9-218-115

REV: SEPTEMBER 2, 2024

SHAWN COLE

VIKRAM S. GANDHI

CAITLIN REIMERS BRUMME

RADHIKA KAK

Background Note: Managing and Measuring

Impact
Sustainable investors a seeking to create social value face the often-daunting tasks of defining
impact, measuring or quantifying it, and, perhaps the most difficult of all, causally attributing their
investment to any resulting impact.

A core challenge is that very different activities are defined as social impact -- contrast a Tesla car
with a solar lantern, or a new airport for Madagascar. As the nature of impact investing by definition
is nuanced depending on the cause and geography of investment, settling on a shared definition or
minimum bar for impact is challenging. Nevertheless, a recent movement seeks to align sustainable
investing activities within the framework of the United Nations Sustainable Development Goals. 1

In terms of quantifying impact, cost-benefit analysis in which potential impact can be converted
into a single, universal metric, serves as a theoretically rigorous way to quantify impact, assess trade-
offs pre-investment, and compare potential investments. However, while cost-benefit offers a coherent
approach, it is time-intensive to implement and often requires many simplifying assumptions. Because
of this, many firms and funds focus on reporting on output, or, more rarely, outcomes.

Nevertheless, by 2024, industry insiders have expressed some optimism that impact measurement
has made progress over the years. The emerging concept of “impact management” b suggests increasing
sophistication around how to integrate impact into an investment process, from due diligence, to
incentivizing staff, to negotiating an exit. Longstanding impact investors, such as Acumen Fund and
Root Capital, have been experimenting with ways to integrate impact measurement and portfolio and

a This note is written in the context of primarily private market sustainable investing, such as private equity and venture capital.
Values-based public market strategies, such as socially responsible negative screening, face distinct considerations.
b The term impact management appears to have been developed by Bridges Ventures in their 2016 report, “More than
measurement: A practitioner’s journey to impact management.” Bridges defined impact management as “which we define as
the management of assets in order to meet explicit impact goals (alongside financial goals).” The initial paper is positioned
primarily as to assist investors in designing their overall sustainable investment strategy. Source: Bridges Ventures (Bridges
Impact+) and Skopos Impact Fund, “More than measurement: A practitioner’s journey to impact management,” October 2016,
http://www.bridgesfundmanagement.com/wp-content/uploads/
2017/02/Bridges-Skopos-More-than-Measurement-print-view.pdf.

Professor Shawn Cole, Senior Lecturer Vikram S. Gandhi, and Program Director Caitlin Reimers Brumme (Impact Collaboratory), and independent
researcher Radhika Kak prepared this note as the basis for class discussion.

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 218-115 Background Note: Managing and Measuring Impact

financial management, while newcomers, such as TPG Rise, seek to utilize existing evidence on
effective social programs to quantify and compare the potential impact of investees during their due
diligence.

Nonetheless, efforts to define and measure impact in practice face a myriad of strategic, technical,
and practical challenges. 2 Investors continue to allocate capital towards impact, even in the absence of
standard practices, but some feel the emergence of a standard is required to dramatically increase the
quantity and quality of capital allocation. We do note one potentially relevant comparison: the financial
accounting standards upon which investors rely took decades to develop. 3 With calls for standards as
early as the 1960s, it was not until the early 2000s that international accounting standards became
widely adopted. 4

Impact Management and Measurement in Practice

Impact management and measurement (IMM) encompass how an investor integrates impact into
an investment process – from strategy setting, to decision making, measurement, reporting, and exit.
Impact investors, either explicitly or by default, determine when to collect and use impact data (due
diligence, post-investment, at exit) and how to use impact data (deal origination, diligence, monitoring
and reporting, performance management, measurement). This requires a balance between the “ideal”
(rigor, certainty) and the “practical” (time, resource constraints, priorities, etc.). Among other things,
an impact strategy is influenced not only by an investor’s motivation, but also by external demands
such as limited partners’ needs or demands, resource and capacity constraints, data quality, and the
investment strategy itself.

The following set of questions generally guides the development of an IMM strategy: c

1) How will impact be defined? What is the overall impact objective, and how will impact
be defined?
2) How will impact be quantified? How will potential impact be quantified and/or
monetized? How will success be defined? How will impact be monitored over time? d
3) How will impact be attributed? Even if a firm provides a good or a service to the poor,
how could an investor be certain this provision improved the customers life?
4) How will impact be managed? How will impact data be used in the investment process
to assess potential, or where feasible, to assist in managing the investment to create
additional impact?

The notion of “managing impact” is still a nascent concept, having first been termed by Bridges
Ventures in 2016. Impact management promotes expanding an investor’s focus beyond accountability
(reporting on metrics to capital provides) to value creation (setting and achieving impact goals). 5 While

c Adapted from Bridges Ventures (Bridges Impact+) and Skopos Impact Fund, “More than measurement: A practitioner’s
journey to impact management,” October 2016, http://www.bridgesfundmanagement.com/wp-content/uploads/
2017/02/Bridges-Skopos-More-than-Measurement-print-view.pdf.
d The G8 Impact Investing Measurement Task Force described the four steps of impact measurement as: 1) Plan - set goals and
metrics, 2) Do - collect and validate data, 3) Assess - analyze data, and 4) Review - report data and make data driven decisions.
Source: Social Impact Investment Taskforce (established under the UK’s presidency of the G8), “Measuring impact: Subject paper
of the Impact Measurement Working Group,” September 2014, https://www.findevgateway.org/paper/2014/09/measuring-
impact-subject-paper-impact-measurement-working-group.

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 Background Note: Managing and Measuring Impact 218-115

certainly relevant and warranting further investigation and discussion, the remainder of this
background note focuses on the critical elements of and challenges of defining and measuring impact.

Challenges in Defining an Impact Strategy

Statements such as “impact is in the eye of the beholder” and “every investment has impact”
capture the essence of the challenge. What constitutes impact differs (often dramatically) across
approaches and sectors, with no generally accepted minimum bar for impact. This perpetuates an
active debate on impact “quality.” Is an investment in an airport in Sub-Saharan Africa a sustainable
investment? Or in Tesla? Or only those investments that address poverty? Oxfam, for example,
advocated in 2017 that sustainable investing should first and foremost be about poverty alleviation
(and not returns). 6 In that same period, TPG Rise alternatively described its investment in a cell tower
company in Myanmar as a sustainable investment due to economic growth and productivity
gains. 7 While this allows investors to express their own preferences, it poses a very practical challenge
to allocation, comparison, benchmarking, reporting, and research.

Paul Brest, former President of the William and Flora Hewlett Foundation and faculty at Stanford
Graduate School of Business and Stanford Law School, added to this debate in 2013 when he proposed
that an investment was only a sustainable investment if it resulted in positive outcomes beyond what
would have otherwise occurred. Specifically, Brest argued:

“For an investment or non-monetary activity to have impact, it must provide

additionality—that is, it must increase the quantity or quality of the enterprise’s social
outcomes beyond what would otherwise have occurred.” 8

Impact investors accepting concessionary returns in favor of impact easily meet the criteria of
additionality, as below-market-rate projects typically attract fewer bidders than those on-par with market
rates. Such catalytic capital providers typically unlock greater amounts of private investment through the
creation of blended finance structures that would not otherwise have been possible. However, while below-
market investors, such as Root Capital or Prime Coalition, embrace this definition, it poses a clear challenge
to market-rate investors who claim impact and commercial returns. According to Brest’s logic, an
investment into an opportunity that would have otherwise raised commercial capital is not a sustainable
investment unless the investor believes its participation is differentiated in some other way, or will increase
the company’s impact.e For example, investing in underserved regions where higher transaction costs or
market frictions present a deterrent to typical commercially-minded investors could be a source of
differentiation and serve as a form of “impact.”9 Another source of differentiation lies in activist investing.
For example, an activist investor that is able to effect change at a large oil and gas major could potentially
have greater impact on climate emissions than an impact investor in a new unproven, potentially unscalable
technology, even though the latter qualifies as bearing greater financial additionality in the strict sense of
provision of capital. Both intention and measurement of impact, therefore, are at the heart of this debate.

Defining Impact
Intentionality towards achieving some pre-specified positive outcome is one of the key defining
features of sustainable investing, alongside measurement and management. This requires an investor
to identify and define an impact objective or strategy ex-ante, such that impact is not coincidental but

e A more technical interpretation of Brest’s logic might argue that an investment in market-rate opportunity “A” could create
“additional” impact if it displaced other investors to be shut out of “A” and subsequently invest in opportunity “B” which might
not have otherwise had impact. Of course, tracking that would be practically impossibly.

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 218-115 Background Note: Managing and Measuring Impact

rather intentional. This is particularly relevant for market-rate investors who may be investing
alongside “traditional” investors. For example, TPG Rise, an impact fund, is differentiated from TPG
Growth in that TPG Rise is constrained to investing only in businesses that they anticipate will drive
meaningful change based on specific impact theses and criteria.

No standard process by which an investor can articulate an impact objective has emerged. Omidyar
Network, a leading sustainable investing family office, describes it as:

The notion of “impact accountability” has long been a key priority for the industry. There
has been a push to measure impact performance over the last decade, as demonstrated by
the development of methodologies, rating systems, metric sets, and accounting standards
[e.g., Social Return on Investment (SROI), Global Impact Investing Rating System (GIIRS),
Impact Reporting and Investment Standards (IRIS), Sustainability Accounting Standards
Board (SASB)]. However, this focus on measurement has overshadowed the fact that the
industry lacks a shared language and framework for describing impact goals in the first
place. The need for this wider conversation has precedent in traditional finance, wherein
capital markets function because of a shared convention underpinned by fundamentals
(financial risk, return, volatility, and liquidity) and a framework (asset classes and
portfolio construction norms) to both group investments with similar characteristics, and
to articulate and align investor goals. 10

As a result, there are several efforts to develop a more standard framework and shared taxonomy.
The Impact Management Project, for example, launched in late 2016, is a multi-stakeholder initiative
with the objective of establishing a shared “convention” or set of “norms” for describing impact. The
project lays out five “dimensions” of impact (what, how much, who, contribution, and risk) and
categories of investor intention (do not consider, avoid harm, benefit people and planet, and/or
contribute to solutions) to help investors develop their impact strategy. 11 (See Exhibit 1.) The project
also makes case studies publicly available on what they view as best practices.

A second emerging trend is to organize around the United Nations Sustainable Development Goals.
The UN Sustainable Development Goals, which were universally adopted by all UN member states in
2015 as a part of the 2030 Agenda for Sustainable Development, lay out 17 non-legally binding
objectives with achievement plans, such as “zero hunger,” “decent work and economic growth,”
and “no poverty.” Exhibit 2 provides an overview of the Sustainable Development Goals. Given their
cross-asset class applicability and focus on outcomes, the SDGs have been heralded as one potential
guiding framework or set of categories investors may use to define an impact objective. Increasingly,
institutional investors, financial institutions, assets managers, and corporations prioritize aligning with
and reporting on their investments and the SDGs. 12 Additionally, there are examples of prominent
asset managers, such as TPG Rise and KKR, launching fund strategies towards achieving the
SDGs. 13 Indeed, in 2023 GIIN Impact Investing Survey, over three-quarters of investors stated that
they rely on the SDGs to guide impact strategy. 14

Absent a universal framework, impact is often defined along one or more of the following dimensions:

• Issue or sector, such as affordable housing, off-grid energy, microfinance, or

agriculture.
• Target population, such as “base of the pyramid,” “emerging middle class,” or
“rural poor.” Gender lens investing is an example of a strategy defined based on
benefits to a specific population.
• Target outcomes, such as improved health or reduced poverty.

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 Background Note: Managing and Measuring Impact 218-115

• Geography, such as a specific country, region, or even more broadly, emerging

markets.

Some investors use a single category when defining an impact strategy (microfinance) while some
use multiple dimensions to define a strategy (microfinance in rural Africa).

Measuring Impact
Determining appropriate metrics or units of impact is a critical step in defining impact, and
ultimately tracking and measuring impact over time. Many use the concept of the impact logic chain
to distinguish between outputs (which redirect byproducts of an enterprise’s activities), outcomes (which
are changes resulting from such outputs, such as savings or graduation rates), and impacts (which are
changes of effects on society or the environment). 15 Exhibit 3 lays out the Impact Value Chain concept.
Some investors rely on the Theory of Change, f a tool used in philanthropy to articulate the logical
connection between a company’s activities and its social mission, to identify relevant output and
outcome metrics for any given investee.

Most investors utilize some combination of standardized and proprietary or customized metrics
across their portfolios. Several sources of standard metrics have emerged. For example, IRIS, founded
in 2008, is a publicly available compilation of over 500 generally accepted standard metrics to report
on company social, environmental, financial, and operational performance. 16 The 2023 GIIN Impact
Investing Survey shows that 78% of impact investors use IRIS+ to measure impact. The Investment
Leaders Group is a framework launched in 2016 that categorizes the SDGs into six broader impact
themes of basic needs, well-being, decent work, resource security, healthy ecosystems, and climate
stability. The framework then proposes one standardized metric per category with a goal of simplicity
and standardization. 17 Finally, the B Analytics/GIIRS rating system provides a standardized
benchmark to rate and compare companies and funds based on key practices such as governance,
employee well-being, environmental impact, and community engagement. These ratings use IRIS
metrics as a key input. Exhibit 4 shows the estimated usage of various tools, indicator sets, and
standards for sustainable/impact investing.

However, selecting metrics often requires trade-offs among competing priorities, such as rigor versus
rapid feedback. Standardized metrics prioritize comparability and simplicity (often outputs), but often
come at the expense of context- or industry-specific data, or whether communities, lives, etc. were altered
(outcomes or impact). Acumen, for example, has found that their initial focus on collecting standardized,
IRIS-aligned metrics resulted in ample data on breadth of impact (number of people served), but a rather
shallow understanding of the depth of their impact (whether livelihoods were being improved). 18 More
generally, there is a tendency to track indicators that are easy to measure (outputs) instead of those that are
most meaningful (outcomes), and while such metrics are useful in that they serve as good proxies for change
on the ground, they cannot directly be substituted for the same. Some impact measurement projects, like
Acumen’s 60 Decibels, puts the customer’s voice as the focal point for impact measurement to avoid this
pitfall. The 2023 GIIN Impact Investing Survey shows that while 71% of respondents use generally accepted

f From the Center for Theory of Change: “Theory of Change is essentially a comprehensive description and illustration of how
and why a desired change is expected to happen in a particular context. It is focused in particular on mapping out or ‘filling in’
what has been described as the ‘missing middle’ between what a program or change initiative does (its activities or interventions)
and how these lead to desired goals being achieved. It does this by first identifying the desired long-term goals and then works
back from these to identify all the conditions (outcomes) that must be in place (and how these related to one another causally)
for the goals to occur.” Source: Center for Theory of Change, “What is Theory of Change?”
https://www.theoryofchange.org/what-is-theory-of-change, accessed June 1, 2022.

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 218-115 Background Note: Managing and Measuring Impact

standardized systems to assess impact, 66% develop their own in-house specific impact targets, most likely
to account for the nuances of impact measurement relating to specific investment cases. 19

An important nuance in ensuring that a “net” measurement of impact, a process which entails including
the negative impacts of business performance apart from the positives. For example, while electric vehicles
(EVs) over lifetime use are found to generate lower carbon emissions than their ICE counterparts, it is critical
to account for the emissions and negative environmental impact associated with development of mineral-
based batteries used in EV cells. Fossil-fuels are used in the mining and processing these materials which
implies that building a new EV can generate ~80% more emissions than a comparable gas-powered car. The
comparison looks worse in countries where most grid energy is sourced from fossil-fuels. 20 Similarly, while
the solar industry helps decarbonize the electricity supply, there have been many reports about forced labor
used to manufacture solar modules in China (which manufactures ~80% of all stages of solar panels) and
the risk of toxic waste emanating from end-of-life solar panels.

Role of Regulations in Driving Greater Disclosure

Greater global regulatory emphasis on the disclosure of ESG-related factors (see the Background Note:
Introduction to Sustainable Investing for details on the evolving regulatory backdrop) will undoubtedly enable
sustainability-oriented investors and asset owners unearth trends and insights to ascertain progress. Indeed,
tracking progress towards stated goals is impossible without due measurement and tracking of key metrics.
The last few years have been pivotal in driving greater disclosure, with the US, EU, and several emerging
markets adopting mandatory ESG-related disclosure requirements. The International Financial Reporting
Standards (IFRS) standards on sustainability – IFRS S1 and S2, effective January 2024, subsume the
recommendations of the TFCD and SASB, g and are in the process of being adopted by major countries
across the world. These focus on the disclosure of financially material ESG factors that will help financially
motivated investors. The erstwhile SASB for instance, outlines financially material sustainability-related
risks and opportunities by industry, encouraging firms to disclose their performance on ESG factors most
relevant to their sector and business. US SEC standards, too, focus on the disclosure of financially material
ESG factors, while several US states, including California, New York, and Illinois, have gone a step further,
requiring firms to disclose Scope 1, 2, and 3 emissions obligatorily regardless of materiality. These
disclosures will go a long way in enabling climate and other ESG-driven investors assess impact.
Meanwhile, the EU’s regulatory emphasis on double materiality will specifically help impact investors, as
it invites firms operating in the region to report on the impact of their business decisions on the environment,
encouraging them to place emphasis on their responsibilities towards the region’s net-zero targets and other
ESG considerations. The EU’s CSDDD goes even further in requiring firms to take concrete steps to prevent
and mitigate against the potentially adverse ESG impact of their operations. These requirements mark a
welcome step towards recognizing the duties of firms towards all stakeholders rather than investors alone.

Challenges in Attributing and Measuring Impact

Measuring impact, in both absolute and relative terms, pre- and post-investment, is arguably the
greatest challenge faced by sustainable investors. Measurement is necessary pre-investment to inform
where investors might invest to maximize social return and post-investment to determine if social
impact has, in fact, been achieved and to what extent.

g In 2011, the Sustainability Accounting Standards Board (SASB) was founded as a non-profit organization to guide firms across
77 industries on financially material ESG factors. In 2017, the Financial Stability Board (FSB) created the Task-Force for Climate
Disclosure (TCFD) to develop recommendations on the kinds of climate-related disclosures that firms should make.

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 Background Note: Managing and Measuring Impact 218-115

A rigorous approach would be to conduct a cost-benefit analysis, in which [potential or realized]

impact is converted into a single, universal metric, allowing investors to consider trade-offs across
investments. However, while cost-benefit analysis offers a coherent approach, it is time-intensive to
implement and often requires many simplifying assumptions. Acumen’s [prior] use of the “best
alternative charitable option” or TPG Rise Fund’s “Impact Multiple” are examples of investors
attempting to quantify and compare the cost-benefit of an investment during due diligence.

One alternative is to at least use existing evidence to estimate the impact of a potential investment
(perhaps even compare to like-alternatives). Thousands of randomized control trials (RCTs) in the
social sector around the world have contributed to a growing body of compelling evidence about the
value of education, health, and financial service, and many other interventions. While RCTs may have
been too costly or cumbersome in the context of an investment, the growing evidence base can inform
coherent, if not “lighter touch” efforts to direct investment to impactful opportunities.

The UK Institute of Development Studies’ report on impact investing methodologies describes the
state of impact measurement:

A number of initiatives have begun to harmonize approaches to the social and

environmental outputs of impact investments, and in particular, to assist investors with
their due diligence through metrics, ratings and certifications. Far less, however, has been
achieved in addressing an evaluative h understanding on impact. 21

This statement intends to distinguish between quantifying or measuring impact and attributing
impact. As described above, defining impact involves determining the definition of success (e.g., “poor
people’s well-being”). Measuring impact involves determining the unit of impact (e.g., “income” or
“consumption”) and then assessing performance against the determined metric. Attributing impact
involves evaluating whether a certain intervention or investment causes the desired impact (e.g., micro-
finance increases income by 1.2%).

RCTs are considered the gold standard in evaluation providing scientific evidence on the impact of
any specific intervention or product – by randomly assigning an eligible pool of people to receive or
not receive a treatment, a researcher can answer the question, what is the impact of treatment or
product on the individual. RCTs create evidence of a positive outcome compared to a counterfactual.
See Exhibit 5 for detail on the evidence spectrum. However, as an approach to measuring impact pre-
or post-investment, the methodology is often not practical, ethical, or affordable. RCTs typically take
many years to complete and require a stable intervention over the life of the evaluation. As a result,
some impact investors argue it is not an appropriate methodology for rapidly evolving social
enterprises, and that learning and adapting is a more appropriate objective of measurement than
building evidence. i

Quasi-experimental methodologies, such as difference-in-difference or pre-post analysis, are other

evaluation methods to estimate causal effects or attribution. Yet, even these also suffer from data
quality, cost, and other practical limitations. As a result, most impact investors do not attempt to
attribute positive social outcomes to their direct interventions or investments.

h In this context, the term “evaluative” draws from the field of development evaluation and seeks to draw a distinction between
metrics-based approaches which may be important for accountability, and evaluation which seeks to determine the effectiveness
of an intervention.
i From an economics lens, we would propose that the more the investment is concessionary, the greater the case for high-quality
casual attribution.

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 218-115 Background Note: Managing and Measuring Impact

While the most recent GIIN Impact Investing Survey shows that almost all sustainable investors measure
impact performance at least once a year (94%), 22 the quality and rigor of this measurement is not certain,
particularly as few impact investing firms are able to afford external auditors to verify claims. For smaller
investors, the sheer costs and difficulty of accumulating data and benchmarking presents a significant
hurdle. These costs may divert precious resources away from the cause itself. Indeed, the majority of
sustainable investors fund impact measurement out of management fees. This ultimately imposes a
transaction cost for the asset owner, and lowers available capital for the funding of projects.23 Table 1 shows
how specific impact management and measurement tools are used throughout the investment cycle.

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 Background Note: Managing and Measuring Impact 218-115

Table 1 Impact management and measurement (IMM) Stages and Resources

Consideration of impact data at each stage of the investment process

Importance of resources to advancing the practice of IMM

Source: Global Impact Investing Network (GIIN), The State of Impact Measurement and Management Practice (Second
Edition), 2020,
https://thegiin.org/assets/GIIN_State%20of%20Impact%20Measurement%20and%20Management%20Practice_Sec
ond%20Edition.pdf.

While the reluctance to use in-depth impact assessments is practically understandable, this creates a risk
that even an investment that may appear successful based on a certain output measures does not result in
the intended impact. Indeed, “impact washing” or the exaggeration of positive impact is a common pitfall
of impact measurement. Recent research conducted by the Wharton Social Impact Initiative finds that
impact metrics are used to demonstrate accomplishments and success rather than to measure or evaluate
performance. 24 Most impact investors that report being “successful” do not outline a quantitative impact
target at all. Additionally, apart from development finance institutions and philanthropic foundations
which are more invested in impact measurement as they are impact-driven by definition and are giving out

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 218-115 Background Note: Managing and Measuring Impact

grants to build out impact evaluation teams, most investors are satisfied with current level of reporting. This
corroborates findings by the Impact Finance Research Consortium, a collaboration among Wharton School,
Harvard Business School, and the University of Chicago Booth School of Business, which finds that market-
rate-seeking impact investors often feel they can assess impact simply by monitoring the financial
performance of their investments as “impact strategy is baked in,” while non-profits can have a sharpened
focus on impact assessment. 25

Microfinance, touted as the solution to global poverty, is an interesting example. The microfinance
industry is seen as an unprecedented success – dozens of equity and debts funds, two global IPOs
generating more than $1 billion in shareholder value, 100 million households reached. And yet,
experimental research conducted by several academics, including J-PAL of MIT, eventually tells a more
multifaceted story. Microfinance is useful for those already motivated to run a business, but has not, in
fact, been found to reduce poverty in a measurable way for the general population of borrowers. 26

Conclusion
Sustainable investing is distinct in its promise of intentionality towards and measurement of impact.
Sustainable investing requires an investor to define an impact strategy, manage it towards an impact
objective(s), and assess performance. Capital allocators (foundations, family offices, pension funds)
who choose to engage in this practice have to work through the incremental challenge of identifying
their impact objective(s) and selecting investments, managers, and/or products that align with their
goals and meet their standards of measurement. At the same time, asset managers have to clearly
communicate their impact strategies and performance. Absent commitment to measurement, there is
a risk that sustainable investing will become a marketing overlay for accumulating assets by market-
rate strategies, or an excuse for poor investing by below-market strategies. Perhaps more importantly,
it can result in very costly mistakes for those seeking to meaningfully address social problems.
At the same time, the diverse array of investor preferences and constraints around impact,
implementation, and measurement create opportunities for different strategies to emerge and for the
market to grow. Wellington Global Impact, Acumen, TPG Rise, and Social Finance, for example, all
endeavor to solve different problems and take distinct approaches to impact measurement and
management, with varying degrees of rigor.

10

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 Background Note: Managing and Measuring Impact 218-115

Exhibit 1 United Nations Sustainable Development Goals

Source: United Nations, Sustainable Development Goals, http://www.un.org/sustainabledevelopment/sustainable-

development-goals, accessed June 1, 2022.

11

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Institute of Management - Lucknow from May 2025 to Nov 2025.
 218-115 Background Note: Managing and Measuring Impact

Exhibit 2 Impact Management Project - Dimensions of Impact

Source: The Impact Management Project (IMP), http://www.impactmanagementproject.com, accessed June 1, 2022. Licensed
for use under a Creative Commons Attribution-NoDerivatives 4.0 International (CC BY-ND 4.0)

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Institute of Management - Lucknow from May 2025 to Nov 2025.
 Background Note: Managing and Measuring Impact 218-115

Exhibit 3 Impact Value Chain

Source: Social Impact Investment Taskforce (established under the UK’s presidency of the G8), “Measuring impact: Subject
paper of the Impact Measurement Working Group,” September 2014,
https://www.findevgateway.org/paper/2014/09/measuring-impact-subject-paper-impact-measurement-working-
group.

13

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Institute of Management - Lucknow from May 2025 to Nov 2025.
 218-115 Background Note: Managing and Measuring Impact

Exhibit 4 Tools and Frameworks Used in Impact Measurement and Management (IMM)

Source: Global Impact Investing Network (GIIN), The State of Impact Measurement and Management Practice (Second
Edition), 2020,
https://thegiin.org/assets/GIIN_State%20of%20Impact%20Measurement%20and%20Management%20Practice_Sec
ond%20Edition.pdf.

14

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Institute of Management - Lucknow from May 2025 to Nov 2025.
 218-115 -15-

Exhibit 5 Evidence Value Chain

Methodology Description Strengths Cons

Proprietary View Individual’s experience-informed No external data collection required Biased by individual’s experience and
perspective views, which may not be
representative
Anecdotal Data or observations collected Low cost; no systematic collection or Does not address systematic biases or
opportunistically without pre-specified analysis required ensure representative sample
design
Survey Design and implementation of Potentially low-cost Answers susceptible to various biases,
interviews and questionnaires such as survey question order effects
bias, observer bias, or selection bias
Pre-Post Evaluation method in which outcomes Relatively easier and/or lower cost Lacks external control or adjustment,
(historical baseline) for a specified group are compared than other evaluations; no control so may see changes that are not
before and after the group is exposed to group required attributable to the intervention (e.g.,
an intervention recession or population aging)
Randomized Control Trial Experimental evaluation method pre- Results in causal evidence; largely Rigid; time and resource intensive
(RCT) specifies potential outcomes, randomly eliminates selection bias and
assigns one group to receive a confounding
product/service/treatment and a control
group of similar makeup which does not
receive an intervention, and observes for
change over time
Difference-in-Difference Evaluation method which attempts to Eliminates selection bias; potentially Still subject to biases (e.g., regression

Institute of Management - Lucknow from May 2025 to Nov 2025.

mimic RCTs using observational data by lower-cost than RCT toward the mean where extreme data
looking at the outcomes of a group that points skew measurement such that
received an intervention versus a non- natural variation looks like real
intervention control group change)

Source: Compiled by casewriters. Sources: William M. K. Trochim, Research Methods Knowledge Base (Second Edition). Available at: http://www.socialresearchmethods.net/kb;
Marianne Bertrand, Esther Duflo, and Senhil Mullainathan. “How much should we trust differences-in-differences estimates?” The Quarterly Journal of Economics (February
2004), 119: 249–275, doi: 10.1162/003355304772839588. Available at: https://academic.oup.com/qje/article-abstract/119/1/249/1876068; Peter O’Flynn and Chris Barnett,
“Evaluation and impact investing: A review of methodologies to assess social impact,” Evidence Report No. 222, Institute of Development Studies (IDS),
https://opendocs.ids.ac.uk/opendocs/bitstream/handle/123456789/12835/ER222_
EvaluationandImpactInvestingAReviewofMethodologiestoAccessSocialImpact.pdf.

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 218-115 Background Note: Managing and Measuring Impact

Endnotes

1 Price, Dennis, David Bank and Marina Leytes, “Sustainable development goals take hold as universal impact investment
framework,” ImpactAlpha, May 25, 2017, https://impactalpha.com/sustainable-development-goals-take-hold-as-a-universal-
impact-investment-framework.
2 Global Impact Investing Network (GIIN), The State of Impact Measurement and Management Practice (Second Edition),
2020,
https://thegiin.org/assets/GIIN_State%20of%20Impact%20Measurement%20and%20Management%20Practice_Second%20Ed
ition.pdf.
3 Financial Accounting Standards Board, “Comparability in international accounting standards – A brief history,”
https://www.fasb.org/page/PageContent?pageId=/international/briefhistory.html, accessed June 1, 2022; Social Impact
Investment Taskforce (established under the UK’s presidency of the G8), “Measuring impact: Subject paper of the Impact
Measurement Working Group,” September 2014, https://www.findevgateway.org/paper/2014/09/measuring-impact-
subject-paper-impact-measurement-working-group.
4 Financial Accounting Standards Board.

5 Social Impact Investment Taskforce.

6 Oxfam, “Impact investing: Who are we serving,” Oxfam Discussion Papers, April 2017,
https://www.oxfamamerica.org/static/media/files/
dp-impact-investing-030417-en.pdf.
7 The Team at ImpactAlpha, “Billionaires’ ball: Deconstructing TPG’s $2 Billion RISE Fund,” ImpactAlpha, December 21, 2016,
https://impactalpha.com/billionaires-ball-deconstructing-the-2-billion-rise-fund.
8 Brest, Paul and Kelly Born, “Unpacking the impact in impact investing,” Stanford Social Innovation Review, August 14, 2013,
https://ssir.org/articles/entry/unpacking_the_impact_in_impact_investing.
9 https://ssir.org/articles/entry/impact-investing-should-be-hard#

10 Booker Allen, Lauren and Ryan Alam,“Why we invested: The Impact Management Project,” Omidyar Network, July 19,
2017, https://medium.com/omidyar-network/why-we-invested-the-impact-management-project-b570617276b4.
11 The Impact Management Project (IMP), http://www.impactmanagementproject.com.

12 Price, Dennis, David Bank and Marina Leytes.

13 Lynn, Alex, “KKR to join growing band of impact investors,” Private Equity International, February 15, 2018,
https://www.privateequityinternational.com/kkr-to-join-growing-band-of-impact-investors.
14 https://s3.amazonaws.com/giin-web-assets/giin/assets/publication/research/2023-giinsight-%E2%80%93-impact-
measurement-and-management-practice.pdf
15 Social Impact Investment Taskforce.

16 Global Impact Investing Network (GIIN), IRIS+ System & Standards, IRIS Catalog of Metrics,
https://iris.thegiin.org/metrics, accessed June 1, 2022.
17 University of Cambridge, Cambridge Institute for Sustainability Leadership, Investment Leaders Group,
https://www.cisl.cam.ac.uk/business-action/sustainable-finance/investment-leaders-group, accessed June 1, 2022.
18 Acumen, Energy Impact Report, https://acumen.org/energy-impact-report, accessed June 1, 2022.

19 https://s3.amazonaws.com/giin-web-assets/giin/assets/publication/research/2023-giinsight-%E2%80%93-impact-
measurement-and-management-practice.pdf
20 https://climate.mit.edu/ask-mit/are-electric-vehicles-definitely-better-climate-gas-powered-cars

21 O’Flynn, Peter and Chris Barnett, “Evaluation and impact investing: A review of methodologies to assess social impact,”
Evidence Report No. 222, Institute of Development Studies (IDS),
https://opendocs.ids.ac.uk/opendocs/bitstream/handle/123456789/12835/ER222_
EvaluationandImpactInvestingAReviewofMethodologiestoAccessSocialImpact.pdf.

16

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Institute of Management - Lucknow from May 2025 to Nov 2025.
 Background Note: Managing and Measuring Impact 218-115

22 https://s3.amazonaws.com/giin-web-assets/giin/assets/publication/research/2023-giinsight-%E2%80%93-impact-
measurement-and-management-practice.pdf
23 https://s3.amazonaws.com/giin-web-assets/giin/assets/publication/research/2023-giinsight-%E2%80%93-impact-
measurement-and-management-practice.pdf
24 https://knowledge.wharton.upenn.edu/podcast/knowledge-at-wharton-podcast/challenge-measuring-impact-
performance/
25 https://ssir.org/articles/entry/impact-investing-should-be-hard

26 Abdul Latif Jameel Poverty Action Lab, “Where credit is due,” Policy Bulletin, February 2015, https://www.poverty-
action.org/sites/default/files/publications/Where-Credit-is-Due_web.pdf.

17

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Institute of Management - Lucknow from May 2025 to Nov 2025.