As impact investing gains traction, investors, regulators and end clients are placing greater scrutiny on impact measurement and management (IMM). While the quest for robust IMM practices and standards may be shared by the impact community, the journey is less than straightforward. Impact investors need to balance myriad nuances with an objective, transparent and evidence-based approach to impact assessment and measurement.
Wellington’s Impact Platform has a robust framework to assess impact according to materiality, additionality and measurability. While these requirements provide a sound starting point for identifying impact companies and issuers, clarifying the impact thesis for some investments can be more challenging, requiring granular analysis. Impact measurement is even trickier. Developing a standard set of impact key performance indicators (KPIs) or leveraging IMM frameworks might bolster the authenticity and transparency of impact, but every company, issuer and issue is different. A blanket approach could lead to the exclusion of worthy candidates from the impact opportunity set. Here, we offer a few examples of common issues where a fundamental, issuer-specific approach can help.
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