Impact Measurement Methodology
As the impact investment industry becomes more mainstream, thoughtful and accurate measurement is more important than ever. We have built a track record of measuring, and transparently communicating our impact, recognising that we can only manage the impact that we can measure.
While there is currently no single accepted framework for measuring impact (such as GAAP in the accounting world), there are some widely used methodologies. We strive to leverage the best current thinking and conform with global best practice, but also ensure that we practically complete impact measurement in the right way for our investments.
We believe the following should underpin an effective impact measurement framework:
- investors should be clear about their impact investment thesis and define relevant metrics at the outset;
- investors should take a conservative approach to assessment of impact;
- investors should be transparent and hold themselves to a high level of accountability, which includes assessment of potential unintended adverse consequences; and
- investors should not let the challenges of impact measurement stop them from getting started
How do we measure impact?
We use the Impact Management Norms (“IMN”) as the overall framework, which considers impact achieved across five dimensions: what, who, how much, contribution, and risk.
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What What outcome(s) do the investment activities drive?
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Who Who experiences the outcome?
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How much How much of the outcome occurs in terms of scale, depth, and duration? We assign measurable key performance indicators (“KPIs”) and using IRIS+, we select the metrics that will best track the outcomes required to contribute to the solution of the identified challenge.
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Contribution What is the additionality of our investment? Additionality is making something happen that otherwise would not.
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Risks What is the risk if the impact does not occur as expected?
We also align with the United Nations Sustainable Development Goals and layer in the Global Impact Investing Network’s (“GIIN”) Impact Reporting and Investing Standards (“IRIS+”) metrics for each impact dimension of IMN. This enables investors to aggregate their impact metrics at a portfolio level.
We put a particular focus on outcomes over outputs. For example, in addition to simply measuring the number of affordable housing dwellings we finance (the output), we also consider the direct impact building affordable housing has on our society (the outcome).
Our approach involves 3 steps:
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1
Apply Impact Management Norms (“IMN”) framework
- This considers impact across five dimensions: what, who, how much, contribution and risks
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2
After applying the IMN framework, each investment is categorised on a scale of impact, from 0 (lowest) to 5 (highest)
- Scores 0-2: “Avoids Harm”
- Scores 2-3.5: “Benefits People & Planet”
- Scores 3.5-5: “Contributes to Solutions”
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3
Transparent and clear reporting to investors
- We release an annual Impact Report to investors, which shares details of our investing activities and portfolio impact performance for the year. In addition to our annual Impact Report, we provide quarterly reporting to investors which includes an assessment of both financial and impact performance.