Driving integrated

3 | Impact investing

An integrated measurement approachThe global business landscape is undergoing a perceptible shift.

regulation (on one hand) and social and environmental impacts (on the other hand) has come to the fore, and can no longer be ignored. Traditional operating models are being challenged, prompting businesses and investors to turn their attention to the social and

• measure and drive it.

•

metrics are particularly important to investment decisions in emerging markets,1

2

outcomes

are challenging traditional operating models and prompting the commercial sector to turn attention to the social and environmental impact of their ventures.

range from a focus on environmental, social and governance issues 3

unison.

These differences are not trivial, since goal-setting drives measurement and measurement drives business behavior.

more closely.

1 CCaSS Institutional Investor Survey

2 o orro s invest ent rules lo al survey o institutional investors on non nan ial er or an e

4Impact investing |

and drive

also echoed in integrated reporting initiatives, like the International

has broader applicability across other sectors too.

disclosures, and a clear corporate strategy on value creation,

of industries, including industrials, mining and metals, consumer products and manufacturing. In addition, impact investing

measurement.5

businesses generating measurable, and positive, social and environmental outputs are more likely to achieve competitive and

commercially meaningful.

•

• trade one for the other.

•

o orro s invest ent rules lo al survey o institutional investors on non nan ial er or an e

5 | Impact investing

performance

are aggregated across the portfolio and used by deal teams and

foundations have broader applicability to other sectors and provide

in measurable outputs and outcomes (purpose), and integrates

•

•

•

including deal teams, investors and management, to monitor and drive performance.

6Impact investing |

0

10

20

30

40

50

60

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14

US$

mill

ions

0

5

10

15

20

25

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14M

illio

ns

Emerging consumers Total Women and children

0%10%20%30%40%50%60%70%80%90%

100%

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14

Policy completeness Policy formalization -

1

2

3

4

5

6

7

8

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14

Mill

ions

Life Non-lifeHealth Savings/investmentPensions Emerging consumer customers

Portfolio gross revenue

Portfolio good governance and policy

Portfolio people reached

7 | Impact investing

performance

are essential to a clear business strategy on value creation.6

societal impact, e.g., reduction in poverty, are not used to drive business behavior. A business has limited reach and therefore a

impact such as poverty reduction or a cleaner environment, but a multitude of variables, including consumer choice, means that

has found that in order to drive business behavior, it is necessary

6 Tomorrow’s investment rules

Inputs Activities outputs outcomes Impact

• •

• • Operations •

• Quality products and customer retention

• sustainability

• top talent and risk management

• relevant products in

• terms

• mitigate risk

• Different investment choices

• Different life choices•

poverty

8Impact investing |

are seen as intrinsic contributors to building successful business

metrics provide a good means to identify indicators of social outputs for a range of business across many sectors. It is essential

To invest in companies that provide

people across Africa and Asia and, in so doing, generating top-

9 | Impact investing

In the insurance sector, there is a strong business case for creating

make better investment decisions for their future (purpose). In the

7

• This indicates the average number of days it takes an insurer to pay a claim upon receipt of full claims

• These rates refer to a measure of the

voluntary products, it also acts as an indicator of the value of the

• This is a measure of the number of claims

to the end consumer.

• These ratios indicate the value of claims relative to premiums paid. This ratio can be an indicator of product

on the life cycle of the product.

10Impact investing |

energy production could have an impact on the reduction of a

emissions (environmental). A company in this sector could turn

communicate them to the market.

Opportunities for driving impact

move from measuring social performance to driving it.

social metrics. Integrated reporting and its application to models

measurable outputs and outcomes as a means of achieving impact.

measuring impact. They monitor changes in behavior as a result

services, health, education and environment.

correlating outcomes to impact is an opportunity for commercial

pressing societal problems.

11 | Impact investing

Notes

12Impact investing |

Notes

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