Stockholm (NordSIP) – The total global impact investing market is now estimated to have exceeded USD 1 trillion. While this rapid growth is good news, the industry is still beset by difficulties in accurately measuring and reporting impact outcomes. This will continue to hinder the scalability of impact funds to the levels needed to make a significant dent in the UN Sustainable Development Goals (SDGs). Earlier this month, the Global Impact Investing Network (GIIN) held its annual forum in the Hague, Netherlands. In his introductory remarks, GIIN CEO Amit Bouri highlighted the fact that in the short history of this event they have had to systematically increase the venue capacity each year to one that now holds 1,500 attendees from around the globe. During the successful event, the GIIN announced the launch of a new Impact Lab initiative aimed at developing better impact performance measurement tools.
The Impact Lab will benefit from USD 4.5 million of initial funding, provided by its founding strategic partners along with the EQT Foundation, Temasek and the Visa Foundation. Designed as a research and development accelerator, the Impact Lab will work on designing impact measurement tools to help plug the current data gaps and benefit the industry as a whole. A common language and tools are urgently needed to grease the wheels of the impact investment industry and facilitate the large capital shifts that are needed to meet the SDGs.
According to GIIN CEO Bouri, “the founding of the Impact Lab is an important development that will take impact investing to a new level of sophistication and push the boundaries of what is possible. At a time when impact investing is gaining traction around the world, the industry is looking to visionary leaders, like our partners EQT Foundation, Temasek and Visa Foundation, to establish critical infrastructure that prioritises impact with integrity and cultivates a ‘race to the top’ on the basis of impact performance.”
Impact measurement and management (IMM) is highly complex. There was much debate on the subject at the GIIN Forum 2022. One common theme that emerged was the importance of accurately capturing not only quantitative metrics but also the softer, less direct consequences of successful impact investing. These could include positive changes in mindset among local companies or regulators, and the global spread of positive sustainability practices.
The EQT Foundation, which was established in 2019 by the Nordic private markets manager as a conduit for the firm’s philanthropic activities, has provided a grant of USD 1.5 million to be distributed over a 3-year period. Commenting on the launch, EQT Foundation CEO Cilia Indahl said: “determining impact performance is an important step for the financial industry to allocate capital to where it will matter the most. Developing impact intelligence tools and benchmarks with wide participation is critical for investors and asset managers to level up from impact outcome reporting to understanding if the impact outcome achieved was reasonable given the amount of capital being deployed. We see this as a key initiative to support to strengthen the impact investing community.”
