One fund that arguably leads in setting the ground-rules for impact investment and measurement is Acumen Fund, based out of New York. In this posting, I have summarized their (and their partners') draft list of sector/theme-specific indicators for impact investors. Acumen has created this along with The Rockefeller Foundation, Global Impact Investing Network (GIIN) and B Lab. And these social impact indicators are to be used in tandem with the financial, operational and CSR ones usually collected and managed by any good business. These newly standardized indicators are meant to over the long-run measure investee impact and performance while benchmarking them in high quality 'apples to apples' comparisons.
Before summarizing the IRIS (Impact Reporting and Investment Standards) indicators below, it's worth noting that the IRIS (and the supporting tool Pulse, now being extended for use globally across the social impact investment community) builds upon Acumen's use of their proprietary BACO (Best Available Charitable Option) methodology for evaluating new investment opportunities (against other charitable options) as well as benchmarking their performance once in the portfolio. Basically, across a conservative -to- aggressive scale of forecasts, the BACO methodology is used to determine the Cost per Unit of Social Impact and compare it to the most competitive charitable alternative. As described in their BACO paper, and article, which is set in the context of their investment in A to Z Textile Mills, the limitations and criticisms of this model is that cannot allow for a broad enough "apples to apples" comparison across investment alternatives/projects, and it cannot estimate the longer-term (and more intangible) social/environmental impacts of the investments (i.e. the Terminal Value of the investment). Hence the need for setting up a standard and tool for collecting such data from across the globe, and across all the major issue themes.
IRIS (Impact Reporting & Investment Standards) for triple bottom line measurement.
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Disclaimer: The IRIS is apparently in draft, and the indicators are non-exhaustive.
Use: To create transparency and credibility in how social impact funds define, track and report on the social and environmental performance of their capital allocations
Created by: The Rockefeller Foundation, Acumen Fund, B Lab in consultation with MFIs, CDFIs, SGBs, PE/VCs, foundations, investment groups
Users: funds/foundations/investors, financial intermediaries, investees, rating agencies/members orgs, academia/think tanks
Supporting tools: Pulse portfolio data management system (jointly developed by Acumen and Google, being deployed globally using Salesforce.com), Global Impact Investing Rating System GIIRS (B Lab led). See the links for more info the project and Pulse.
Compliant: builds upon IFRS, GRI, SPTF, MIX... and of course the BACO methodology
Member orgs: GIIN, ANDE, FAST...
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Sector-specific indicators for Impact Investors
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AGRICULTURAL/ARTISANAL
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PRODUCT/SERVICE type, primary focus
Products: Animal Goods (Dairy products, Meat, Eggs, Wool), OR Crops (Fruits, Vegetables, Grains), OR Coffee, OR Handicrafts
Processing: Crops or Animal Products
Retail: Retail / Distribution Center
Services: Education / Training
Other
Indicators
- sales (basic, export, certified), price premium (via certification), indirect jobs created, purchases from rural producers, certifications, sustainable land area cultivated, amount (hazardous) agrochemicals purchases, productive forest area
ENERGY / ENVIRONMENT / WATER
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PRODUCT/SERVICE type, primary focus
Energy Generation: Alternative energy / Renewable (Wind, Solar, Hydro, Biomass/Biogas), OR Fossil fuel / Traditional Fuel (Oil, Coal, Kerosene)
Products: Energy Efficient / Environmentally Superior Technologies, OR Energy Production
Water: Purification / Production (Community Water Systems), OR Treatment (Community / Individual Sewage Systems), OR Water Purification Systems (Household Water Purifiers)
Environment: Conservation
Other
Indicators
- units produced, sold/distributed, installed
ENERGY: traditional energy (MWhs) produced, renewable energy (MWhs) produced, utilization: production and percentage (production as % of capacity), energy saved/displaced (electricity MWhs, charcoal tonnes, firewood tonnes, oil barrels, kerosene litres), GHG offset/mitigated (tonnes of CO2 equivalent), new access to energy (#households, #businesses/facilities), improved access to energy i.e. consistent delivery (#households, #businesses/facilities)
WATER: potable water production capacity (total litres at a community), potable water utilization (%), water use per person (in a community), agricultural (non-potable ie irrigation quality) water production capacity, water production capacity: litres produced or sold through Point-of-Use devices, new access to clean water (#households, #individuals)- waste treatment (litres/day)
CONSERVATION: return flow (litres/day back to water table at same or better quality), land reserve preserved (hectares), high conservation value forests HCVF preserved (hectares), coastlines preserved (km), land reforested (hectares), trees planted
EDUCATION
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PRODUCT/SERVICE type, primary focus
Facilities / Infrastructure: New, OR Renovations / Improvements
Production - Educational Materials
Services: Student Education, OR Instructor Training
Retail / Wholesale: Traditional Educational Materials, OR Technology
Transportation Services
Other
Indicators
- new primary students given access (total, female, minorities), new secondary students given access (total, female, minorities), transition rate primary to secondary (% and female), dropout rate primary (% of # that started, and female), dropout rate secondary (% of # that started, and female), net enrolment rate primary (% of enrolment age group population, and female), net enrolment rate secondary (% of enrolment age group population, and female), gross enrolment ratio primary (% of eligibles, regardless of age), gross enrolment ratio secondary (% of eligibles, regardless of age), net intake rate primary (% of eligible age), new edu materials provisioning type (donation or sale or production), new edu materials number (books/packets), new edu materials value (USD), ratios (students to facility, students to classroom, students to classroom sq ft, students to teacher, textbook to student, students to toilet), educator experience (yrs teaching), educator qualitications (% meeting or exceeding min rqmts), educators trained (#, hours, average hours per teacher/instructor), facilities built, converted or expanded (type of upgrade, type of facility upgraded, sq ft), non-academic extracurricular programs offered by school (#), non-academic basic health programs offered by school (#), vehicles managed (#), students transported (#)
COMMUNITY DEVELOPMENT FINANCE
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PRODUCT/SERVICE type, primary focus
Credit: Mortgage Loans, OR Energy Efficiency Loans, OR Business Loans, OR Consumer Loans
Facilities / Infrastructure
Equity Investments
Services: Technical Assistance / Education / Training
Other
Indicators
HOUSING
- people housed (# as result of new construction, loans, repairs, remodeling), housing (#units, value, type eg sale/rent/other, 'affordable'?, % affordable), housing location (type eg urban/semi-urban/rural, zone/zip), green building housing (#units, value, type eg sale/rent/other, 'affordable'?, % affordable), green building housing location (type eg urban/semi-urban/rural, zone/zip)
CONSUMER LOANS
- 1-4 family mortgage loans (# in low income communities, value), multi family mortgage loans (# in low income communities, value)
FACILITIES/INFRA
- community development facilities (#built/renovated, type eg health/edu/childcare/other, value), space created retail/commercial (sq ft created/preserved), space created green buildings (sq ft created/preserved), new businesses entering neighborhood (#, size), retail or commercial infrastructure built/renovated (value), energy efficient improvements (sq ft), energy saved/conserved (KWhs), building re-use (sq ft renovated), infill of buildings (sq ft developed/redeveloped)
BUSINESS LOANS
- loans for business development (value of loans), equity for business development (value of equity)
SERVICES
- group based training (#), technical assistance (#), organization receiving training (#)
HEALTHCARE
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PRODUCT/SERVICE type, primary focus
Facilities / Infrastructure: Healthcare, OR Product / Drug Manufacturing
Products: Medical/Health-related Suppliers and Devices, OR Pharmaceuticals / Medications
Services: Healthcare Treatment, OR Healthcare Training / Technical Assistance
Retail: Traditional Outlets or Kiosks, OR Non-traditional Models (Local Entrepreneurs)
Financial Services: Insurance / Financing
Other
Indicators
PRODUCTS
- units (#produced, #sold, #distributed, value)
SERVICES
- patient visits (total, well visits including immunzn, curative visits), number of procedures performed ie surgeries, referrals (total, well visits, curative visits)
FACILITIES/INFRA
- units/facilities under management (total #, health-related, manufacturing-related), units/facilities built/repaired, units/facilities sold/closed
RETAIL
- capacity (#beds, diagnostic packages, doctors/person, etc), utilization (occupancy %, operating hours booked %, machines hours used %), caregivers employed (doctors, nurses, physicians aids, other), caregivers exiting, caregivers trained (#), revenue clients (% of clients paying for services), insurance policies (#people covered by policies sold), wait time (avg wt per patient for well-visits)
MICROFINANCE
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PRODUCT/SERVICE type, primary focus
Credit: General Loans, OR Microenterprise / SME Loans, OR Line of Credit, OR Education Loans, OR Housing Loans, OR Loans for Immediate Needs
Savings: Checking, OR Savings, OR Fixed Term Deposits (CDs)
Insurance: Credit Life Insurance / Life Insurance, OR Home Insurance, OR Livestock / Agriculture Insurance
Services: Financial (debit/credit card, transfer service), OR Education / Training / Technical Assistance
Other
Indicators
- Methodology/type (individual lending, solidarity group Lending, village banking, self help group banking, other), service delivery split (% individual, % solidarity group, % village banking, % self help group banking, % other), clients (#) (also breakups for female, active borrowers+savers, active borrowers, active voluntary savers, new clients), client drop-out rate % (no activity past 12 months), % female clients (of total active), value voluntary deposits (voluntary and time deposits), exit survey frequency?, client feedback?, jobs: self-employed individuals in financed enterprise, jobs: hired (non household) individuals in financed enterprise
LOANS/CREDIT
- avg loan size per delivery methodology (value for each methodology)
NON-FINANCIAL SERVICES
- loan types (enterprise services?, adult education?, health services?, women empowerment?), interest rate method? (declining balance method or flat interest method), effective interest rate (use Social Performance Task Force calculator for single declining balance nbr), active borrowers per credit officer, total value of loans, ratio: deposit to loans (voluntary deposits to gross loan portfolio), % clients receiving loan insurance (of total active), ratio: operating efficiency (operating expense to loan portfolio), ratio: personnel efficiency (personal expense to loan portfolio), portfolio at risk 30d (outstanding bal & portfolio overdue > 30d + renegotiated portfolio / adj gross loan portfolio), portfolio at risk 90d, write-offs value (per time frame), client protection policy? (6 core principles: avoidance of client over-indebtedness, transparent communications on pricing terms conditions, appropriate collections practices, ethical staff behavior, mechanisms for redressing grievances, privacy of client data), methods for ensuring client over-indebtedness is avoided (details on IRIS website), methods for ensuring transparent communications (details on IRIS website), methods for ensuring appropriate collections practices (details on IRIS website), methods for ensuring ethical staff behavior (details on IRIS website), methods for ensuring redressal of complaints/grievances (details on IRIS website), methods for ensuring privacy of client data (details on IRIS website)
SERVICES
- non-financial services (enterprise services?, adult education?, health services?, women empowerment?), enterprise services provided (enterprise skills development, business development, other), adult education (financial literacy, basic health / nutrition edu, other), health services (basic medical services, special medical services for women and children, other), women empowerment services (business training to enhance opportunities, leadership training, training on rights/responsibilities as leaders in participative models, women's rights education / gender issues (training for men and women), counseling / legal services for violence victims, other), training of clients in basic business skills (#)
OPERATIONAL/INTERNAL
- staff training: social performance measurement? also, which staff (board, top mgmt, mid mgmt, loan officers, back office eg MIS/admin/accounting, other), staff training: areas covered? (over-indebtedness prevention, communications with clients, acceptable practices of collections, collecting quality social info, policy/procedures on safeguarding client data, referral of clients complaints, responsiveness, gender sensitivity, other), staff performance appraisals: appraisals? (ability to attract new clients from target market, outreach of remote rural communities, gender sensitivity skills, quality of interaction with clients, social data quality, retention / drop-out rates, portfolio quality, other), staff performance appraisals: incentives? (areas same as above), staff performance appraisals: which staff incentivized? (top mgmt, mid mgmt, loan officers, back office, other), market research on clients? frequency? what research process? (research for new product development, client satisfaction assessment, interviews with exiting clients, other)
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Financial indicators
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- TYPICAL ONES +
- operating revenue (total, grant/donation/in-kind contribution, earned)
- entrepreneur investment
- total portfolio value: loans and investments (in investees)
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Operations indicators
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Governance
- board of directors type governing body (diversity? independence? meeting freq?), formal governance policies? (code of ethics, conflict of interest, whistle blowing, records retention)
Compliance
- local compliance? (labor, tax, environmental regulations), community service policy? (volunteer hours, donations value)
Employees
- full time employees (total/females/minorities, skilled t/f/m, salaried t/f/m, unskilled t/f/m, hourly t/f/m), full time jobs growth, part time employees (total/females/minorities, skilled t/f/m, salaried t/f/m, unskilled t/f/m, hourly t/f/m), part time jobs growth, seasonal employees, contract employees, departing employees (FT and PT, voluntary and involuntary), staff turnover rate % (past year), inorganic growth? #jobs
Benefits/People-Development
- healthcare benefits for full time employees? healthcare: number of FTs elected to receive, % premium covered, value of benefits paid by firm over period, employee health education expense, full time employees trained (total, skilled, unskilled), full time employees training hours (total, skilled, unskilled), full time training per employee (total, skilled, unskilled), full time training cost (total, skilled, unskilled)
Wages
- full time wages including bonuses (total/females/minorities, skilled t/f/m, salaried t/f/m, unskilled t/f/m, hourly t/f/m), full time wage growth, part time wages including bonuses (total/females/minorities, skilled t/f/m, salaried t/f/m, unskilled t/f/m, hourly t/f/m), part time wage growth, full time median wage (non management), seasonal wages, contract wages, wage equity ratio (highest to lowest)
Customers
- customer visits (#), growth in target population served (%), growth in target population served: demographics (% for women, children/adolescents, minorities, other), growth in target population served: socioeconomic (% for very poor, poor, low income), growth in target population served: location (% for major urban, minor urban, semi-urban, rural)
Suppliers
- supplier evaluation considering social/envi performance?, local suppliers supported (# total, # female owned/run), local sourcing value
Energy
- energy consumption (MWhs), energy conservation (MWhs), renewable energy consumption (% of total consumption), greenhouse gas emissions (tonnes CO2 equivalent, uses GRI calculation), greenhouse gas reductions (tonnes CO2 equivalent, from prior to current period)
Water and Waste
- water use (litres), water conservation (litres), water treatment (litres), solid waste produced (Kgs), substitution/recycling/recovery used to reduce material usage?, waste reductions achieved (%)
Facilities
- employs green building practices?, portion of facilities green/envly superior (%)
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