Measuring success a priority for impact investors
30 January 2020 at 8:20 am
Managing and measuring impact is critical to impact investing’s success GIIN CEO says
The global impact investing community is becoming increasingly sophisticated when it comes to measuring social and environmental impact, new research finds.
The new Global Impact Investors Network (GIIN) report found that impact measurement and management (IMM) was “no longer optional”, and was now a requirement for all credible impact investors.
“While impact investors pursue diverse impact objectives, they universally agree on the importance of measuring and managing impact results,” the report said.
The GIIN defines IMM as identifying the positive and negative effects business actions will have on the people and the planet, and then mitigating those actions to align with impact goals.
GIIN’s director of IMM, Kelly McCarthy, said she had seen significant changes in attitudes towards IMM since the first survey in 2017.
“The market is maturing rapidly and demand for more and better impact performance management is only increasing,” McCarthy said.
“We’re moving in a positive direction, and I hope insights from this new survey will continue to help inform what is needed to move the industry forward and integrate impact investing into the mainstream.”
Out of the 278 impact investors surveyed, over 90 per cent reported some progress in the past three years in the sophistication of measurement and management tools and frameworks, and the availability of professionals with IMM-relevant expertise.
The report also found that investors were starting to all use the same measurement frameworks, such as the United Nations Sustainable Development Goals (SDGs), which 80 per cent of respondents reported using. This figure has doubled since the last survey in 2017.
Despite this, the findings did show that there was an excess of measurement tools available, and for the market to mature further, there was a need for “greater cohesion of approaches to IMM”.
The report also said that a lack of transparency around impact performance was a major obstacle moving forward.
Amit Bouri, GIIN CEO, said making sure IMM practices were strong across the market was critical to the success of impact investing.
“It will not only preserve the integrity of impact investing, but it will also raise the bar on impact investors to become more effective at translating their intentions into real impact results,” Bouri said.
“My hope is that one day impact investors will compete on impact performance as much as the market competes now on financial performance.”
A full copy of the report can be found here.