‘Mirror, mirror on the wall’ – an honest reflection of impact investing

 

Kai Hopkins

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Kai Hopkins

I was chatting to a friend of mine in the gym the other day, taking a well-deserved water-cooler moment. He was complaining about spending so much time and money going to the gym, and that he was struggling to see results. If only his body could tell him he was on the right track, he joked, instead of having to endlessly look in the mirror waiting to see if what he had invested in was having any impact.

We concluded it would be a great help to our gym progress, and would help us achieve our beach bodies in no time. It was such a simple, obvious solution to the eternal problem: ‘Is what I am doing having the right impact, is it the most efficient, effective way to achieve my goals?’ How valuable would it be to get robust honest feedback on your performance, to be able to compare that feedback against others’, and to use it as the basis for improvement?

Well now, if you are a social investor at least, you can.

In 2010, seven leading social investors used a common survey to collect anonymous feedback from their 330 investees. The results have now been published in the Keystone Accountability report What Investees Think.

The report mines the anonymized data findings from the survey for the implications for the emerging field of impact investing as a whole. One headline identifies a significant opportunity to redress the gap in the existing field-level measurement, reporting and rating tools with systematic investee feedback.

As in the gym, this investee feedback seems simple and obvious, yet up to now has been somewhat lacking in the sector. While initiatives such as GIIRS and IRIS are useful, they omit this crucial element. The feedback is frank, accurate and – as the participating investors all testify in the report – effective in driving improvement. Creating an authentic and constructive discourse about the investor-investee relationship in this emerging field needs investee feedback, not just industry-agreed standards and ratings based on self-reported information.

The report highlights areas of strength and areas in need of improvement, and provides an insight into what effective impact investment looks like from the position of investees. For example, survey respondents reported that they don’t really know what their social and environmental results are. Similarly, they reported that they have no idea what investors do with the reports that they prepare for them, and note that investors do not provide sufficient resources or expertise to enable them to meet their reporting requirements.

The survey aims to address the following essential questions for investors:

Efficiency: How efficient are your operations?

Net value: What value do you add to investees beyond investment capital?

Learning: How well do you enable learning and improvement by your investees?

Credibility: How are you seen in terms of peer standing, responsiveness and professionalism?

Transparency: How open and complete are you in your communications with your investees?

Net effectiveness: Overall, how effective are you at enabling investee success?

Each participating investor received a confidential report that enabled it to see its feedback with benchmarks to the other six investors, who were anonymized. Their reports provided analyses and recommendations geared to their unique opportunities for improvement, and benchmarking their performance provided a much needed reality check to their impact measurement conversation. One investor commented that ‘we knew that the survey would be useful, but when we received preliminary results, we realized it was much more valuable than expected’.

In the end it doesn’t matter if you are in the gym or in the office ‒ merely having the right intent is not enough. If you are looking to raise the bar (no pun intended) in terms of your performance, you need to have honest feedback, and while unfortunately you may have to keep blind faith that what you do in the gym is going to work, there is no reason not to track your progress with invaluable investee input.

Keystone is now repeating the process, and the Impact Investment Survey 2013 is now open to subscription. Register by the end of May and you will have your benchmarked investee feedback by the end of August.

For more information on the What Investees Think report, or to discuss your participation in 2013 survey, please contact Kai Hopkins on kai@keystoneaccountability.org

Kai Hopkins is finance and operations manager at Keystone Accountability

Tagged in: Benchmarking Impact measurement Keystone Accountability Social investment


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