• Bhavana Poosarla

The Quest for Standardisation in Impact Measurement & Management

Updated: Dec 2, 2019


Headlines compiled from various news articles on IMM


Impact measurement and Management (“IMM”) are high on the agenda of every stakeholder in the impact investing value chain - be it asset owner, asset manager, or social enterprise. An organisation’s impact measurement exercise does not end with a beautiful SDG-adorned impact report. It is essential to continuously monitor the data on positive (and negative) outputs and outcomes to improve the long-term impact on people and the planet [1].


The market remains fragmented


In 2004, Clark et al. reported that a ‘common standard for social impact accounting does not exist’ [2]. Fifteen years and fifty standards later, the IMM market remains fragmented. Organisations venturing into IMM face a myriad of definitions, standards, principles, frameworks, models, conventions, measurement methods, and indicators. Many of existing frameworks are resource-intensive, time-consuming, lack interoperability, and at the risk of becoming obsolete.

More than 130 initiatives related to impact measurement and reporting - Cambridge Institute for Sustainability Leadership (CISL)

The table below provides a sample (but not exhaustive) list of choices developed by (and for) asset owners, asset managers, social enterprises, non-profits, and field-building organisations.


More available on repositories such as GIIN Impact Toolkit, SDG Compass, Global Value tool navigator


Alignment with the Sustainable Development Goals


The UN Sustainable Development Goals have been touted as a universal framework for articulating, measuring, and managing the impact of an investment. Since their inception in 2015, these global goals have swiftly made their place in investors agendas, investment strategies, impact reports, company websites – or marketing presentations, at the very least.

Global Goals by 2030 will require roughly $5–7 trillion of annual investments. The financing gap is currently $2.5-3 trillion annually – UNCTAD

The SDGs have been interpreted in a variety of ways by the financial sector. (Formerly) ESG data providers such as MSCI, Sustainalytics, and ISS-Oekom now offer investors with SDG-related impact assessment tools with varying methodologies [3]. For example, MSCI looks at revenues from SDG products and services, while Sustainalytics weighs alignment of company strategy and products with the SDGs. Due to lack of SDG-related data and incongruity of mapping themes and portfolios to SDGs, there have been growing concerns about ‘SDG-washing’ [4].


No one-shoe-fits-all approach


For many of these stakeholders, the existing methodologies are far from ideal and lack the desired depth. For example, does the metric ‘No.of jobs provided’ indicate whether the jobs pay decent wages, provide safe working conditions, and ultimately empower the beneficiaries?


It is difficult to put a number on every benefit

Let’s take a look at the SDGs. In 2017, Dutch asset managers APG and PGGM found 15 of the 17 SDGs investable. Even within these 15 SDGs, the asset managers believe some sub-goals are investable, while some aren’t [5]. It might be easier to measure the direct impact of investments contributing to these 15 SDGs. However, SDGs such as the seemingly uninvestable ‘SDG 16 Peace and Justice’ reflect a systemic change where the benefits are intangible and cannot be easily quantified. Such situations require a combination of quantitative and qualitative measurement approaches [6].


Organisations resort to different IMM approaches based on their objectives. Not satisfied with one methodology or standard, an organisation might draw from different methodologies to develop a proprietary measurement framework which caters to its needs (ex. Actis Impact Score, The Rise Fund Impact Multiple of Money).


Multiple efforts in a similar vein


As it seems, the industry runs the risk of exerting duplicate efforts which serve the same purpose. For example, under the Dutch Central Bank’s Sustainable Finance Platform, more than 20 Dutch asset owners collaborated to develop indicators for investors to assess their impact on the SDGs [7]. Investment Leaders Group, a coalition of global 11 insurers, pension funds, and asset managers, also published a set of six open-source metrics to help investors track their progress against the SDGs [8]. Nonetheless, such initiatives are driven by the same values of convergence and cooperation.


Towards collaboration and shared communication


An increasing number of organisations are working with peers towards a common agenda of harmonisation. The most recent push from asset owners includes the launch of the Global Investors for Sustainable Development Alliance (GISD), where 30 institutional investors partnered with the UN to catalyse long-term investments into sustainable development [9]. This November, GSG (the Global Steering Group for Impact Investment) partnered with the UN Global Compact to unveil the SDG impact assurance standards and SDG investor maps [10].


At the same time, a shift from proprietary to open-source frameworks is emerging. Impact Management project, facilitated by Bridges Ventures, has brought together 2000 investors, policymakers, and companies to build a global consensus on how to measure and manage impact [11]. IFC’s Operating Principles for Impact Management, with more than 70 investors as signatories, provide guidelines for selecting and managing investment funds for impact by integrating impact considerations throughout the investment lifecycle [12]. Both these initiatives align with the SDGs and have been gaining momentum. It remains to be seen whether such efforts will achieve global acceptance.


So what does the future hold for impact measurement and management? Amidst all the conundrum about ideal standardised metrics, it is important not to lose hold on the basics. The purpose of going through rigorous impact measurement practices is to stay accountable to all stakeholders and progress with time. Saïd Business School, which teaches the Oxford impact measurement programme [13], provides a critical framework to keep in mind:


  • Framing perspectives: Why do we measure? For whom?

  • Evidence of Impact: What do we value? What do we measure?

  • Measurement approaches: How do we measure? Who measures?

  • Managing for Impact: How will we make decisions? Who is accountable?

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