Alnoor Ebrahim, Associate Professor, Harvard Business School

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The State of Impact Measurement An update for
the Social Impact Investment TaskforceGuildhall,
London, July 9, 2015

• Alnoor Ebrahim, Associate Professor, Harvard
  Business School
• Kelly McCarthy, Senior Manager, Global Impact
  Investing Network
• Daniel Brown, Doctoral Candidate, Harvard
  Business School
• Correspondence to aebrahim_at_hbs.edu

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At a Glance G71

• Mobilizing
• Convene diverse players (Canada, France)
• Influence legislation (Aus, Italy, Japan)
• Build knowledge base via investor surveys
  academic centers (Aus, Italy, US)

• Standardizing
• Process guides (Japan, UK, Germany)
• Process/assurance standards (Germany, UK)
• Outcome standards by industry (France, UK)
• Transparency/reporting (Germany, UK, US)

• Financing
• Pay for Success/SIBs (Aus, Canada)
• Bank of unclaimed assets (Japan)
• Catalyze philanthropic support (US)

Source National Advisory Board updates to Social
Impact Investment Taskforce (2015)
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It is early days (still)

• Though there is increasing understanding of
  social impact measurement, the practice is still
  under development. (Japan)
• Need to develop an impact measurement culture
  before setting impact objectives to measure.
  (Italy)
• Measurement of impact continues to vary on a
  deal-by-deal basis. (Canada)

Source National Advisory Board updates to Social
Impact Investment Taskforce (2015)
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1. Methods
2. Adoption
3. Ecosystem

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Guidance (process)
JP Morgan (2015)
Impact Measurement Working Group Social Impact
Investment Taskforce (2014)
EVPA (2013)
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Methods for different stages

Expected Return
SROI


Theory of Change
Logic Model
Mission Alignment
Social Value Criteria

Scorecards
Quasi-Experimental Experimental Methods
RCT

Historical baseline

Pre/post test

Regression discontinuity design

Difference in differences

Post-Investment
Pre-Approval
Due Diligence
Process Alignment
Source Ivy So Alina Staskevicius, (2015),
Measuring the impact in impact investing,
Harvard Business School, MBA independent project.
http//www.hbs.edu/socialenterprise/pdf/MeasuringI
mpact.pdf
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Data Quality
GIIRS GRI SASB SROI
Materiality
Reliability
Comparability
Additionality
Universality
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Data Quality
GIIRS GRI SASB SROI
Materiality v v v
Reliability v v v v
Comparability v v v (v)
Additionality v
Universality v v v
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1. Methods
2. Adoption
3. Ecosystem

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EVPA Guidance Adoption
IRIS Metrics Adoption
How social/environmental performance of investees
is measured
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• So
• Investors appear to be seeking and using
• general guidance and some standardized metrics
• But
• What are they actually measuring?
• How are they judging performance?

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Top 10 IRIS metrics
Rank Registered Users Metric
1 57 Client Individuals Total (PI4060)
2 50 Full-time Employees Total (OI3160)
3 44 Jobs Created at Directly Supported/Financed Enterprises Total (PI3687 )
4 42 Permanent Employees Total (OI8869)
5 41 EBITDA (FP1657)
6 41 Net Income (FP1301)
7 37 Client Individuals Female (PI8330)
8 30 Net Income Before Donations (FP3274)
9 30 Units/Volume Sold Total (PI1263)
10 29 Part-time Employees Total (OI8864)
166 registered users
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Top 10 IRIS metrics
Rank Registered Users Metric
1 57 Client Individuals Total (PI4060)
2 50 Full-time Employees Total (OI3160)
3 44 Jobs Created at Directly Supported/Financed Enterprises Total (PI3687 )
4 42 Permanent Employees Total (OI8869)
5 41 EBITDA (FP1657)
6 41 Net Income (FP1301)
7 37 Client Individuals Female (PI8330)
8 30 Net Income Before Donations (FP3274)
9 30 Units/Volume Sold Total (PI1263)
10 29 Part-time Employees Total (OI8864)
166 registered users. Financial
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Top 10 IRIS metrics
Rank Registered Users Metric
1 57 Client Individuals Total (PI4060)
2 50 Full-time Employees Total (OI3160)
3 44 Jobs Created at Directly Supported/Financed Enterprises Total (PI3687 )
4 42 Permanent Employees Total (OI8869)
5 41 EBITDA (FP1657)
6 41 Net Income (FP1301)
7 37 Client Individuals Female (PI8330)
8 30 Net Income Before Donations (FP3274)
9 30 Units/Volume Sold Total (PI1263)
10 29 Part-time Employees Total (OI8864)
166 registered users. Financial, Operational/HR
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Top 10 IRIS metrics
Rank Registered Users Metric
1 57 Client Individuals Total (PI4060)
2 50 Full-time Employees Total (OI3160)
3 44 Jobs Created at Directly Supported/Financed Enterprises Total (PI3687 )
4 42 Permanent Employees Total (OI8869)
5 41 EBITDA (FP1657)
6 41 Net Income (FP1301)
7 37 Client Individuals Female (PI8330)
8 30 Net Income Before Donations (FP3274)
9 30 Units/Volume Sold Total (PI1263)
10 29 Part-time Employees Total (OI8864)
166 registered users. Financial, Operational/HR,
Social (output)
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Top 10 IRIS metrics
Rank Registered Users Metric
1 57 Client Individuals Total (PI4060)
2 50 Full-time Employees Total (OI3160)
3 44 Jobs Created at Directly Supported/Financed Enterprises Total (PI3687 )
4 42 Permanent Employees Total (OI8869)
5 41 EBITDA (FP1657)
6 41 Net Income (FP1301)
7 37 Client Individuals Female (PI8330)
8 30 Net Income Before Donations (FP3274)
9 30 Units/Volume Sold Total (PI1263)
10 29 Part-time Employees Total (OI8864)
166 registered users. Financial, Operational/HR,
Social (output/outcome)
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Performance challenges
Source GIIN, J.P. Morgan 2015
Given these challenges, how satisfied are
investors with the social performance of their
portfolios?
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Performance relative to expectations
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Measurement Conundrum

• Many challenges to measuring social impact
• Yet investors are satisfied with social
  performance!
• Highly idiosyncratic practice limited
  convergence
• Little external scrutiny or reporting obligations
• Few incentives or demands for systematized
  information

See GIIN/J.P. Morgan 2015 EVPA 2014.
Investing for Good, Esmée Fairbairn, Big Society
Capital (2015), Oranges and Lemons. New
Philanthropy Capital (2014), Smart Money
Understanding the Impact of Social Investment.
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1. Methods
2. Adoption
3. Ecosystem

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A Growing Ecosystem
Guidance
Metrics
Standards Ratings
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Where are we?
Standardization
Integration
Emergence
Convergence

• Convergence on
• Process guidelines
• Data quality (except additionality)
• Not on
• Metrics (by industry, investment stage, or
  investor type)
• Performance of investees or investors

Impact Measurement Working Group, Social Impact
Investment Taskforce, 2014