The Raising the Bar report is the first in a series aimed at improving the quality and usefulness of impact performance reports produced by impact investors.
NEW YORK, April 20, 2022 /PRNewswire/ — BlueMark, a specialist provider of impact verification services for investors and corporations, today released a report calling for a more robust approach to impact performance reporting that would enable the market to analyze and compare impact performance more easily. The full report,Raising the Bar: Aligning with the Key Elements of Impact Performance Reporting“, is available at https://bluemarktideline.com/raising-the-bar.
The research was conducted with the support of grants from the Rockefeller Foundation and the Tipping Point Fund on Impact Investing.
“While impact reporting by impact investors in private markets is common practice, the absence of widely accepted guidelines for reporting impact performance has resulted in heterogeneous approaches and perception by end readers that the reports are incomplete and insufficient to meaningfully interpret the impact results,” mentioned Christina Leijonhufvud, CEO of BlueMark. “Given the market imperative to improve the quality and usefulness of impact performance reporting, we wanted to gain a deeper understanding of impact reporting best practices and provide pathways to accelerate their reporting. adoption.”
A two-pronged approach was adopted for the research project. First, BlueMark analyzed a sample of 31 recent impact reports written by general partners (GPs) in the private market to identify trends and common practices. Second, BlueMark consulted with 57 diverse industry stakeholders – via one-on-one interviews and focus groups – to better understand the challenges and opportunities associated with producing and consuming impact reports.
These research activities highlighted several gaps and challenges that limit the usefulness of impact performance reporting, including: lack of precision on goals or targets, selective selection of data, lack of insights stakeholders and the focus on successes as opposed to risks or underperformance.
However, the research also revealed a high degree of alignment around what constitutes a quality and decision-useful impact performance report. Building on these areas of consensus, BlueMark – in close consultation with industry stakeholders – has composed the following proposed “Key Elements” for Quality Impact Performance Reports.
Completeness: A Quality Impact Report provides information on all holdings in the portfolio and discusses impact performance at the fund and holding level.
Clarity: A quality impact report presents impact information in a way that is accessible and easy to interpret, with clear definitions, supporting assumptions and calculations.
Objectives and expectations defined: A quality impact report is explicit about the fund’s intent and impact goals, including clarity about investor contribution and expected results.
Relevant metrics: A quality impact report includes quantitative metrics that are drawn from industry standards wherever possible and linked to articulated impact goals.
Relative performance results: A quality impact report provides information that allows the reader to effectively interpret and compare progress and performance metrics.
Integrated Stakeholder Perspectives: A quality impact report identifies relevant stakeholders and incorporates their experiences and voices.
Transparency on risks and lessons learned: A quality impact report is forthcoming on potential impact risks and lessons learned from the past.
These elements were tested in focus groups of GPs and LPs, including members of the BlueMark Allocator Working Group, a learning community of some of the leading institutional allocators with a shared commitment to advancing best practices in investing.
To help increase adoption of these elements, BlueMark is collaborating with Impact Frontiers, an initiative of the Impact Management Project (IMP), to pilot an impact reporting verification approach with a select group of community businesses. Impact Frontier. The verification methodology will be based on the research findings in the first “Raising the Bar” report. The main lessons from this pilot project will be published in a second report at the end of 2022.
“The desire to go beyond impact practice to impact performance is a common refrain among investors participating in Impact Frontiers cohorts,” said Mike McCreless, Executive Director of Impact Frontiers. “The report launched today is a big step in that direction and we look forward to working with BlueMark and the Impact Frontiers investment community to build on this momentum.”
BlueMark’s current verification services are structured around the two key pillars of accountability for impact: impact management practice (the extent to which an investor or company has the systems, processes and capabilities to help achieve the desired impact); and impact performance (the extent to which an investor or company has achieved intended impact results). To date, BlueMark has performed over 65 audits for organizations managing a combined total of over $156 billion in impact assets.
BlueMark is a leading provider of impact verification services for investors and businesses. Founded in 2020, BlueMark’s mission is to “Build Confidence in Impact Investing”. BlueMark’s verification methodologies are supported by a range of industry standards, frameworks and regulations, including the Impact Management Project (IMP), Operating Principles for Impact Management (OPIM), Principles for Responsible Investment (PRI), the SDG Impact and the Sustainable Finance Disclosure Regulation (SFDR). Learn more about BlueMark and impact verification at www.bluemarktideline.com.
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