DIY Investor Magazine
/
2015 Issue
15
HOW RELIABLE ARE IMPACT BUSINESS’ SOCIAL
IMPACT REPORTS?
The veracity of the social impact report is the
foundation on which the impact investment house has
been built, as a result there is an ongoing effort across
the sector to standardise impact measurement and
reporting.
The Social Stock Exchange (see below) requires
prospective members to prepare and submit an
extensive impact report before they can be considered
for admission by an independent panel.
However it’s widely understood that such
comprehensive approaches won’t be suitable for every
business, so the way in which impact can be validated
will continue to evolve with time.
Having a standardised process is of critical importance
however, because it empowers organisations to self-
assess and improve, encourages funding through
credible reporting, and enables the mission to be
projected through a clearly articulated broadcast of
success. Ultimately, it leads to efficient organisations
and sustainable investments, and outlines the pathway
to achievement from start to finish.
From the perspective of the investor, a standardised
approach is just as important, too. They need to have
the ability to see how the work carried out by the
organisation connects to the impact being made.
A number of global initiatives, such as the Impact
Reporting and Investment Standards (IRIS) which
provides standardised language and taxonomy in
the field, and the Global Impact Investing Rating
System (GIIRS), which acts as a third party assessor of
environmental impacts by impact firms, have sought
to provide common frameworks to aid analyses in this
sector. It has resulted in four broad areas of evaluation:
•
Use of capital
– how investor money has been put
to use, whether this follows its original designation,
whether the intended impact was created, and how
this compared to past performance.
•
Impact reporting
– investors require the impact
performance to be reported and this must fit
certain criteria such as objectivity, robustness, and
detail a balance of the good and bad outcomes
created.
•
Impact delivery
– whether targets have been met,
over what time period, and how this compares to
the past.
•
Future outlook
– an overview of how the
organisation is meeting its wider goals and
whether there’s anything that can be done to
improve it or the environment it operates in to
better achieve its mission.
Ultimately, effective measurement and reporting
creates useful targets for the organisations and
the investors assessing them, and leads to useful
feedback to drive efficiency and improvements.
SO WHAT IS THE SOCIAL STOCK EXCHANGE?
The Social Stock Exchange bridges the gap between
the increasing desire of businesses to make a
difference as well as making a profit, and those
investors who share this vision and have the means to
enable it to be fulfilled.
What’s more, it’s the first such exchange to be
established anywhere in the world – to date 13
member firms have been admitted with the vast
majority having liquid tradable securities that can,
in some instances, even be bought and sold over
the Social Stock Exchange’s own regulated market
segment of ISDX.
This level of accessibility is critical – you no longer
need an expert team of advisers to become an
impact investor, but instead you can buy and sell the
investments through any mainstream stockbroker and
on top of that, the vast majority of assets can also be
held in a tax-efficient wrapper like an ISA or a SIPP.
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