Tag: GIIN

GIIN 2019 Impact Investor Survey

~ Sasha ~ Leave a comment

The Global Impact Investing Network (GIIN) has just published its survey of the impact investing market. Each year at this time, I head straight for a chart that’s been, until now, buried in the back.

It’s the chart that talks about impact performance for the estimated $502 billion of impact investing assets. In my view, it’s the most important chart in the report: since “impact” investing exists to create impact, we should care most about whether we’re pulling that off.

Unfortunately, data on impact performance is hard to come by in this report. The only chart that speaks to it directly, the one that I flip to immediately, doesn’t have performance data. Instead, it asks impact investors to self-report their performance relative to their own expectations. It’s a start.

Our Performance, Relative to Expectations

So, how do we think we’re doing? Pretty great, it turns out.

This year, 98% of the impact investors who responded to the survey said their impact performance was in line with or exceeded their expectations. Put another way, just 5 of the 266 impact investors surveyed were brave enough to say that they were under-performing on impact (or, maybe only five have clear enough impact goals and data to make it possible to under-perform).

How to make sense of this? Mathew Weatherly-White proposed on Twitter that perhaps the sector is exclusively doing place-based impact investing in Lake Wobegon (which would lead to the next question: would our version of Garrison Keillor’s famous closing line be, “Well, that’s the news from Impact Investing, where all the women are strong, all the men are good-looking, and all the funds’ impact performance is above average.”)

What happened in 2019 that makes us feel we’re doing so exceptionally well? Nothing much, it turns out, as this is not a new development. In fact, the numbers in this chart have been essentially unchanged over the last three years. Here’s a composite chart based on the data in the 2017 to 2019 GIIN reports:

GIIN 2019 impact performance

Perhaps this is our sector’s version of “too big to fail”–if you’re a self-styled impact investor, you cannot, by definition, fail at meeting expectations for impact. This isn’t for cynical reasons: most impact investors don’t yet have transparent, concrete targets around the impact their capital is meant to create; they don’t have benchmarks of impact performance; and they don’t feel they have a useful, repeatable way to measure that impact in a way that works for them and their investees.

Our Opportunity

While these results could be seen as discouraging, there’s an opportunity here as well. The GIIN, for one, describes their own rising expectations of impact investors in the opening of the report: “Growth [of dollars invested] without impact is pointless…[we believe] impact investors should have specific impact intentions; consider evidence and impact data in the design of their investment strategies; [and] manage their impact performance.”

I’d underline the phrase “manage their impact performance” and add to it “and set and share impact targets and performance for their funds.”

Setting targets, and managing to those targets, isn’t an end in itself. It’s a beginning.

The act of setting goals, and then taking them seriously, is a leverage point that is hiding in plain sight. It has the potential to jump-start a meaningful cycle of learning and improvement. We all know that there’s no way for performance to reach its full potential without knowing what excellence means, without having a bar to strive for. Nor can we improve without useful data—the kind of data that tells us both how we’re doing today and how much separates us from the best performers in our field.

How do we get from here to there?

With something as important as “impact”–the conditions of people’s lives, the fate of our ecosystems and the planet –we cannot miss our opportunity to become great at what we do.

Becoming great at anything feels daunting at the outset, but, as always, our only job is to start at the beginning: by taking one small step, and then taking the next one.

In this case, we starts by setting real targets, taking them seriously, and doing what we can to gather meaningful data about how we’re doing relative to our goals. If we do this with intention and follow through with integrity, then, bit by bit, we will get better. Once we choose to walk this path, we will discover that our small steps take us far: in a year, and then in five years, and then in 10, we’ll be at a different level in our capacity to invest to create positive change, just as we are experts, today, at deploying capital.

This need not be burdensome, heavy or expensive. The best way to start is by going directly to the source—for example, if you’re making investments designed to help people, then talk to those people. Better yet, do it in a way that is respectful, fast, and light touch, one that gives comparable performance results for impact, just like we have for financial results.

Let’s aim higher, not because we have to, but because we can.

 

[PS if you’re wondering what this looks like in practice, our recent 60 Decibels whitepaper might help].

Cogito Ergo Sum Ego Creo Impulsum

~ Sasha ~ 1 Comment

Of all the charts in the GIIN’s 2017 Annual Impact Investor Survey report, the one that struck me the most was this one.

Of 200 impact investors surveyed, 98% say their impact is in line with or outperforming their expectations.

This in a sector in which almost no one actually measures impact, a sector that still debates whether having the intention to create impact is an important description of an “impact” investor.

It’s like we have our own version of cogito ergo sum: “I call myself an impact investor, therefore, ipso facto, I create impact.”

 

 

A confluence of impact and scale

~ Sasha ~ 1 Comment

I spent last week at the annual meeting of the Global Impact Investing Network (GIIN), and I was struck by three trends that could take our sector to the next level.

The first is around taking impact seriously. The second is how different the impact measurement challenge looks depending on where you sit. The third is the acceleration of the rate at which mainstream financial capital is entering our space.

Throughout the GIIN conference, impact — the role it plays in defining our work and how to improve the quality of our impact data — was front and center in a way that I’ve not felt before. For example, one of the first panels kicking off this year’s event was on market segmentation. While segmentation is not a new topic in impact investing, the panel was titled “Market Segmentation through an Impact Lens.” The panelists — from Skopos Impact Fund, Tideline, Athena Capital Management and Omidyar — discussed their research and client-facing efforts to make sense of impact investing from the perspective of impact objectives.

This shouldn’t be brand new, but it is. An orientation to start segmentation with an impact lens runs against the natural tendency to segment investors by asset class or sector strategy, and it’s certainly a far cry from accepting that “intentionality” (as in: my intention is to make such-and-such happen with limited accountability on the data to figure out whether or not real change is happening) is a high-enough bar to set for the sector in terms of impact.

If we could pull off organizing ourselves, as impact investors, by the change we’re trying to make in the world rather than by the investing strategies we’re using to make that happen, that would be a big step forward.

Second, we need much better impact data AND we need to help people who are drowning in too much indecipherable, low-quality data.

I had the chance to participate in two panels focused squarely on advances in impact measurement. What I learned from these panels is that better impact data isn’t enough — there’s a huge desire for simplification too.

At Acumen, our Lean Data work has focused relentlessly on going directly to the low-income customers we aim to serve so we can understand what they have to say. Our objective is to improve the quality of impact data we have by scaling up our capacity to listen to the voices these customers, so we and our investees can better serve them.

While I’m convinced that this kind of listening must to be the foundation of everything we do as a sector, it’s not enough. Listening to my fellow panelists — from Goldman Sachs, Zurich Re, Abraaj Capital and Leapfrog — I heard that big institutions with large, diverse portfolios of impact investments not only desire better impact data but they also need help simplifying and clarifying the reams of impact data they already feel they receive.

Ironically, these large institutions have too much data coming in and most of it’s not very good. Our job is both to improve the strength of the signal and also lessen the noise.

Lastly, it was impossible not to notice that more and more big-name financial players are coming to the table.

The simple fact of having an impact measurement conversation between Acumen and Leapfrog on the one hand (two organizations that are essentially growing startups, with between $100M and $1B in capital under management), and Goldman Sachs, Zurich Re and Abraaj Capital on the other means that there are innovations in impact management happening across the spectrum of impact capital. That’s hugely positive.

Then, at the end of the day, we got to hear Former Governor Deval Patrick and Deborah Winshel discuss the impact investing strategies they began implementing in the last year at Bain Capital and Blackrock. Both articulated their goals to fully integrate impact into the global practices of these uber-blue chip firms, firms that collectively represent more than $4.5 trillion in assets. While it’s early in the journey for both Bain and Blackrock, it’s clear that their actions could have a huge influence with other mainstream financial players and beyond.

As I left the conference and made my way back to New York, I was struck with the feeling that we are entering a new phase in our sector. Having passed through the teething pains of our early days and our loud, sometimes impulsive childhood, we’re ready to start growing up a bit. This means harnessing — rather than just shouting about — the increased momentum building in our space, thanks to the entrance of major new players, while also taking a much more sober and serious look at the ultimate goal of this work, which is to make a real, large-scale and lasting difference in the well-being of people and the planet.

If, in this next chapter, we can find a way to have impact investing go deeper on impact and bigger in terms of scale and reach, we will truly be in a position to take this work to the next level.

[Note: you can also follow the conversation about this post on Medium]