Impact management for everyone

Impact management for everyone

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  Impact Management for Everyone KarlH Richter @KarlHRichter From interesting data…
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  …to evidence withmeaning When viewed from the place of Nelson Mandela’s capture by the police Place: 29°28'06.1"S 30°10'15.7"E Date: 5 August 1962 50 columns, built 50 years after arrest Be alert to different perspectives Impact is in the eye of the beholder Fact (x1) + Interpretations (∞) = Insights (∞) From interesting data…
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  • From measuringimpact towards managing impact • From counting “what” happens to understanding “why” things happen* • The “why” informs “what“ to measure, & “how” to measure it • Empowered to select indicators appropriate • Ultimately – better judgement • From compliance… > management information > strategic decision making Context • Harmonise impact management according to 3 aspects: 1. A common journey (1 process) 1. Different pathways (6 strategies) 2. Tool-kit of useful things (methods & techniques, use according to your strategy) Content * OECD: Outputs measure the results of production, outcomes assess the effectiveness of decision-making in achieving goals
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  A common journey 1.
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  Industry processes Listed Corporations VoluntaryPledges or Legislative Obligations Select Labelling/ Reporting Regime/ Regulatory Domicile Define Targets & Select Strategies Measure, Collect & Validate Data Analyse & Evaluate Data Reporting to Markets & Authorities Action by Exec./ Consumers/ Shareholders/ Markets UNDP Programmes & Projects Road Map Country Analysis Strategic Planning Implementation Evaluation Closure Clarify intentions Select approach Set targets Do assessment Analyse data Report findings Take action 1. 2. 3. 4. 5. 6. 7. Repeatascycle/continuousimprovement Common journey for impact management DEMING Quality Management Cycle Check Act Do Plan Private Investment/ OTC Transactions Introduction, Sourcing & Screening Due Diligence Potential Analysis & Investment Valuation Investment Decision, Term Sheet & Capital Deployment Post-Investment Monitoring, Evaluation Value Building & Exit/ Refinance Public Securities/ Capital Markets Submit IPO Application to Exchange Review Application Vetting/ Due Diligence for Admission Develop Indices & Tracking Benchmarks Exchange Traded Products for Investors Public Policy Design & implementation Problem Identification Policy Formulation Policy Adoption & Implementation Policy Evaluation Report & Disclose Results Evidence-based policy design/ re-design
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  Different pathways 2.
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  Common journey -different stakeholders, different data needs I am an institutional asset owner I am a social enterprise I am a corporation listed on a stock exchange I am a venture philanthropist I am a private investor I am a fund manager I am a policy writer for the public sector I am an NGO/ NPO charity I am a foundation Less intense More intenseImpact management methodology Descriptive specification/ customisation/ interpretive (∞)Prescriptive requirements/ standardisation/ factual (x1) Definition of impact + purpose for data = methodology
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  Spectrum of mandatesfor impact management Less intense More intenseImpact management methodology Inputs Activities Outputs Outcomes Impact What evidence do we have that a theory of change works? Do no harm Contribute to solutionsBenefit stakeholdersDon’t consider impact MaterialityContributionValueEvidenceOutcomesStakeholdersOutputsInputs Principles Outputs Outcomes ImpactPurpose Negative Potential Target IndicatorThematic Sustainable Impact firstThematicResponsible
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  Agnostic Avoid harm Want good Get facts Explain why Assess effects Interpret impact Do not consider impact Knowwhat you do not want Know what you do want Describe what happens by enumerating outputs Understand why outputs happen based upon specific inputs and actions Enumerate the intended effects of actions on stakeholders Enumerate positive and negative outcomes, intended and unintended Less intense More intenseImpact management methodology Incontrovertible facts (x1) Many interpretations of each fact (∞) Discrete pathways for the impact management journey Select pathway that suits your definitional framework and mandate for impact management methodology Design of the pathways was informed by UNSIF undertaking a pilot to segment market activity (enterprises, investments, funds and portfolios). The delineation is based upon the practicalities of discretely and unambiguously codifying attributes that are objective and independently observable.
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  Common journey +pathways of methodological intensity Pathways of methodological intensity reflecting the strategy / mandate being deployed Commonstagesofjourney 1 2 3 4 5 6 7 Agnostic Avoid harm Want good Get facts Explain why Assess effects Interpret impact
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  Primary attributes ofthe pathways (cumulative) ostic Avoid harm Want good Get facts Explain why Assess effects Interpret impact Exclusion criteria (negative screening) Track KPIs against targets (outputs/ primary impact) Theory of causation Stakeholder engagement Deep analysis Inclusion criteria (positive screening/ activity filters/ goal alignment) Principles (norms) Labels & certifications (binary pass-fail) Ratings & indices (absolute score/ relative ranking)
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  Tool-kit of usefulthings 3.
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  Randomised Control Trials (RCTs) Surveys Labels & Certificates Ratings& Indices Indicators Burden of Proof/ Levels of Evidence Stakeholder Engagement Theory of Change/ Logic Models Counterfactual Analysis Monetisation of Outcomes & Cash Incentives
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  Extra material… • Assistedworkflow – a proof of concept for software approaches and interoperable technology • Definitional framework of impact investing influenced by mandate for methodological intensity of impact management
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  Impact Management forEveryone – Application of the Rubric 1. Definitional framework > Market Segmentation e.g. to communicate the mandate for the methodological intensity of impact management, i.e. what do you mean and expect when using the term “impact” investing 2. Common Processes > Quality Assurance e.g. to enable a UNDP country office representative to communicate to a fund manager what processes they are expected to follow to be compliant with UNSIF requirements, and to provide auditors with a framework to check compliance 3. Common Functionality > Software (Assisted workflows) e.g. to define the functionality for impact management software that vendors are expected to provide, to meet UNSIF requirements, and to enable accreditation of impact management software 4. Basis for Data Interoperabilty > Reporting Rigour e.g. to inform design of data architectures, enable the production of comparable data for identifying legitimate claims of impact and progress towards the SDGs 5. Resource Allocation > SDG Prioritisation e.g. if a company/ fund prioritises say SDG 5, and recognises contributions towards SDGs 10 & 12, then it should spend more resources on managing the impact relating to SDG 5 (methodological intensity and level of evidence), less on SDGs 10 & 12, and at least a minimum level of doing no harm (negative screen) on the other SDGs
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  “Yellow Pathway” –Get Facts (Describe what happens by enumerating outputs) Assisted workflow for selecting impact indicators a proof-of-concept for software solutions
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  Error: 200x (0.5%) - -- - - - - - - - - - - - - - - - - - - - - Need to clarify definitions Can be used to clarify defitions – What is impact investing?
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  Definitional characteristics * Forcreating YOUR definition for profiling, segmenting and comparable analysis * The term “impact investing” is becoming a generic term used to describe any form of investment that includes non-financial objectives. Investment practitioners often use it ubiquitously to include ESG factors, sustainable and responsible investing, social investment, development finance, inclusive finance, venture philanthropy, ethical finance etc. Although for purists it remains a very specific concept requiring deep methodological engagement, intentionality and measurability of impact. The categories on this slide can be used to profile and describe YOUR definition of impact investing. (Adapted from OECD & UNSIF) Business model of investee Funding stage of investee Type of activity Target beneficiary group Social concern Source of capital Legal form of investee Investment vehicle …of capital owner …of investment manager …of frontline organisation …of target beneficiary Full subsidy Recycle capital Preserve capital Concessionary pricing Commercial returns Commercial windfall (alpha) Avoid harm Want good Get facts Explain why Assess effects Interpret impact Stock, shares, units Loan, bond, quasi-equity Guarantee, insurance Social Impact Bond, etc. Cash, commodities Capital or revenue grant, debt relief Equity Debt Underwriting Entitlement/ rights Direct holdings Grants 2. Financial instrument 3. Stage of development 4. Thematic area 5. Legal ownership 6. Geography 7. Commercial mandate 8. Methodological intensity 1. Asset class
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  The end –thank you Karl H Richter @KarlHRichter [email protected]