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ANDE - Summer 2011
Aspen Network of Development EntrepreneursMeasuring Social, Financial and Environmental Performance
ANDE - Summer 2011
Agenda
• Why measure?• What to measure?• How do you collect what you
measure?• Analyzing measurements• Discussion
ANDE - Summer 2011
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
SGB
SGB
SGB
SGB
SGB
ANDE - Summer 2011
SGBs Will Create
Impacts
•Job Growth•Wage Growth•Revenue Growth•Net Income Growth•New Products•Customers Served•Suppliers Supported
Economic Benefits
Steady jobsIncreased incomesWealth creation
Social Benefits
Social goods (glasses)Social infrastructure (toilets)
Environmental Benefits
Reduce deforestationImprove air quality(LPG)
Leading To:
The Promise of SGBs
ANDE - Summer 2011
Financial Flow Schematic of SGB Sector
Social impact investment
Commercial investment
Grants for capacity building
Blended capital investment
Capacity building only provider
Capital and capacity building provider
Capital only provider
Small and growing businesses
Microfinance provider
Traditional private equity provider
Mediumbusinesses
Microfinance clients
SGB Sector
Private Equity
Microfinance
5/$25k
250/$2m
ANDE - Summer 2011
55 Capacity Development
Providers
36 Investors
25 Research, Academic and
Corporate Institutions
20 Foundations
5 Other*
*Includes individual and strategic partner members
142 ANDE Members
ANDE - Summer 2011
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
ANDE - Summer 2011
The Impact Reporting and Investment Standards (IRIS) is a common
framework for defining, tracking, and reporting the social and
environmental performance of impact investments.
ANDE - Summer 2011
Full Time Employees
Company A Company B Company C
Full Time Employees Employees
Same term, different
definitions
Same definition, different terms
Without IRIS
Full Time Employees
Company A Company B Company C
Full Time EmployeesFull Time Employees
Consistent terms & definitions across companies
With IRIS
ANDE - Summer 2011
A Meta Standard
Operational Impact
Product Impact
Financial Performance
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)
International Labour Organization (ILO) Organisation for Economic and Cooperation and
Development (OECD) Global Reporting Initiative (GRI) B Lab
Certification schemes (FLO, FSC, SAI, etc) Sector-specific protocols (SPTF, NCIF, etc) Proprietary systems (IFC, WRI, etc)
ANDE - Summer 2011
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
ANDE - Summer 2011
Measuring Impact at ANDE
Create consistency
CommunicateImpact
Peer Education
Support members in aligning and adopting IRIS
Maintain a core set of indicators (ANDE Core Metrics) to develop performance benchmarks
Collect data from members on annual basis to produces sector level data reports on the impact small and growing businesses
Metrics From the Ground Up Workshop
Metrics Working Group
ANDE - Summer 2011
ANDE Core Metrics
Demonstrate the growth and sustainability of SGBsEarned Revenue (IRIS ID FP5958)
Full Time Employees (OI3160)
Full Time Employee Wages (OI5887)
New Investment Capital (FP8293)
GHG Emissions (OI1479)
Determine the Area of Impact for your Portfolio or each SGB (choose one or more)
Clients (PI7094)
Products Sold (PI1263)
Suppliers (PI9566)
1
2
Core Metrics Plus For organizations seeking to speak more deeply to their impactReport 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 JobsSector Focus: AgricultureANDE Core Metric: SuppliersANDE Core Metrics Plus: Supplier Individuals: Female (PI1728)
3
ANDE - Summer 2011
Impact Investing Infrastructure
STANDARDS
SYSTEMS
DATA WAREHOUSE
RATINGS
Definitions and metrics
Performance managemen
tRepository
and aggregator
Assessment tool
GAAP
SAP
EDGAR
Morningstar
IRIS
Pulse
IRIS Repository
GIIRS
FINANCIAL REPORTING
IMPACT REPORTING
ANDE - Summer 2011
PulseA management information system to track environmental, social and financial performance
- Data collection and reporting tool
- Web based- Application that plugs into
salesforce.com- Pulse (the application) is
free
ANDE - Summer 2011
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
ANDE - Summer 2011
is powered by
a 501(c)3 non-profit whose mission is to harness the power of business to solve social and environmental problems
ANDE - Summer 2011
Capital to Impact
Social and environmental performance ratings
3 Products• Company Ratings • Fund Ratings • GIIRS Analytics
ANDE - Summer 2011
Company Ratings Process
Assessment
Review & Verificatio
n
Ratings Report
• Register company• Complete the assessment (1.5 – 4 hours)• Complete Disclosure Questionnaire• Complete optional Metrics page
• Survey review with GIIRS Team Member (1-2 hours)• Document Verification (conducted by Deloitte)
• Company receives Rating Report• Company attaches optional Management Letter
ANDE - Summer 2011
Company Assessment
Contents Governance
• Workers
• Community
• Environment
• Social Enterprise Models infused into each area
• Disclosure Questionnaire
ANDE - Summer 2011
IRIS Data Report
32
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 MIXMicrofinance Institutions
ANDE - Summer 2011
Percentage of Profitable Organizations
* Companies showing a positive net income in the last year reportedNote: Financial Services sector includes data from the MIX; regional totals do not
ANDE - Summer 2011
Energy Sector: Profitability by Region
Note: Based upon last reported year of data: 2009 or 2010
ANDE - Summer 2011
* Companies showing a positive EBITDA in last year reported
Analysis by Social Impact Objective
ANDE - Summer 2011
Note: Purchasing Power Parity (PPP) based on 2009 World Bank PPP conversion rate; 2008-2010 data
Agriculture Sector: Social Indicators
ANDE - Summer 2011
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/pulsehttp://foundation.force.com/home