Cécile LAPENU opened the session to discuss the topic of Impact and Outcomes measurement from an Investors’ perspective, by sharing some trends influencing outcomes management. First of all, there is a growing demand for accountability following the growing impact investing sector search for more meaningful evidence of social impact. Secondly, it has gotten easier and cheaper to obtain data. Thirdly, with the introduction of outcome measurement, the sector has adjusted its expectations on what can be achieved (i.e. financial health, inclusion) as shorter term outcomes by collecting actionable data. Fourthly, although sometimes challenging, the SDGs have increasingly emerged as the common framework to refer to. Fifthly, there is an increasing interest from investors in outcomes measurements. The final trend Lapenu observed is that outcomes measurement is not always a priority for FSPs, and that they need guidance in this respect. Lapenu subsequently asked the panel members to share their perspective on the developments in outcomes measurement.
First was Rachel BASS of the Global Impact Investing Network (GIIN), which focuses on reducing barriers to impact investment by building critical infrastructure and developing activities. She responded that there is a growing demand for actionable impact performance information. Investors globally indicate a growing urgency to understand how to factor impact into decision-making. However, they lack the tools and resources required to do so effectively. For this purpose, GIIN works on two prototype products that will be launched in the first half of 2022: ‘Aggregated benchmark’ and ‘Custom analytics’. Bass shared the draft dashboard and explained the core features of both: descriptive and distribution analysis of direct transactions, dynamic filters for tailored insights, ‘lenses’ to understand detailed impacts by demographic (Aggregate benchmark) and analysis of relative performance within the peer group, detailed insight into areas of under- and out-performance, analysis relative to the target (Custom analytics).
Next to explain was Safeya ZEITOUN of Tameo Solutions, a spin-off of Symbiotics providing independent solutions for impact fund managers and investors, to support evidence-based decision-making and to increase transparency. According to Zeitoun, investors can measure end-client outcomes when they have strong impact management practices throughout the investment value chain. For this purpose, it is key to define clear impact goals and relevant indicators, to select an appropriate methodology, and to determine what to do with the data. For the way forward, Zeitoun suggested to improve standardisation in outcome measurement, to review relevant indicators over time, and to better integrate data outcomes in decision-making.
Subsequently, Juan Luis PODESTA gave the perspective of Triple Jump, an impact investment management firm. For Triple Jump, their measuring has a twofold objective: firstly, for accountability towards their investors, and secondly, to actively and effectively manage the impact of the investments made. Podesta then shared some of Triple Jump’s data-based initiatives in this regard: Lean Social Outcome Measurement – “Lean SOM” (indicator sampling by using a ToC), using existing captured data, and COVID-19 MSME Impact Measurement, using an interview-based data collection process. In both cases, a Dashboard platform was used to segment interviewed MSMEs. Actions planned by FSPs should aim to enhance short-term outcomes and to track medium-term outcomes.
The floor was then opened to questions, the first one being asked to Triple Jump: ‘Next to indicators at end-client level, what indicators do you use to measure at the level of your target group, namely the FSP’?
Podesta responded affirmatively, pointing to NPL, profitability, and other indicators related to the portfolio and health of the organisation.
Another question was also to Triple Jump: ‘To what extent is the impact investment sector conducting evaluation studies and measuring social performance, both from an accountability perspective and from a learning perspective’?
Podesta explained that they ask FSPs as their target group what they want to achieve, and from there they work out what is needed for including the right kind of data. Generally, apart from credit risk management, FSPs are not used to making decisions based on data. The sector is more inclined to use data for reporting. Other challenges are the capacity to understand and gauge data, the lack of quality of data, and the difficulty to compare between institutions.
After this explanation, Lapenu closed the session, and concluded that outcomes measurement is also about measuring the negative aspects. This is needed for data-driven decision making, and for FSPs to increasingly understand the value of organising quality data for that purpose.