This Is Not an Impact Performance Report
By Sasha Dichter, Tom Adams, Lindsay Smalling & Devin Olmack
In a world of increasing transparency, we expect that what’s on the label will reflect what’s inside the package. This is as true for an “organic, cage-free” label on a carton of eggs as it is for a B Corporation Certification or a fund categorized as “ESG.” These terms communicate something specific to the buyer. Their credibility rests on whether what’s on the label is consistent with the product itself.
In the last five years, impact investing has grown tremendously: Today, more than $40 trillion of assets are classified as ESG. Accompanying that growth, there’s been a marked increase in activity around how to measure and manage impact. This work is essential: It will enable investors to direct capital to make the most change, and it will empower investors and companies to manage impact performance with the same rigor as financial and operational performance. In recent years the impact investing sector has made progress developing better, more accessible, and more transparent ways of talking about impact, from the IMP’s five dimensions of impact to the IRIS+ indicators and the IFC Operating Principles.
Yet despite this progress, we have yet to set a clear minimum expectation around what constitutes “good enough” impact data to judge performance. Is it an articulation of intent? Assurance that certain practices are being followed? Or do we need hard data about material impacts for people and planet? Lacking this shared minimum expectation, current impact performance reports typically rely on basic operational data that are represented as impact created. As a result, most impact “reporting” comes up short: It serves as a self-affirming indicator of good efforts rather than an objective view of performance.
Read the full Stanford Social Innovation Review article below.