A year ago, the Global Impact Investing Network (GIIN) introduced the first of its impact performance benchmarks for different sectors of particular interest to investors. It just announced the launch of its second benchmark, this one focused on agriculture—in particular, smallholder and sustainable agriculture.
“This is part of a suite of work we’ve been doing over a long period of time to help inform investor decisions,” says Dean Hand, chief research officer of the GIIN, a nonprofit that supports impact investing through education, research and other activities.
The benchmark allows investors to compare their own impact investment performance to peer groups and the Sustainable Development Goals (SDGs) across seven key performance indicators. They range from changes in farmer income and sustainably managed land to the amount of greenhouse gas emissions that have been mitigated and investee revenue growth.
With the help of 16 impact investors in agriculture, the GIIN started working on its latest benchmark about a year ago, shortly after announcing its first one, which targets financial inclusion. (It also built on previous work related to the GIIN’s IRIS+ impact measurement system that focused on determining core metric sets for agriculture). The participating impact investors provided not only data, but also input into what features would be most helpful to making informed comparisons.
Determining Impact Performance
The goal is to help investors determine what good impact performance looks like, something that’s been difficult to do. Specifically, according to Hand, that should involve the ability to make comparisons in three critical categories of information: to the previous year’s results, of course, but also to peers’ performance in a similar market and, eventually, to what is needed to solve for a particular challenge. “With those three pieces of information, an impact investor will be able tell how well they’re actually doing,” says Hand. That means investors will be able to make informed decisions on whether to correct their strategy to achieve better results, invest more capital in a particular area and many other issues.
Ultimately, the GIIN wants to help investors have a portfolio view of what impact performance looks like. While the focus is on certain verticals for now, that will expand to include a cluster of benchmarks investors can use to evaluate their entire portfolio over a specific period of time.
Investors interested in exploring the benchmarks can log into the IRIS+ system. To get access to tailored analytics, which allow individuals to compare their own performance to the industry, they must submit their data on the system.
As for the financial inclusion benchmark, the GIIN has added eight new investors, bringing the total to 21. It’s also been gathering repeat data from investors involved since the beginning. “That was always the plan—to continue to grow the benchmark with additional data and additional investors,” says Hand. A third benchmark focused on energy is in development. And by next year, the GIIN will probably add two more.