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HomeOur IndustryImpact InvestmentWhat Is Impact Investment?Measuring and Managing Impact

Measuring and Managing Impact

A central component of any impact investment strategy is understanding, measuring and reporting on the impact achieved.

Over the years, there have been various helpful tools designed to make this easier at both an enterprise and investor level. There have been efforts to codify the underlying principles behind this kind of approach, like the Principles for Responsible Investment and Social Value International’s Seven Principles of Social Value. And there have been efforts to develop indicators that can help to measure and report on performance, like the Global Impact Investing Network’s IRIS metrics or the Global Reporting Initiative’s sustainability reporting

However, particularly as the industry has expanded in size, it has become clear that a single unifying architecture is needed to bring all this together in a coherent way – one that can apply across all asset classes and across all types of organisations. This will make it easier for investors and asset owners to compare impact performance across different enterprises, strategies and funds; which should in turn accelerate the growth of the sector.

The Impact Management Project (IMP)

One promising avenue for this is the Impact Management Project (IMP), a global initiative to find a common consensus on how we measure, manage and report on impact across asset classes. This movement is gaining increasing momentum around the world, as it looks to help investors and enterprises better understand and benchmark impact.

IMP starts from the premise that everything we do has an impact on people and the planet. Impact management is the ongoing practice of understanding these impacts with a view to increasing the positive and reducing the negative.

Launched in 2016, the IMP began by bringing together over 2,000 practitioners globally to agree some standard definitions – which would enable stakeholders across the value chain to align their impact goals and establish a framework for sharing data on impact performance. The IMP consensus was that impact can be broken down into five dimensions:

  1. What: What outcome occurs in this period as a direct result of the business? How important are the outcomes to the people who experience them?
  2. Who: Who experiences the outcome? Are the underserved affected as a result of the business?
  3. How much: How significant is the outcome? (duration and degree of change experienced)
  4. Contribution: What is the direct contribution of the enterprise/investor in relation to the outcome experienced? What degree of the outcome would have occurred anyway?
  5. Risk: What is the risk to both the people and the planet if the outcome is different than expected (e.g. efficiency, evidence, drop-off and alignment risk)?

In the current phase of its work, the IMP is facilitating and coordinating a group of leading global standard-setting organisations to develop a set of end-to-end principles, standards and benchmarks for impact management. This ‘structured network’ includes the Principles for Responsible Investment (PRI), Global Steering Group for Impact Investment (GSG), the Global Impact Investing Network (GIIN) and the Organisation for Economic Co-Operation and Development (OECD).



The IMP impact performance and reporting framework

Enterprises and investors can assess their impact performance by assessing and reporting 15 categories of data

Source: The IMP impact performance and reporting framework, IMP

Further information

FOR FURTHER INFORMATION PLEASE CONTACT THE BVCA

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