Is good impact practice associated with strong impact performance?

The incredible growth in impact investing over the last decade has far surpassed the development of impact measurement practice – leaving the sector vulnerable without better and more transparent data.

There is not enough consistent data in the public realm to be able to properly assess whether better impact practice – the standard proxy used to due diligence impact intentions and impact measurement practices – necessarily translates into a better probability of impact achieved.

Most investors today use standardised frameworks that provide a wide array of metrics. While this breadth allows investors to select what is most relevant to each investment, the preponderance of metrics makes it hard to compare across organisations.

Establishing an investor’s track record on impact achieved demands ongoing measurement of impact on a consistent basis. The data investors collect (and publicly share) is not always consistent over time. So, even if individual impact measures are robust, the lack of consistency makes it difficult to track impact over the long term, or even to compare against the targets set out in an organisation’s strategy.

We owe it to the people and causes who are meant to be benefiting from impact investments, and to those paying for them, to make sure they actually do make social and environmental returns. Major impact investors should publish the data they have on the impact of their investments and commit to collecting it in a consistent way – especially longitudinal impact data. This would go a long way towards improving our understanding of what makes an impact, and ultimately help investors achieve more for the causes they care about.

Solving the problem

If you are an investor or funder and are keen to work with us to improve the consistency of impact investing data, please do get in touch with us.

Acknowledgements

We’re very grateful to Jamie Broderick for supporting our impact investing research, and to the GIIN for sharing a subset of anonymised impact data related to quality jobs.