Impact Measurement and

Reporting Standards

Prof Durreen Shahnaz

January 2011

www.asiaiix.com

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.  The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.

Clean energy

Food security

Fair trade

BOP goods & services

Housing

Insurance

Transportation infrastructure

MicrofinanceHealth

Water / Sanitation

Telecom

Environment

Media

Education

SMEs

Poverty Alleviation and

Sustainable Development

Social Enterprises

Impact Investors

IMPACTINVESTMENTEXCHANGE ASIA

Enterprises

not ready to

list?

Capacity-Building for Social Enterprises

IIX’s not-for-profit affiliate

Social Enterprise capacity-building

Social impact assessments

Market readiness assessments

Financial and social impact reporting

Helps SEs meet IIX eligibility criteriaAsia-focused research

Social Enterprise mapping Social impact measurement Regional regulatory research Impact Investor mapping

Impact Investment Success Linked to..

ImpactInvestment Exchange

Asia

Buy-in from Stakeholders

Investor Acceptable

Social Measurement

InvestmentReadiness

Of SE

Bangladesh

• Rich & diverse NGO sector since 70s

• 26,000 officially registered NGOs

• Large NGOs enjoy wide donor support: BRAC, Grameen, ASA

• NGOs now create market oriented entities: Aarong, BRAC dairy, Probotona, WasteConcern

• Emerging private entities with social orientation: Grameen Danone, Grameen Shakti, Hatey Bunano, Cell Bazaar, Kazi Tea

• Regulatory framework lagging, growth capital scarce for SMEs

Impact Measurement

• One of the greatly discussed issues recently

• Still no widely accepted standardized methodology

• Even less so for Social Enterprises (SEs) in Asia

• Our contribution– We tested methods for SEs in Asia

IRIS

• Impact Reporting and Investment Standards

– A common language for social and environmental impact

1. Descriptor indicators

2. Key financial indicators

3. Operational indicators

4. Sector-specific indicators

Agriculture and Artisanal

Energy, Water, and Environment

Education

Community Development Finance

Healthcare

Microfinance

GIIRS

• Developed in a collaborative fashion

• Buy-in from influential industry players

• Basis for company and fund certification

• Being tested by 25 partner funds

• Global Impact Investing Rating System

– Transparent, standardized, low cost rating system

SROI

• Valuation instead of measurement / rating

• Wide support and many applications to date

• Possible to integrate with IRIS

• Translates impact into financial language

• Social Return On Investment

– Monetizing the impact of an organization

The SROI NetworkAccounting For Value

Kazi Tea & Tea EstateOrganic tea farm

Panchagarh, Bangladesh

GIIRS: 63.7%

Governance and Leadership 87%

Community 74.7%

Employees 65.2%

Environment 70%

Consumers 40%

SROI: 0.14 – 7.04

Training activities 85%

Price premium for certification 4%

Local sourcing 4%

Wage income for workers 6%

Charitable work locally 1%

Environment 0.7%

Results

• GIIRS:

– Higher scores for environmentally focused SEs

– Lower scores for MFIs and education initiatives

• SROI:

– Higher scores for education / training initiatives

– NOTE: One-year timeframe on valuation; environmental returns thus low

From Ideas to Action

• Shujog: Market readiness and impact assessment, capacity building workshops, research

• Impact measurement: Err on the side of simplicity

• IIX: Platforms for channeling private

capital for sustainable development

• Buy-in from investors and intermediaries

• Get involved!

IMPACTINVESTMENTEXCHANGE ASIA

Thank you!

www.asiaiix.comdshahnaz@asiaiix.com