impact,’ seemingly random selections of inputs/output/outcomes unrelated to material impact, and overall weak research designs. However, these practices did lay the groundwork for modern impact management. 

Today, the Impact Management Project (IMP) is providing “a forum for building global consensus on how to measure, report, compare and improve impact performance,” and has produced a more refined, consensus-based definition of impact, but is still based on the approaches evidenced by these early practices. For example, according to the IMP, modern impact managers still track specific information related to certain impact goals (Impact Tracking’); use rating systems to benchmark impact performance (‘Impact Rating’), and compare social and environmental benefits to financial cost (‘Cost-Benefit’), just like in the three groupings above. 

When one understands how impact management looked when it began, and observes what has remained the same and what has changed, one’s confidence in the durability and value of today’s impact management lingo and approaches grows.

Impact Measurement Approaches: Recommendations to Impact Investors

Every business has social and environmental impact, for better or worse, but it is often difficult to understand exactly what these effects are. In 2007 the Rockefeller Impact Investing Collaborative was convened to explore interest among institutional investors in coordinating efforts to address this and related questions. Among the many difficult questions to be answered at the time were: How can investors tell if they are actually making progress toward a better economy both socially and environmentally? How does the pursuit of this better economy affect the finances of investors and the portfolio companies? Is the value created worth the costs? What is the best way for institutional investors to assess and manage their impact? The “Catalog of Approaches to Impact Measurement: Assessing Social Impact in Private Ventures,” was commissioned by the Collaborative to document the impact management practices used by private equity investors in 2006, identify patterns, and offer recommendations to investors and portfolio companies seeking to better manage their impact. A summary of the Catalog’s findings are found here. This article summarizes the recommendations laid out in a sister report to the catalog titled, “Impact Management Approaches: Recommendations to Impact Investors.” 

Two general approaches to impact measurement that were emerging at the time were the use of “impact ratings” to gauge environmental and social performance, and “impact assessment” by proxy to evaluate the actual effects of investment activity. 

“Impact ratings”  Just as a great restaurant may receive a Michelin star, an investment may have a certain rating that demonstrates it reputability. For investors studied in the Catalog, these ratings were based on an assessment of a given portfolio company’s impact management practices, translated into a standardized scoring system. For example, the report  characterizes “B Corporation [certifications as] the emerging standard for small- and medium-sized enterprises,” where “standard” in this case means a standardized list of questions about practices, and a weighted scoring system for assigning points to each answer, where the maximum total score was 200. Better ratings indicated better practices, and carried the implication of more positive effects on people and/or the planet, although the underlying questions for the most part did not directly measure those effects. For portfolio companies, these rating systems provided a structured way to think about their own environmental or social performance, and a performance level (80/200 points to qualify for certification as a “B Corporation”) to strive for. However, at the time the study was done, there was no universal, public, generally-accepted rating system in impact investing.    

“Impact assessment”  Impact Assessment at the time this document was published was closely related to Impact Rating systems, but without the added layer of abstraction/standardization of a score. In the Report the term impact assessment was defined as, “periodically [evaluating] characteristics, practices, and/or results of portfolio investments.” At the time, most impact assessment systems typically tracked some measurable output, or leading indicator of impact, as a proxy for the actual effects the business had on people or the ecosystem; for example, a business’ carbon output or energy consumption. These indicators could in theory be used to compare the portfolio company’s impact to that of other businesses. Essentially, these assessments were used by investors to identify the company’s strengths and weaknesses. For example, an assessment might show a company using excessive energy in creating their product. With this information, the investor can work with the company to find ways to lower their energy use to reach a desired energy consumption target. These assessments could also enable the comparison of the impact of different businesses within the same sector.

Based on these and other insights that informed the Catalog of Impact Management Approaches, including interviews with about 20 investors, SVT Group distilled nine recommendations for an approach impact measurement suitable for potential investors and portfolio companies, that could help facilitate progress towards a more socially and environmentally productive market:

  • Add value to companies: Only track identifiers that are key to the portfolio company and might affect their mission or profitability.

  • Ask for measurement of net results: Capture both positive and negative impacts caused by the portfolio company.

  • Screen up front for alignment with impact goals: Figure out the portfolio company’s impact goals…what does the company want to look like?

  • Adopt an industry-wide rating of basic standards: How does this company compare to all the others in the same field?

  • Adopt a common documentation protocol: Every measurement needs to be in the same units, format, and based on the same common assumptions/principles.

  • Adopt a Progress-out-of-poverty index (PPI): The PPI is essentially a set of questions that that focus on certain indicators of poverty so that you can gauge the level of poverty someone has (i.e. what is your roof made out of?).

  • Be accountable for impact: Keep impact in mind during all decisions.

  • Support R&D for assessment of the relationship between impact and financial return: Understand how a change in impact is going to change financial return.

  • Commit publicly: Being held publicly accountable shows other companies how it is done!

Though this report was written over a decade ago, these same recommendations still hold true. To shape a market driven more by social and environmental concerns, credible information about each company’s impact needs to be publicly available. This would bring greater social pressure to align financial decisions with ensuring a stable, healthy environment and with the well-being of others. However, there remains very little regulation governing how much a company needs to disclose. Without greater clarity about and demand for disclosures, most firms lack the vision and incentive to successfully manage their impact so that they at least do no harm and ideally benefit those whom they affect. In order for investors and others to embrace these recommendations, they will need a greater incentive to understand and proactively manage impact than has historically existed. One example where this incentive has crystallized recently is the issue of climate-related risk to investors, which is has catalyzed 30 central banks to demand clear disclosure of carbon and other environmental risks. The day may come when other impact issues, such as poverty eradication, income equality, or diversity get similar treatment; in the meantime, asset owners, employees and the public at large are slowly but surely growing the demand for information about impact.