An impact investment group is one that puts capital into ventures that they believe will do more than just make a profit. They are concerned with meeting a social or environmental objective. They want to see a financial return on their investment, but they also want to see a social impact. An impact investment group intends to see that their dollars and time are improving lives, helping the environment, assisting the underserved, or strengthening the impoverished.
Return on investment is important, but the impact of an investment is equally critical or often more paramount. That is why it is so crucial to have a strong system to measure the social or environmental impact of an investment. Financial gains are fairly easy to measure, but social impact is more difficult to quantify. A balance sheet, income statement, and cash flow statement can report on an organization’s financial status, but do not tell the story of impact. That is where the Global Impact Investing Network (GIIN) steps in.
The GIIN is a nonprofit network dedicated to increasing the scale and effectiveness of impact investing. To support transparency, credibility, and accountability in impact measurement practices, they created a coding system called IRIS. IRIS is used to catalog the most useful and widely accepted impact performance metrics. This standard language allows investors and the public to evaluate performance and allows organizations to communicate their impact more effectively. For example, IRIS breaks environmental impact down into specific categories like “percent recycled materials,” “land directly controlled and sustainably managed,” and “households provided new access to water.”
After establishing what will be measured with IRIS, the GIIN is now able to assess a rating based on an organization’s impact. This rating is known as a GIIRS Rating. GIIRS Ratings are the gold standard of impact measurement in social and environmental impact investing.
Since a GIIRS rating is the best way for Access Ventures to measure and showcase the impact our investments are making, we decided that all of our larger equity partners should be rated. To do this we have partnered with B Lab,a nonprofit that has created a platform called B Analytics to help facilitate the rating process. B Analytics is the exclusive source of impact data on GIIRS rated companies and is used by the leading impact investors, fund managers, and impact entrepreneurs globally. B Analytics will survey us and our portfolio and create a report card to assess our impact based on the IRIS standards. Our results are then used to establish a GIIRS rating.
GIIRS Ratings are the gold standard of impact measurement.
B Analytics provides a platform for us to benchmark, measure, and report our impact on an ongoing basis. They will also serve as coaches and advisors to help us and our portfolio improve our social impact. B Lab will also provide referrals for possible investments in other impactful organizations. With the help of the GIIN and B Lab, Access Ventures will be better equipped to build inclusive economies and impact lives and communities.
Written by Aaron Brough @ambro311