Impact Evaluation of a Portfolio of Private Investments
IMPACT EVALUATION OF A PORTFOLIO OF PRIVATE INVESTMENTS
Using The Common Approach to Impact Measurement and the Impact Management Project
The financial market has responded well to the growing number of investors wanting to invest for positive impact, by offering increasingly diverse and complex products. However, it remains challenging for investors to consistently assess the impact of their private investments, and especially to understand that impact at a portfolio level, because:
- Reporting practices vary. Impact reporting practices vary across the market and most often, investors receive progress reports on their fund holdings which may or may not include impact performance data
- Impact data is not sufficient or transferable. When impact is reported, it’s often in fixed bespoke ways, often aggregated and across varying time periods, making evaluation and comparison difficult across funds
Following a similar approach for measuring impact benefits both investors and the impact investing sector:
- Investors can more easily assess impact, to then align their investments with their impact goals
- Companies can better understand what fund managers and investors are looking for when assessing impact, and design their measurement approach accordingly
- Private fund managers can convey the quantifiable impact of their underlying assets
We believe greater commonality and greater understanding will help bring more investments into the sector.
We partnered with The Common Approach to Impact Measurement to explore how the Common Approach can support greater consistency in impact reporting in the investment world.
Our guide offers an approach to measuring and reporting on the impact of a private investment portfolio, and demonstrates the value of consistent measurement and management practices. We hope it makes it easier for social purpose organizations, and their investors and grantors, to measure impact.
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