Did you know that 62% of companies mentioned the SDGs in their reporting, 37% of companies selected priority SDGs, 79% of companies that prioritized the SDGs chose SDG 13 Climate Action, and 28% of companies set quantitative targets and linked these to societal impact? (Source: SDG Reporting Challenge 2017) In other words, many companies are starting to align with UN SDG Goals, but are they moving beyond simple impact washing? While multiple impact frameworks, standards, and tools are available today, most organizations still struggle to understand and communicate their impact.
Millennials are much more impact savvy than previous generations. They are asking hard questions beyond the simple composition of portfolios. How are you creating an
In 1994, when I worked at TIBCO/Reuters, we championed and revolutionized software integration based on publish/subscribe, which is now ubiquitous and fundamental to any corporate application's integration. Back then, our premise was - to create a software bus (similar to Intel’s Hardware Bus). This allowed us to create a
Read More: How can social impact data be used to measure and manage the impact?
How can we scale with the
Read More: Case study: Transforming Families with Affordable Housing.
Last three years, we have been experimenting and collecting feedback from hundreds of social sector companies, working with multiple standard bodies, and bringing in our experience to solve the challenge of building flexible integration for the entire impact ecosystem.
SoPact Impact Cloud simplifies all the impact jargon using a simple impact search engine aligning Theory of Change (TOC) and Impact Management Project (IMP). Simplify metrics selection aligned with Sustainable Development Goals, IRIS, and GRI, and build custom metrics based on your internal goals and targets. Drive a lifecycle of impact framework, progress monitoring, and reporting with individuality and flexibility.
We introduce impact ecosystem players in Uniting the Impact Ecosystem: A Call for End-to-End Impact Management. Three key layers are Asset Owners, Asset Managers, and Assets.
In the following
Read More: The Impact Management Journey of Sustainable Social Enterprises
Impact Management Project
Impact Management project defines five dimensions of its effect on people or the planet: intended and unintended, positive and negative. For each effect, the level of performance is evaluated for all five dimensions.
The real challenge is that investors should use a data-driven approach to assess the impact. The impact cloud provides a flexible foundation of cross-reference services that allows the evaluator to assess results based on external and internal data.
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Figure: Working Example from Impact Management Project: Evaluation process for each effect based on a data-driven process.
Read More: CDFI Program Impact Measurement Case Study 2022
Integrating Investor’s Impact Matrix
As investors gather better asset-based evaluation, the next task is to map their existing portfolio and then, over time, transition that portfolio to be impactful in the way that best suits their intentions and constraints.
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The ultimate goal is to define a portfolio that maps all the assets that help communicate the two most important questions:
- Impact allocation for a portfolio communicates composition by instruments and sector composition and defines the impact metrics of a portfolio. These impact metrics can help communicate the real footprint. For example, €220 billion portfolios of the pension fund may achieve a much lower impact that avoids harm than the $10M portfolio of a family foundation focused on creating
solutions . An investor seeking higher impact might want to review impact metrics before investing.
- Impact investors are now asking to provide evidence of how their capital creates an impact or how beneficiaries benefit from the stated impact. This has often been challenging as an
outcome of impact investors are not aligned with the investee. They often do not speak the same language of an outcome and do not trust the results/data collected from the investee. Creating an impact data pipeline from enterprise to asset owners through Impact ID describes how we can solve outcome alignment and data trust issues between asset owners, asset managers,and assets.
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Integrating Social Impact Frameworks & Standards
During the last ten year, we have seen a rise in leading frameworks from the theory of change "impact management project (IMP)". We have also seen many standards starting with Sustainable Development Goals (SDG) and IRIS/GRI. While these standards and frameworks are a good starting point, they are insufficient to understand the impact of assets truly. There are other initiatives from the UN, OECD, and TONIIC to build an integrated framework. For example, TONIIC’s T-100 provides a cross-linking between Impact Management, SDG, and IRIS.
While these are definition is useful, they still have a few limitations --
- Requires more flexibility to accommodate other qualitative/quantitative custom and standards-based metrics
- Requires a foundation metrics search, selection, data collection, analytics, and reports
Unfortunately, many investors use this reference, but they must streamline the process independently. SoPact Impact Cloud provides a theory of change (TOC) & impact management (IMP) project-driven
Integrating Theory of Change
Impact Cloud integrates SDG, IRIS & Impact Management framework defined by OCED, IRIS, and TONIIC. We take a step forward by integrating a flexible metrics catalog that provides enriched metadata at the metrics level and cross-links SDG goals, targets, and indicators with GRI and IRIS. On top of that, each SDG target can create a hybrid standard and custom metrics allowing each asset to define impact (and context) metrics. This change-based approach allows asset managers and the
Read More: Theory Behind Social Impact Experiments
Conclusion
The key to impact measurement & management success is that the process aligned with the
Most Asset Managers today still aggregate results from the assets in excel based manual process. They often have a pseudo-impact data aggregation framework, which requires the investee or grantee to provide data regularly. Many even use B-Labs-based B-Assessment approach. While they provide IRIS based framework to aggregate results, most feel that this approach is too limited.
The B-Assessment-based approach might be useful to a few, especially the GIIRS rating; most investees think this approach does not convey the necessary context. Second, the questions presented in the form of IBM Rating pigeon holes to a rigid approach. Finally, social and
The best data aggregation
- Allows asset managers to define metrics specific to the unique context of each enterprise (asset).
- Allows enterprise and asset
managers to measure progress against their own unique targets. - Performs
simplified analysis of assets with similar or different metrics. - The results from different assets and asset managers can be nicely composed in a unified way, reducing tremendous data aggregation and reporting burden.
Impact Cloud reporting provides built-in widgets that beautifully provide an integrated theory of change, impact management reporting combined with a portfolio or fund-level automatic reporting. The story-driven wizards allow dynamic tables, and charts combined with integrated impact learning and narratives from social media feed.
Impact measurement to management enables funders to make better decisions based on a reliable and effective process.
Further Reading
Curious about what other setting up actionable impact management frameworks? Get a free copy of this e-book with four impact measurement experts.
