080723 ande social metrics [read-only]
TRANSCRIPT
Metrics Discussion
July 23, 2008
• If the health clinic you have invested in is reaching the poor and delivering reasonable social value?
• If the carbon footprint of your housing investments is offset by your renewable energy portfolio? your renewable energy portfolio?
• If your portfolio’s financial return is competitive in an increasingly crowded investment field?
• If the number of jobs created by “private sector development” funds is material to ending poverty?
Fund ABC
Number of investments and/or businesses supported 10
Funds disbursed $8,000,000
Social metrics – annual portfolio
Jobs created 2000
Funds report out on social and financial performance using a
common set of metrics and accounting
2
Jobs created 2000
Wage growth 50%
Revenue growth 105%
Net income growth 20%
Number of customers served 100,000
Local suppliers supported $5,000,000
Additional finance mobilized by investees $10,000,000
Financial metrics – annual portfolio
Gross return 25%
Management fee 3%
Pre-investment TA 5%
Post Investment TA 5%
M&E expenses 2%
Net return (Projected) 10%
Aggregated ANDE Member Social and Financial Impact Number
reporting
Total amount of capital invested $459 Million 9/10
Social metric data could be aggregated and various sector
benchmarks created
3
Number of businesses supported 5,601 14/14
Number of jobs created 250,000 8/14
Additional finance mobilized by investees $5.5 Billion 8/14
Potential Ratios Sector average Company A
Jobs created / capital invested 1 : $1,836 1 : $7,200
Finance mobilized / capital invested $119 : $1 $70 : $1
Revenue growth / capital invested Xx Xx
Products Green Coffee
We could rate social impact in a common way
4
Year company founded 2001
Country of operations Tanzania
Annual revenue $ 3,418,000
Governance Score 10
Community Leadership Score 15
Employment Impact Score 13
Environment Impact Score 9
Customer Score 17
TOTAL SCORE: 64
RIIC Social
Impact
Score
1. Highlight where we are towards establishing common metrics for the ANDE community
2. Discuss progress towards building platforms to support social impact metrics and transparency
5
impact metrics and transparency•Update on the PDMS metrics platform
•Update on the RIIC social metrics survey
3. Discuss as a group what it will take to move this forward
Sector-level:
•Metrics specific
Organization-level
•Specific ‘story’, theory of change
and qualitative
indicators
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Renewable
energy
•Metrics specific to sectors Agribusiness Health Etc…
Base-level
•Common metrics
for all ‘small and
growing’
businesses
Common metrics for ‘Small and Growing Businesses’
First level
Jobs created
Wage growth
Revenue growth
Net income growth
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Net income growth
Number of customers served
Local suppliers supported
Additional finance mobilized
Carbon offsets
Second level
Quality of data
Comparable charitable impact
‘SGB returns and expenses’
Gross
return
‘Management
fee’
Pre-
investment TA
Post-
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Post-
Investment TA
M&E
expenses
Net return
Returns generated by SGBs less aggregate
expenses from intermediaries
What would it take…
Intermediaries to commit to:� Collect and report on the core
social metrics and financial accounting annually
� Use a common one page template
What ANDE could do…
• A standard definition of social impact metrics and accounting, and a standard reporting template / table
� Use a common one page template in annual reports with the ANDE ‘seal of approval’;
� Provide more detailed but confidential information to ANDE to help build the research base for the sector
Funders to commit to:
� Use, request and track the same data for these type of investments
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• Aggregated sector-wide impact to support advocacy efforts
• Sector and individualized benchmarking reports
• Overall improved transparency for the sector on what works and what doesn’t work
1. Highlight where we are towards establishing common metrics for the ANDE community
2. Discuss progress towards building platforms to support social impact metrics and transparency
10
impact metrics and transparency•Update on the PDMS metrics platform
•Update on the RIIC social metrics survey
3. Discuss as a group what it will take to move this forward
• Building a best in class portfolio management tool that allows individual social investors to:
• Track investment performance against target on financial and operational metrics
• Define standard and custom social and environmental metrics for aggregation at portfolio level
• Qualitative reporting and capabilities assessment balances performance management functionality
• Building a shared data architecture and information standards that enable:
• Aggregation, verification and benchmarking of certain performance indicators
• Better insight to be shared with investors, policy makers and academics
- Drill-down to any deal
- Summary of investment, status, team members, attachment uploads
- Financial details of investment
User friendly interface in beta testing
- Metrics summary
- Project Managers add, edit, and select metrics
- Notes to provide qualitative input on data
- View and change forecasts for targets
Acumen Fund*
E + Co* Endeavor*Grey
Matters*OmidyarNetwork
SEDFRoot
Capital*
Skoll*
• Basic quarterly reporting• Performance vs. past and
vs. plan
Public
Funder
Intermediary
Enabling performance management along the chain of
accountability
Fund* Matters* Network
Microdrip
Capital*
• Basic quarterly reporting• Performance vs. past and
vs. plan• Qualitative assessments• Diagnostics• Stakeholder voice
Enterprise
Customer
Acumen Fund*
Root Capital*
E + Co* Endeavor*Grey
Matters*OmidyarNetwork
SEDF
System level features
Private, confidential space for fund level portfolio management
Standard and shared metrics for certain industries
Customization and
Skoll*Google
.org*Rockefeller* IFIs & DFIs
HNW individuals
CommercialImpact
Investors
Creating a “Social Venture One”?
LPs
GPsFund*
Microdrip
Capital* Matters* Network Customization and qualitative reporting enabled within fund
Firm level data shared across multiple investors
Aggregated data enables benchmarking by fund, geography, sector, etc.
Shared pipeline functionality
Co’s
* Involved in current beta testing
Impact Investing Collaborative • Diverse network of impact investors • Platform for collaboration• Initial focus on 3 projects, incl. Project Galileo (metrics)
Goals of Project Galileo
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Goals of Project Galileo• Develop standards for assessing the social & environmental impact
of investments/portfolios (S&P, Moody’s, LEED)• Catalyze launch of an independent standards-setting body
Value Proposition• Investors: ability to measure impact across a variety of investment
opportunities; allocation of capital to optimize on impact• Fund managers: coordinate, streamline reporting on impact data;
attract new investors• Field: drive more capital into impact investments
July
Survey of investor
perspectives and impact
measurement
New survey developed by
adapting B Ratings System for developing
Pilot of new survey using companies in
Agora Partnerships
JuneMay
•Release of the survey for
feedback at RIIC Bellagio
summit
AprilMarchJanuary-February
B Ratings System (BRS)
identified as most
Subsequent feedback, testing
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measurement tools
developing countries
Partnerships Portfolio
summit
•Decision to focus on
institutional development
•Feedback at PDMS summit
most applicable
methodology
1. Refinement of content • Portfolio-level analysis
2. Development of tool to collect, analyze, manage data• Allow users to re-weight or integrate the underlying data
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• Allow users to re-weight or integrate the underlying data
3. Business plan and incubation of independent standards-setting body
• Organizing Committee designated to provide oversight • Actively seeking collaboration/coordination with other
initiatives, incl. ANDE and PDMS
Governance
• Formal registration• Verified financial statements • Structures in place to promote sound governance of the company
Community
leadership
• Purchasing from and/or serving local economy• Giving back to local community
Employment• Creating high quality employment for people from marginalized or lower income communities
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Employment income communities
Environment • Business models that reduce emissions and promote conservation
Customer• Providing goods/services with a social or environmental impact • Serving customers in need (e.g., Bottom of the Pyramid)
Comprehensive and comparable measurement of company’s impact (potential impact at time of investment, actual impact over investment horizon)
Products Green Coffee
Year company founded 2001
19
Year company founded 2001
Country of operations Tanzania
Annual revenue $ 3,418,000
Governance Score 10
Community Leadership Score 15
Employment Impact Score 13
Environment Impact Score 9
Customer Score 17
TOTAL SCORE: 64
RIIC Social
Impact
Score
Products Green Coffee Fair trade and
Organic Coffee
Coffee The principal
products are
organic coffee
and high-quality
conventional
Coffee
20
conventional
coffee.Year company founded 2001 1982 1995 36596 1997
Country of operations Tanzania Mexico Peru Perú Guatemala
Annual revenue $ 3,418,000 $ 5,000,000 $ 8,300,000 $ 1,694,393 n/a
Governance Score 10 10 10 10 8
Community Leadership Score 15 16 13 7 12
Employment Impact Score 13 18 6 19 23
Environment Impact Score 9 12 9 9 6
Customer Score 17 15 15 8 14
TOTAL SCORE: 64 71 53 52 62
RIIC Social
Impact
Score
Engage ANDE members in the development process through on-going testing and feedback
• Address portfolio-level issues (i.e. weighting criteria)
Develop technological and organizational arrangement
21
Develop technological and organizational arrangement • Coordinate with PDMS to extent possible
Establish entity to undertake business planning process, incubation phase
• B Lab as likely candidate
Core social metrics Common accounting
Social impact ratings
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PDMS
Core social metrics Common accounting