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Aspen Network of Development EntrepreneursMeasuring Social, Financial and Environmental Performance

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Agenda

• Why measure?• What to measure?• How do you collect what you

measure?• Analyzing measurements• Discussion

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SGB

Small and growing businesses (SGBs) are commercially viable businesses, typically from 5 to 250 employees, that have strong potential for growth -- and thus for creating economic, social and environmental benefits

SGB

SGB

SGB

SGB

SGB

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SGBs Will Create

Impacts

•Job Growth•Wage Growth•Revenue Growth•Net Income Growth•New Products•Customers Served•Suppliers Supported

Economic Benefits

Steady jobsIncreased incomesWealth creation

Social Benefits

Social goods (glasses)Social infrastructure (toilets)

Environmental Benefits

Reduce deforestationImprove air quality(LPG)

Leading To:

The Promise of SGBs

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Financial Flow Schematic of SGB Sector

Social impact investment

Commercial investment

Grants for capacity building

Blended capital investment

Capacity building only provider

Capital and capacity building provider

Capital only provider

Small and growing businesses

Microfinance provider

Traditional private equity provider

Mediumbusinesses

Microfinance clients

SGB Sector

Private Equity

Microfinance

5/$25k

250/$2m

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55 Capacity Development

Providers

36 Investors

25 Research, Academic and

Corporate Institutions

20 Foundations

5 Other*

*Includes individual and strategic partner members

142 ANDE Members

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Why Measure?

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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

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What to measure?

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The Impact Reporting and Investment Standards (IRIS) is a common

framework for defining, tracking, and reporting the social and

environmental performance of impact investments.

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Full Time Employees

Company A Company B Company C

Full Time Employees Employees

Same term, different

definitions

Same definition, different terms

Without IRIS

Full Time Employees

Company A Company B Company C

Full Time EmployeesFull Time Employees

Consistent terms & definitions across companies

With IRIS

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IRIS FrameworkThe IRIS Framework

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A Meta Standard

Operational Impact

Product Impact

Financial Performance

Examples of Frameworks Leveraged

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) Organisation for 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)

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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

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Measuring Impact at ANDE

Create consistency

CommunicateImpact

Peer Education

Support members in aligning and adopting IRIS

Maintain a core set of indicators (ANDE Core Metrics) to develop performance benchmarks

Collect data from members on annual basis to produces sector level data reports on the impact small and growing businesses

Metrics From the Ground Up Workshop

Metrics Working Group

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ANDE Core Metrics

Demonstrate the growth and sustainability of SGBsEarned 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)

1

2

Core Metrics Plus For organizations seeking to speak more deeply to their impactReport 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 JobsSector Focus: AgricultureANDE Core Metric: SuppliersANDE Core Metrics Plus: Supplier Individuals: Female (PI1728)

3

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Impact Investing Infrastructure

STANDARDS

SYSTEMS

DATA WAREHOUSE

RATINGS

Definitions and metrics

Performance managemen

tRepository

and aggregator

Assessment tool

GAAP

SAP

EDGAR

Morningstar

IRIS

Pulse

IRIS Repository

GIIRS

FINANCIAL REPORTING

IMPACT REPORTING

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Data collection tools

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PulseA 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

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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

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Collecting and Assessing

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is powered by

a 501(c)3 non-profit whose mission is to harness the power of business to solve social and environmental problems

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Capital to Impact

Social and environmental performance ratings

3 Products• Company Ratings • Fund Ratings • GIIRS Analytics

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Company Ratings Process

Assessment

Review & Verificatio

n

Ratings Report

• Register company• Complete the assessment (1.5 – 4 hours)• Complete Disclosure Questionnaire• Complete optional Metrics page

• Survey review with GIIRS Team Member (1-2 hours)• Document Verification (conducted by Deloitte)

• Company receives Rating Report• Company attaches optional Management Letter

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Company Assessment

Contents Governance

• Workers

• Community

• Environment

• Social Enterprise Models infused into each area

• Disclosure Questionnaire

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Supplement to Standard Assessment

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Assessment Structure

40 Versions of Assessments

Coming Soon: Industry Addenda

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25 Pioneer Funds

North American Pioneers

Emerging Markets Pioneers

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GIIRS Analytics: Fall 2011

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Putting it Together: IRIS Data Report

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IRIS Data Report

32

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

Data from 1,931 MFIs Data based on alignment and

integration work with the MIXMicrofinance Institutions

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Overall Statistics

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Percentage of Profitable Organizations

* Companies showing a positive net income in the last year reportedNote: Financial Services sector includes data from the MIX; regional totals do not

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Energy Sector: Profitability by Region

Note: Based upon last reported year of data: 2009 or 2010

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* Companies showing a positive EBITDA in last year reported

Analysis by Social Impact Objective

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Note: Purchasing Power Parity (PPP) based on 2009 World Bank PPP conversion rate; 2008-2010 data

Agriculture Sector: Social Indicators

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Online Resources

http://www.aspeninstitute.org/policy-work/aspen-network-development-entrepreneurs/metrics-impact

http://iris.thegiin.org/iris-standards

http://www.giirs.org/

http://www.app-x.com/pulsehttp://foundation.force.com/home

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Thank You

lindsey.yeung@aspeninst.orgwww.aspeninstitute.org/ande