Aspen Network of Development Entrepreneurs Measuring Social, Financial and Environmental Performance

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1 Aspen Network of Development Entrepreneurs Measuring Social, Financial and Environmental Performance

2 Contents Why measure? Impact Reporting and Investing Standards IRIS Adoption for ANDE Members Resources

3 Why Measure?

4 The Promise of SGBs SGBs Will Create Impacts Job Growth Wage Growth Revenue Growth Net Income Growth New Products Customers Served Suppliers Supported Leading To: Economic Benefits Steady jobs Increased incomes Wealth creation Social Benefits Social goods (glasses) Social infrastructure (toilets) Environmental Benefits Reduce deforestation Improve air quality (LPG)

5 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

6 Impact Reporting and Investing Standards (IRIS)

7 The Impact Reporting and Investment Standards (IRIS) is a common framework for defining, tracking, and reporting the social and environmental performance of impact investments.

8 Company A Full Time Employees Without IRIS Company B Full Time Employees Company C Employees Same term, different definitions Same definition, different terms Company A Full Time Employees With IRIS Company B Full Time Employees Company C Full Time Employees Consistent terms & definitions across companies

9 IRIS Framework The IRIS Framework

10 A Meta Standard Examples of Frameworks Leveraged Financial Performance Operational Impact Product Impact 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) Organisationfor 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)

11 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

12 ANDE and IRIS

13 Measuring Impact at ANDE Create consistency Support members in aligning and adopting IRIS Maintain a core set of indicators (ANDE Core Metrics) to develop performance benchmarks Communicate Impact Collect data from members on annual basis to produces sector level data reports on the impact small and growing businesses Peer Education Metrics From the Ground Up Workshop Metrics Working Group

14 Value of IRIS for ANDE and Members - Provides a common way to communicate the performance of SGBs increasing transparency and consistency - Cross-sector, cross-geography, financial, social and environmental metrics - Increases the validity of performance reports of members - Aggregated data will create benchmarks on increasing performance of SGBs

15 IRIS Adoption for ANDE Members Identify current impact objectives and data collected Align current metrics with IRIS metrics Choose additional IRIS metrics that measure impact objectives Update existing systems, collection and reporting tools Submit IRIS compatible data to the IRIS data repository using Pulse or Excel Data Submission Template Report using IRIS metrics to stakeholders Assess performance against IRIS and ANDE benchmarks

16 ANDE Core Metrics Demonstrate the growth and sustainability of SGBs Earned 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) Core Metrics Plus For organizations seeking to speak more deeply to their impact Report 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 Jobs Sector Focus: Agriculture ANDE Core Metric: Suppliers ANDE Core Metrics Plus: Supplier Individuals: Female (PI1728)

17 Data collection tools Two Options: Or Excel

18 Pulse A 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

19 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

20 Excel For organizations with limited data, not wanting to change systems, or who already use excel.

21 Collecting and Assessing

22 Impact Investing Infrastructure STANDARDS Definitions and metrics FINANCIAL REPORTING GAAP IMPACT REPORTING IRIS SYSTEMS Performance management SAP Pulse DATA WAREHOUSE Repository and aggregator EDGAR IRIS Repository RATINGS Assessment tool Morningstar GIIRS

23 Company Assessment Contents Governance Workers Community Environment Social Enterprise Models infused into each area Disclosure Questionnaire

24 Putting it Together: IRIS Data Report Full report available here:

25 IRIS Data Report 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 Microfinance Institutions Data from 1,931 MFIs Data based on alignment and integration work with the MIX 25

26 Overall Statistics

27 Percentage of Profitable Organizations * Companies showing a positive net income in the last year reported Note: Financial Services sector includes data from the MIX; regional totals do not

28 Energy Sector: Profitability by Region Note: Based upon last reported year of data: 2009 or 2010

29 Analysis by Social Impact Objective * Companies showing a positive EBITDA in last year reported

30 Agriculture Sector: Social Indicators Note: Purchasing Power Parity (PPP) based on 2009 World Bank PPP conversion rate; data

31 Online Resources

32 Thank You

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