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Aspen Network of Development Entrepreneurs Measuring Social, Financial and Environmental Performance

Aspen Network of Development Entrepreneurs Measuring Social, Financial and Environmental Performance. Agenda. Why measure? What to measure? How do you collect what you measure? Analyzing measurements Discussion. SGB. SGB. SGB. SGB. SGB. SGB.

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Aspen Network of Development Entrepreneurs Measuring Social, Financial and Environmental Performance

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  1. Aspen Network of Development Entrepreneurs Measuring Social, Financial and Environmental Performance

  2. Agenda Why measure? What to measure? How do you collect what you measure? Analyzing measurements Discussion

  3. SGB SGB SGB SGB SGB SGB Small and growing businesses (SGBs) are commercially viable businesses, typically from 5 to 250 employees, that have strong potential for growth -- and thus for creating economic, social and environmental benefits

  4. Impacts • Job Growth • Wage Growth • Revenue Growth • Net Income Growth • New Products • Customers Served • Suppliers Supported Economic Benefits Social Benefits Environmental Benefits Reduce deforestation Improve air quality (LPG) Social goods (glasses) Social infrastructure (toilets) Steady jobs Increased incomes Wealth creation The Promise of SGBs SGBs Will Create Leading To:

  5. Commercial investment Capital only provider Blended capital investment Capital and capacity building provider Social impact investment Capacity building only provider Grants for capacity building Financial Flow Schematic of SGB Sector Private Equity Traditional private equity provider Medium businesses 250/$2m SGB Sector Small and growing businesses 5/$25k Microfinance provider Microfinance clients Microfinance

  6. 142 ANDE Members 25 Research, Academic and Corporate Institutions 36 Investors 20 Foundations 5Other* 55 Capacity Development Providers *Includes individual and strategic partner members

  7. Why Measure?

  8. Some reasons . . . Provide greater legitimacy to individual performance reports Validate that SGBs can generate tremendous impact Eradicate inconsistent definitions across investments and throughout the sector Improve performance of investees and funds Increase the credibility of the sector Conclusion: Measuring social, financial and environmental performance can help increase impact

  9. What to measure?

  10. The Impact Reporting and Investment Standards (IRIS) is a common framework for defining, tracking, and reporting the social and environmental performance of impact investments.

  11. Without IRIS Company A Company B Company C Full Time Employees Full Time Employees Employees Same term, different definitions Same definition, different terms With IRIS Company A Company B Company C Full Time Employees Full Time Employees Full Time Employees Consistent terms & definitions across companies

  12. The IRISFramework IRIS Framework

  13. A Meta Standard Examples of Frameworks Leveraged • International Financial Reporting Standards (IFRS) • U.S. Generally Accepted Accounting Principles (GAAP) • Microfinance Information Exchange (MIX) • Community Development Finance Data Project (CDP) Financial Performance • International Labour Organization (ILO) • Organisation for Economic and Cooperation and Development (OECD) • Global Reporting Initiative (GRI) • B Lab Operational Impact • Certification schemes (FLO, FSC, SAI, etc) • Sector-specific protocols (SPTF, NCIF, etc) • Proprietary systems (IFC, WRI, etc) Product Impact

  14. IRIS Data Repository Performance Data Repository • A standard set of social and environmental definitions and metrics available as a public good • Developed by an objective governance process and with broad participation • Hub for performance data reported using standards • Data submitted anonymously • Utilize aggregated data for benchmarking and to capture industry scope

  15. Measuring Impact at ANDE • Create consistency • Communicate • Impact • Peer Education Support members in aligning and adopting IRIS Metrics From the Ground Up Workshop Metrics Working Group Collect data from members on annual basis to produces sector level data reports on the impact small and growing businesses Maintain a core set of indicators (ANDE Core Metrics) to develop performance benchmarks

  16. ANDE Core Metrics Demonstrate the growth and sustainability of SGBs 1 Determine the Area of Impact for your Portfolio or each SGB (choose one or more) 2 • Core Metrics Plus For organizations seeking to speak more deeply to their impact • Report in conjunction with the area of impact you are reporting on to more deeply speak to reaching target populations or responding directly to the needs of a community. • Example: • Impact Objective: Supporting Female Access to Jobs • Sector Focus: Agriculture • ANDE Core Metric: Suppliers • ANDE Core Metrics Plus: Supplier Individuals: Female (PI1728) 3

  17. Impact Investing Infrastructure FINANCIAL REPORTING IMPACT REPORTING Definitions and metrics GAAP IRIS STANDARDS Performance management SAP Pulse SYSTEMS DATA WAREHOUSE Repository and aggregator EDGAR IRIS Repository Assessment tool Morningstar GIIRS RATINGS

  18. Data collection tools

  19. Pulse A management information system to track environmental,socialandfinancialperformance • Data collection and reporting tool • Web based • Application that plugs into salesforce.com • Pulse (the application) is free

  20. Pulse and IRIS • You can track both IRIS and unique metrics in Pulse • Pulse and IRIS partner to ensure Pulse has latest versions of IRIS • Simplified reporting to enable contribution to IRIS data repository

  21. Collecting and Assessing

  22. a 501(c)3 non-profit whose mission is to harness the power of business to solve social and environmental problems is powered by

  23. Capital to Impact • Social and environmental performance ratings • 3 Products • Company Ratings • Fund Ratings • GIIRS Analytics

  24. Company Ratings Process • Register company • Complete the assessment (1.5 – 4 hours) • Complete Disclosure Questionnaire • Complete optional Metrics page • Company receives Rating Report • Company attaches optional Management Letter • Survey review with GIIRS Team Member (1-2 hours) • Document Verification (conducted by Deloitte)

  25. Company Assessment • Contents • Governance • Workers • Community • Environment • Social Enterprise Models infused into each area • Disclosure Questionnaire

  26. Supplement to Standard Assessment

  27. Assessment Structure 40 Versions of Assessments Coming Soon: Industry Addenda

  28. 25 Pioneer Funds North American Pioneers Emerging Markets Pioneers

  29. GIIRS Analytics: Fall 2011

  30. Putting it Together: IRIS Data Report

  31. IRIS Data Report • Data from 463 companies across 6 funds and 1 technical assistance provider • Process included alignment of performance measures and review of data for submission to the database • Data from 1,931 MFIs • Data based on alignment and integration work with the MIX • Microfinance • Institutions

  32. Overall Statistics

  33. Percentage of Profitable Organizations * Companies showing a positive net income in the last year reported Note: Financial Services sector includes data from the MIX; regional totals do not

  34. Energy Sector: Profitability by Region Note: Based upon last reported year of data: 2009 or 2010

  35. Analysis by Social Impact Objective * Companies showing a positive EBITDA in last year reported

  36. Agriculture Sector: Social Indicators Note: Purchasing Power Parity (PPP) based on 2009 World Bank PPP conversion rate; 2008-2010 data

  37. Online Resources http://www.aspeninstitute.org/policy-work/aspen-network-development-entrepreneurs/metrics-impact http://iris.thegiin.org/iris-standards http://www.giirs.org/ http://www.app-x.com/pulse http://foundation.force.com/home

  38. Thank You lindsey.yeung@aspeninst.org www.aspeninstitute.org/ande

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