The Power of Comparing Impact, an Op-Ed From the GIIN

GIIN Chief Research Officer Dean Hand recently shared her insights on elevating the work of impact investors through benchmarking in an ImpactAlpha op-ed. Read the full article here, or check out some need-to-know highlights for investors in the letter below. 

Letter from Chief Research Officer Dean Hand 

As an impact investor, understanding your progress is essential — and you can only truly grasp how well or how poorly your investments are doing by comparing your performance to something tangible. Whether it's last year's results, the performance of your peers or a threshold of required performance, these comparisons are crucial for gauging your success and making informed decisions.

Investors focused solely on financial returns find comparison straightforward. Ample performance data allows you to track your progress effectively. You can compare your performance to the previous year (e.g., percentage change from last year), to peers (e.g., relative performance in the same class, sector or geography), and to a benchmark (e.g., relative to an index or economic measure).

However, if you are an impact investor aiming for both impact performance and financial return, you face more challenges. To make similar comparisons the discipline of using available tools and sharing impact-relevant data is needed. 

Imagine truly knowing whether you're missing the mark or reaching success in terms of the effectiveness and efficiency of your impact results. This knowledge would significantly influence future decisions, mitigate greenwashing and increase the impact of an investment.

Thanks to financial support from EQT Foundation , the Visa Foundation and Temasek , the GIIN's Impact Lab has been testing a range of tools for investors to better understand their impact performance. The flagship among these uses is investor-reported performance data from investors to benchmark impact performance relative to peers and to the results required to achieve SDG targets.  

These pilot benchmarks, built on a standard methodology for comparing impact metrics, offer a window into what is possible. Ultimately, they are a step in the right direction for tracking impact performance, and they’re now available to investors through the GIIN’s website. 

Comparing performance to widely-used thresholds and peers provides a strong foundation for managing toward positive outcomes for people and the planet. Once you know how far off or ahead of the mark you are, it becomes easier to take the actions required to achieve meaningful impact results.

Investors interested in diving into impact benchmarking can access our benchmarks for financial inclusion, agriculture and energy through the GIIN website. We’ll also have benchmarks coming later this year for the healthcare and forestry sectors.  Those investors who submit their data to the benchmark will receive custom analytics comparing their impact results to past performance, peers and global goals. If you’re interested in contributing your data to GIIN Benchmarks, we’re eager to hear from you; reach us at research@thegiin.org.  

• Dean Hand

News we’re watching: 

• In case you missed it, in July the GIIN partnered with the Financial Times to publish a list of over 100 impact investors, their impact AUM and other relevant information including key sectors and target geographies. It ran alongside an op-ed from GIIN CEO and Co-Founder Amit Bouri, highlighting the progress of impact investors since the start of the industry and the future we can chart. 
• Impact investing for all: this month Forbes shared advice on evaluating an investment’s impact performance, and US News published a guide to impact investing for beginners.  
• The World Economic Forum recently shared reasons to link compensation with impact performance to improve impact outcomes. This is a topic we’ll dig into in the GIIN’s upcoming research report on trends, performance and allocations. 
• GIIN member Schroders ’ first group wide impact-investing report reveals important insights, including that “stronger demand from pension funds for impact investments has begun to increase the flow of commitments and solutions needed from large asset managers to accelerate growth in the sector.” 

The latest from the GIIN: 

• Speakers at the GIIN Impact Forum 2024 include experts on climate solutions, healthcare investing and AI. We recently announced that at the forum internationally recognized sustainability scientist Johan Rockström will discuss planetary boundaries, a climate framework he helped pioneer. The forum will be held in Amsterdam, October 23 -24. Secure your spot today. 
• For investors looking to deepen their impact investing practice, we’re hosting our Transforming Your Portfolio impact investing seminar on October 22 in Amsterdam. This seminar features hands-on training and insights into including impact goals in your portfolio. This training is designed as an input for CFA UK’s Impact Investor Certification. 
• The GIIN is coming to Japan on September 30 - October 1 to host an introduction to impact investing workshop. This workshop includes lectures on fundamental impact investing practices, group-based exercises and peer discussions to enhance understanding. Participants can also join for an optional second day to learn more about building an impact thesis. 
• This month investors who participated in the GIIN’s annual survey attended a webinar where we shared findings from our upcoming market reports. Stay tuned for fresh industry insights and an updated impact investing market sizing coming later this year. 
• In July we welcomed seven new members, Asia Green Fund , Asian Development Bank (ADB) , AWE (Achieving Women Equity) Funds , Fonds de finance sociale Cap Finance , Fortaleza SAFI , Fundacion Inicia Educacion and Potato Impact Partners , bringing our total to 435 members across 58 countries.