Gates Offers $80M to Close Gender Data Gap

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By Sunny Lewis

SEATTLE, Washington, May 31, 2016 (Maximpact.com News) – Compared to the lives of men, little is known about the lives of the world’s women – how much time they spend on unpaid work, if they own land, if they can get credit, if they die in childbirth, which programs meant to help them are succeeding and which are not.

To narrow these gender data gaps and accelerate progress for women and girls throughout the world, the Bill & Melinda Gates Foundation has committed to invest US$80 million over the next three years.

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Melinda Gates, who co-chairs the Seattle-based foundation with her husband, Microsoft co-founder Bill Gates, announced the new funding in her keynote speech at the Women Deliver conference in Copenhagen earlier this month.

Gates and the foundation’s team have concluded that if the United Nations’ Sustainable Development Goals (SDGs) are to be reached by 2030, the world must expand its knowledge about the lives and livelihoods of women and girls, their welfare and well-being, and the contributions they make to their communities, countries and economies.

By adopting the SDGs the world agreed to achieve gender equality by 2030. But we cannot close the gender gap without first closing the data gap,” said Melinda Gates.

“We simply don’t know enough about the barriers holding women and girls back, nor do we have sufficient information to track progress against the promises made to women and girls,” she said. “We are committed to changing that by investing in better data, policies and accountability.”

“Data holds power,” explained Gates. “It demonstrates the size and nature of social or economic problems, and brings clarity around who is falling through the cracks. Through reliable data, women and girls’ lives can become visible and counted, helping to inform programming and hold leaders to account.”

Yet, despite the need and the power, there is still a lack of comprehensive, current information about women and girls, especially in developing countries, hindering efforts to advance gender equality.

The Gates Foundation‘s new $80 million commitment will support efforts intended to fill critical gender data gaps. One example would be learning much time women and girls devote to unpaid work, and how this affects their ability to complete an education, get a job or start a business.

The Gates funding will be directed to improving the accuracy and reliability of data collection, which can reveal who owns assets like land, property or credit.

The funds are expected to equip decision makers with more timely and clearer evidence about programs and interventions that are working and those that are not.

On the political level, the Gates funds will support civil society in holding leaders to account for the commitments they make to women and girls, fostering the political will to achieve gender equality.

Finally, the new money will amplify and strengthen organizations and platforms that keep gender equality at the center of global and national development efforts.

At the conference, governments, nonprofits and funding organizations agreed on a new statement of principles regarding gender data and its importance for accelerating development outcomes.

Anne-Birgitte Albrectsen, chief executive of the children’s rights organization Plan International, told reporters that there is a huge data gap when it comes to recording the number of girls under age 15 who give birth each year.

Globally it is estimated over two million girls younger than 15 become mothers each year, and an estimated 70,000 girls aged 10 to 19 die from birth-related complications every year. But the figures are uncertain as official data usually tracks births by women aged 15 to 49 although girls can get pregnant from approximately age 10.

At the Women Deliver conference, Plan International launched a partnership with the International Women’s Health Coalition, the accountancy firm KPMG, ONE Campaign and Women Deliver, to find ways to compile better data on women and girls.

The Gates funding for gender data came just before the first World Humanitarian Summit held May 23-24 in Istanbul, Turkey, where women’s empowerment was a central part of the discussion.

The summit gathered 9,000 participants from 173 UN Member States, including 55 heads of state and government, hundreds of private sector representatives, and thousands of people from civil society and nongovernmental organizations.

In its outcome document, Summit delegates overwhelmingly affirmed an approach that engages communities, civil society and youth, “and for the equal participation of women in leadership roles and peace-building processes.”

There were widespread calls at the Summit for gender equality, women’s empowerment and women’s rights to become pillars of humanitarian action. Participants committed to increased programming to enable women and girls to take on roles as leaders and decision-makers.

New methods and new financial support for creating accountability to gender equality programming were announced.

Plans to end tolerance of gender-based violence against women and girls were launched, and commitments were made to ensure the right to sexual and reproductive health care is fulfilled for all women and adolescent girls in crisis settings.

Several participating government officials pledged national measures to enhance the protection of women and girls against sexual violence.

The Summit pledged to leave no one behind in the quest for sustainable development for all.

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World leaders and participants across the board affirmed that those most at risk of being left behind – the more than 60 million displaced, particularly women and children, will receive the global attention and support they deserve to live in safety and dignity, with opportunities to thrive.

Phumzile Mlambo-Ngcuka, executive director of the agency UN Women, said the Gates Foundation’s support for data enhancement will be to the benefit of women and girls around the world.

“The 2030 Agenda for Sustainable Development aims ‘to leave no one behind.’ To bring all women and girls to the finishing line in 2030 at the same time as everyone else, we must be able to target them and their needs, and see what progress we are making,” she said.

 “Through our new flagship program initiative, Making Every Woman and Girl Count, pledged Mlambo-Ngcuka, UN Women commits to supporting countries to improve the production, accessibility and use of gender statistics.”


Main Image: UN Women offers computer training to Internally Displaced Persons living in the Protection of Civilians site 3 in Juba, South Sudan. Students are taught to type, to organize and file computer records, to access and browse the internet, and to send email. (Photo by United Nations Mission in South Sudan) Creative Commons license via Flickr

Image 01: Melinda Gates, co-chair of the Bill & Melinda Gates Foundation, at the Women Deliver conference in Copenhagen, May 17, 2016 (Photo courtesy UN Women) Creative Commons license via Flickr

Faetured Image: UN Secretary-General Ban Ki-moon (center right) and Turkey’s President Recep Tayyip Erdoğan with two young participants during the closing ceremony of the World Humanitarian Summit, May 24, 2016, Istanbul, Turkey. (Photo by Eskinder Debebe / United Nations) Posted for media use.

Effective Two-Way Engagement: A New Gold Standard for SRI Investing

cartoon of men communicating across a chasmBy Marta Maretich @maximpactdotcom

At its most effective, communication is a two-way process. Developments in engagement practices between companies and social, responsible and impact (SRI) investors are showing us that this idea is now more applicable than ever.

New expectations and standards are growing up around investor/investee engagement in the SRI investing sector. These are driven by a number of factors including calls for more transparency and accountability, the rising power of investors in the boardroom and emerging evidence that attending to extra-financials, like sustainability, has positive effects on financial performance.

In practice, the pressure to engage—and the need to find effective ways to do this through communication—comes from several directions.

Investors want more extra-financial information

The need for engagement is impelled by a increase in socially concious investors, notably wealthy millennials and women, who are demanding detailed ESG performance information about the companies they invest in. Recent research reveals that investors (and their advisors) are relying more heavily on extra-financial disclosure when deciding where to place their capital. Poor performance in ESG areas, or a lack of disclosure about them, will make them say no to an investment.

Companies are responding to this increased scrutiny by improving communications around ESG extra-financials. This may include making performance information more freely available on websites and other media, or training company spokespeople to incorporate extra-financials into their communications.  It may also mean embracing integrated reporting, which delivers performance information in extra-financial areas and provides the content for communication in these areas.

In another trend, the corporate world is seeing increased demand for more up-to-the minute and on-demand performance information. Facilitated by web-based services, real-time financial performance information is already a reality for some companies and it could shortly become a necessity for all. If that happens, companies will need to create systems for delivering extra-financial information this way—and for receiving investor feedback.

Investors expect more influence over companies

Investors are becoming more active in their efforts to influence the companies they invest in.  In a trend for more investor engagement, industry leaders like Blackrock are declaring their intentions to engage with investees on governance matters, strategy and operations, with ESG issues a major focus. Evidence of increased engagement on extra-financials can be seen in the record number of proxy resolutions filed by investors seeking corporate disclosure and action on a range of environmental and social issues, seen here in the Sustainable Investment Institute’s Proxy Preview 2015.

To deal with increased pressure from investors, businesses are establishing direct engagement strategies, and communication is an important part of these. Direct engagement strategies identify investor concerns and priorities, then pro-actively seek to address them before they become an issue. Communications may involve a range of measures including targeted investor roadshows, making more information accessible online and one-to-one communication between investors and senior managers.

Companies need to know more about SRI investors

The burden of communication isn’t solely on the side of companies. Investors, too, need to communicate clearly for effective engagement, especially when they are SRI-focused.

With the increasing influence of investors in the boardroom, it’s more important than ever for companies to seek out investors who will support all parts of their strategy. This is particularly true when it comes to businesses aiming to produce both profit and benefit—blended value, impact and profit-with-purpose businesses—and those for whom ESG goals are a core part of their business model.

For these kinds of organizations, investors who might work against the overall strategy, for example pushing through an unfavorable exit or IPO, should be avoided. To make a good match, companies need adequate information about potential investors before they partner with them, including insight into their goals, priorities, values, governance stance and voting policies.

According to findings by the Conference Board, a US governance think tank, investors should communicate clearly and transparently with potential investees about themselves, providing information on their own engagement policies and track record when voting as members of the board. Information about their stance on extra-financial issues, such as governance and sustainability, should be easily accessible to investees and should form a point of discussion during negotiations. Triodos Bank is one SRI investor that makes such information freely avaliable to investees and the public.

Engagement services for the future

With engagement between investors and investees becoming more important, the question of how best to engage is now taking center stage in SRI investing.

In mainstream financial markets, Broadridge has risen to become “the most important firm on Wall Street that you’ve never heard of” by providing investor engagement services, including proxy and shareholder communications, to companies. However, it’s questionable whether Broadridge’s engagement methods will prove as effective for the SRI sector, where communicating ESG extra-financials and impact metrics will be as important communicating about the traditional bottom line.

This suggests an opportunity for service providers to step up to meet the needs of a growing marketplace of SRI investors and companies. By providing high quality, innovative engagement services that help investors and investees communicate about a broader range of performance criteria, an ESG- and impact-oriented engagement service company could fill the gap and become the next Broadridge in a vibrant new marketplace. Any takers out there?

Bare It All: ESG disclosure is the new obsession of investors and businesses alike

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By Marta Maretich @maximpactdotcom

Here’s a riddle: Investors are demanding them. The global business community is boosting them. Companies large and small are trying to figure out how to produce them. What are they?

You guessed it: Extra-financial performance results—the environmental, social and governance (ESG) metrics that demonstrate that a company is acting responsibly as it conducts its business. In a major shift in global attitudes toward sustainability and the role of business in society, this fast-growing area is now a major focus for businesses and investors alike.

Not new, but moving fast

The movement behind making ESG criteria for investing has been gaining ground for four decades, with pioneers like Hazel Henderson and Joan Bavaria of Trillium leading the charge. But the pace of change has recently been accelerating across non-profit, public and business sectors alike leading more investors to look to ESG when making decisions.

Several factors are driving the shift. Increased concerns about the effects of climate change are leading citizens and governments to demand tougher environmental regulations for businesses (E). Social factors (S), such as human rights abuses, are now recognized as material risks. Poor governance is widely seen as a factor in the financial crash of 2008, sparking investor demands for more information about the G in ESG. Meanwhile, evidence is mounting that shows companies that pay attention to extra-financials actually perform better in the long term.

Extra-financial and ultra-influential

All these factors contributed to making 2014 a watershed year for investment decisions based on extra-financial factors. Fossil fuel divestment was one area where investors were seen to make decisions for reasons other than financial performance.

Investors controlling billions of dollars, such as the Rockefeller Brothers, The Wallace Fund and Ben and Jerry’s, all divested their holdings in fossil fuels in an effort to combat climate change. More of this is coming. Major institutions such as museums, universities, city governments and pension funds are all feeling the pressure to divest.

Private investors are an important part of the trend with some 70% now expressing an interest in investing with a conscience. As a result, asset managers in many parts of the industry are climbing on board and looking to expand their expertise in what is a strong growth area of the market.

Changing attitudes to ESG in business

These trends are putting new ESG-related obligations on companies and investors alike.

For companies, there is increased pressure to track and report ESG performance, an activity that costs organizational resources and must be carefully managed for good results. Luckily, attitudes toward ESG are changing across the business world. Top executives no longer see it as mainly a reputational or branding exercise. Rather, ESG-competence is emerging as good business practice that can foster innovation, lead companies to identify efficiencies and help manage risks. Embracing ESG reporting provides greater access to capital, too. It’s a necessity in a climate where investors will turn down deals with companies that don’t disclose well enough or don’t disclose at all.

Across the world, companies are racing to incorporate ESG into their monitoring and reporting frameworks. To help them, the Global Reporting Initiative (GRI) provides a range of resources, including this one for absolute beginners. GRI starter kit. Other groups, like the EVCA, a European group of private equity investors, have developed their own framework to help businesses disclose ESG performance.

Investors incorporate ESG in decision-making

The EVCA framework—for businesses but developed by investors—is one example of how seriously investors are now taking ESG. And there is further evidence that the investing sector is taking positive steps to get better at incorporating extra-financials into decision-making processes.

The UN-sponsored Principles for Responsible Investing (PRI) initiative has been around since 2005 and today has 1,371 signatories around the world. The PRI provides a framework for incorporating ESG concerns into investment practice as well as reporting. It now includes a climate change pledge for asset owners.

Global investors are banding together around ESG, joining groups like the Global Sustainable Investor’s (GSI) Alliance. The Alliance supports progress in sustainable investing by identifying trends and acting as a network for national groups. It has attracted important national members including Europe’s Eurosif, British UKSIF, American US SIF, Canadian RIA and the Asian region ASrIA.

Standards are also being developed to help investors compare ESG performance across companies. The CDP amasses disclosure data on climate change issues and works with investors and companies to improve performance and reporting. Today its membership includes more than 822 institutional investors representing in excess of US$95 trillion in assets. In 2014 the CDP scored over 4700 companies on climate-related performance.

Meanwhile, the Sustainability Accounting Standards Board (SASB) is establishing the materiality of sustainability issues, applying an accountancy approach to determining their value. Operating as a non-profit, SASB makes its standards in areas like healthcare, infrastructure and renewable resources available online to investors and businesses alike. Like the CDP and the EVCA, SASB offers paid consultancy services to help clients embed ESG into their reporting and decision-making processes. (Note that this kind of service provision around ESG disclosure looks set to be a growth area for the sector.)

Burdens and opportunities

Extra-financial disclosure presents both a burden and an opportunity for companies and investors. On the burden side, it takes time, resources and in some cases a profound change of attitude for companies and those who capitalize them to embrace ESG and make it part of normal business practice. On the opportunity side, the link between non-financial performance and long-term organizational health and profitability is becoming clearer. That of course leaves aside the core argument for ESG reporting: that it is a powerful tool for reigning in the damage business can do and turning its efforts to benefit in the larger sense. This is something both companies and investors should get behind.

Monitoring for Social Enterprises: How to Protect Mission and Deliver Profit

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By Marta Maretich @maximpactdotcom

A growing body of sector research is shining light on the principles of how social enterprises can use outcome monitoring to strengthen mission and deliver a blended bottom line.

Up until now, the commitment to measuring and reporting outcomes has been one of the things that distinguished social investing from mainstream investing. Today, that’s changing. Increasing regulation and a global movement for integrated reporting are making impact monitoring everybody’s business, though in different ways and to different degrees. The will to verify is increasing, yet the questions of how and what to measure remain tricky ones for companies, even as measurement standards and services proliferate.

For social enterprises with a double bottom line to account for, outcome monitoring remains even more challenging as well as more important. Proving impact and demonstrating sustainability are key to building brand reputation, attracting investment and winning customers. Beyond these well-known values, evidence now suggests that these activities can actually provide managers and directors with the tools they need to protect the mission while delivering profit.

Two kinds of social enterprise

To understand how this works in practice, the team behind a recent report—researchers Alnoor Ebrahim, Julie Battilana and Johanna Mair—first identify two distinct kinds of social enterprises and then reveal the best monitoring approach for each.

One kind of enterprise, the “differentiated hybrid”, keeps social activities separate from commercial ones. For them, the profits generated through selling products or services are used to pay for activities that help beneficiaries who are not their primary customers.

In a second kind of enterprise, the “integrated hybrid”, beneficiaries and customers are the same people. These businesses create social benefit directly through delivering their products or services. Many microfinance organizations work on this basis, providing loans to beneficiaries who couldn’t otherwise get them.

Facing the danger of mission drift

For both kinds of social enterprises, the report says, mission drift—the failure to realize social and environmental benefit goals—is a danger. But in each case, the threat takes a different form.

For differentiated hybrids, the danger comes from financial pressures leading the company to prioritize creating value for customers at the expense of delivering value to beneficiaries—for example, using increased revenues to grow the business rather than dedicating the money to mission delivery.

For integrated hybrids, risk arises when commercial activity is misaligned or “de-coupled” from social or environmental benefit goals. For example, if delivering the commercial good or service doesn’t reach the intended client group, or it proves too expensive for them to access, then the business has failed in its mission, even if it’s succeeded in the marketplace.

Two different approaches to monitoring

To avert the danger of mission drift, both kinds of social enterprises need to establish systems that deliver information about the effect of their activities—and this is where outcome monitoring comes in.

Differentiated hybrids need to monitor the outcomes of both financial and beneficial streams of activity and use these metrics to evaluate the way commercial activities are supporting beneficial ones. For example: How much profit did the business generate and what was the resulting increase to social or environmental benefit? Monitoring efforts will focus on managers: those heading the social and financial work and those whose job is to integrate the two areas.

Integrated hybrids need, first and foremost, a sound model to begin with, one that makes it possible to deliver benefit through commercial activities. They then need to monitor behaviour, the “how” of the way the business is done. For instance: Are sales agents targeting the intended client group? Do the products meet needs or, as in the case of inappropriate lending, do they make the situation of the client group worse? In this case, monitoring needs to cover those overseeing the behaviour of salespeople in the field and those delivering services.

A governance challenge

Monitoring is, obviously, a good idea for social enterprises: this research is more proof of that. But the really important insight here is how the monitoring information can be used, and who will use it, to preserve mission delivery.

This report forms part of a growing body of evidence that links outcome monitoring systems and data collection to organizational leadership and governance. With measurement data in hand, directors and managers can see for themselves whether mission is being met or not and take action. Just as importantly, in a climate where businesses are increasingly expected operate transparently, investors and customers will be able to see it, too. This could ultimately prove the strongest incentive for social benefit companies to adopt monitoring systems that help them keep on course.

Download the full report here.

Asset Managers Need New Skills to Meet Millennials’ Demands for Social, Sustainable and Impact Investing Opportunities

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By Marta Maretich @maximpactdotcom

It’s clear: the global investment landscape is changing. Oil, that mainstay of portfolios, is on the slide. Markets long dominated by pension funds and insurance companies are now seeing greater international ownership of companies and the rise of other players such as hedge funds and private equity firms. Investment horizons are shortening. Regulation is increasing.

These factors are creating a challenging climate for financial asset managers who need to adapt to the new realities of a changing investment marketplace.

To make matters more complex, investor profiles are changing, too. As older investors pass on their wealth, a new generation of socially conscious millennial investors are demanding more opportunities to put their money into investments that produce social good and avoid doing environmental damage. The effect of this trend is already measureable, with studies, like this one from Eurosif, showing all sustainable and responsible investment strategies continuing to grow at a faster rate than the broad European asset management market.

This means that, while asset managers are getting to grips with a new financial picture, they’re also looking for ways to serve new kinds of clients. Many of them already see the writing on the wall: in a recent survey by First Affirmative, a financial network, 49% believed that “the needs and interests of younger investors will have to be catered to if the industry is to thrive.” Female asset managers are ahead of the curve, the same study shows, with a higher rate of awareness when it comes to impact, social and sustainable markets and a greater likelihood to already be offering such options to clients.

The age of the “multilingual” asset manager

Change may already be happening, yet the mainstreaming of socially beneficial investing—and particularly impact investing, which has grown faster than any other part of the market—means that asset managers across the industry will need to upgrade their skill sets and become “multilingual” when it comes to creating investment strategies.

Recent thinking about the future of the impact investing sector flagged the importance of the “multilingual leader”—an individual or team with an array of cross-sectoral skills that create the right mix of social commitment an financial know-how to lead beneficial businesses.

The rise of popularity in social and impact investing will demand that asset managers become “multilingual” in a similar way. In this context, multilingualism will mean bringing all the traditional skills of asset management to the table, and adding to these new tools and expertise to meet the demands and opportunities of today’s more diverse marketplace.

But what, specifically, are these new skills and capabilities?

New skills for a new investing landscape

Practices are evolving even as the market for impact, sustainable and social investing expands, but some core competencies have been identified so far.

Familiarity with diverse investment markets: Lack of familiarity with new kinds of investing is often cited as a main reason why many asset managers don’t offer these options to clients. Asset managers with an eye on the future need to familiarize themselves with the ever-growing array of opportunities across the sector. These include private equity impact investing, social investment bonds, ESG screened portfolios, themed funds, and now even electronically traded funds in areas like cleantech, water and edutech.

In a market where innovation is extending the range of options on a daily basis, keeping up can be a challenge. Tuning into the conversation by following the work of leading institutions such as GIIN and the IIPC, websites like GreenBiz , and good twitter feeds such as @pioneerspost  and @IAimpactassets can help newcomers find their way. 30 Must-Follow Twitter Feeds for Impact Investing. For a mainstream take, large media sites like Forbes  and Huffpost and financial publications like The Economist and the FT increasingly cover the social investing trend in terms asset managers can relate to.

Confidence with more information: As digital natives, millennial investors have higher expectations when it comes to communication and transparency, especially where social and environmental impact is concerned. In this, they are in step with a global trend toward more stringent regulation leading to higher demands for disclosure and transparency on the part of companies. Today’s young investor is likely to be more actively engaged than her older predecessor, demanding timely, accurate information on investments to be delivered in a convenient and easy-to-grasp form.

This has a host of implications for asset managers offering socially beneficial investment options to their clients. First, they will need to be able to evaluate the reported data of potential investments accurately and align investor concerns with outcomes in a given strategy. An ability to see beyond claims and accurately judge the quality and reliability of the various reporting practices used by companies will be key. Asset managers will need to choose investments that can deliver a high level of accountability and transparency in both financial and extra-financial performance, for example ones that adopt extended reporting practices and use new standards for sustainability like SASB.

Faster, detailed, two-way communication: Importantly, they will also need to find effective ways to communicate this information to clients more quickly and at every point in the investment cycle.

The practice of annual and quarterly reporting is already being viewed as insufficient by many investors, and real-time, on-demand reporting is now a reality inside some companies. What this will mean for the wider investment marketplace is still not certain, but it’s clear that asset managers will need to be prepared to handle unprecedented levels of information and use it effectively to build strategies and also to communicate with clients.

And they can expect communication to be an increasingly two-way street. With better informed, socially conscious clients wanting more of a say in how their money is invested, the ability to receive and manage investor feedback will be a key skill for asset managers. Satisfying clients will mean keeping pace with their evolving social and environmental objectives and responding quickly to their concerns.

Changing the industry from within

Mainstream finance has made strides when it comes to embracing sustainability, social benefit and impact investing. Driven by government regulation and supported by high profile initiatives like the G8 taskforce, the movement is becoming part of the broader market ecosystem. Industry giant BlackRock’s appointment of Deborah Winshel, a multilingual leader if there ever was one, is one example of a changing mood in finance. Another is the high profile of climate change and sustainability at Davos this year.

Asset managers obviously have an important role to play in giving more investors access to the expanding marketplace for beneficial investing. Their influence, however, goes beyond the purely commercial and is likely to be felt on a deeper level.

Increasingly, asset managers themselves form part of the groundswell toward creating a new kind of financial marketplace. Many are shifting out of traditional investing to take up roles in impact and sustainability. The next generation is demanding more training in innovative financial approaches from their MBA programs, while organizations like GIIN are offering training for professionals already working in the field.

At the same time, inside many large institutions, committed individuals like Harald Walkate of Aegon are quietly at work teaching other asset managers how to build more impact into existing portfolios and how to create investment strategies that maximize social and environmental benefit while delivering profit.

While not a “skill” as such, this new outlook on the part of asset managers may be the most valuable thing they bring to the field of beneficial investing. It will contribute to reshaping the financial landscape and, in highly practical ways, help establish socially beneficial finance as a viable choice for investors of all kinds. For asset managers, this mindset looks set to be one of the factors that will shape their working lives in coming years, demanding from them new skills and new sensitivities and profoundly changing their relationship with markets—and with the millennial clients they serve.

Impact Investors: What Did You Do in the Healthcare Revolution?

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By Marta Maretich, Chief Editor @maximpactdotcom

Healthcare is undergoing a global revolution. Demographic changes, including aging populations and rising levels of affluence in many countries, are altering health priorities for citizens and governments alike.

Meanwhile an explosion in healthcare technology — both in new devices and in the increasing importance of data — is transforming healthcare from the inside out, changing both capabilities and expectations and creating new opportunities as well as new ethical and practical challenges.

All this is driving a new wave of healthcare investment  — and setting the stage for impact investors to enter an exciting global marketplace.

A picture of health in 2014

Aging populations in developed and emerging economies are behind many of the changes now emerging in healthcare markets.  By 2017, there will be 560 million under-65s on the planet; by 2050 there will be 2 billion over-60s, according to World Health Organization (WHO) figures.  People everywhere are living longer, including those in emerging economies, due to improved access to medicine and better control of infectious diseases. That’s the good news.

The bad news is that this longevity will lay a heavy burden of healthcare demands and costs on states and individuals alike. A more affluent lifestyle for a bigger slice of the global population creates problems of its own, too.  Obesity is rising worldwide, especially among children, with far-reaching implications for the future health of populations. Similarly, chronic diseases are on the up, many of them, like diabetes and heart disease, associated with changing diets and a sedentary modern lifestyle.

And yet this picture of rising global affluence masks a sobering reality: as many as one billion people on the planet still a lack access to any kind of healthcare system. This problem remains particularly acute in developing countries, but it touches the developed world too. Women and the poor, especially in rural areas, are particularly at risk.

New needs, new costs

There’s evidence that governments around the world are already stretching to meet the changing healthcare needs of their populations.

In developed nations, healthcare is set to become the second-largest category of government spending overall. In the US, the Affordable Care Act is radically altering healthcare care access and delivery with cost implications for private, state and federal providers. In Europe, governments are struggling to maintain high healthcare standards in the face of a stagnant economy and budget cuts.

Meanwhile, developing nations, such as China and India, and regions like the Middle East, are set to increase healthcare spending significantly to meet growing local demand. In a parallel move, development agencies such as the WHO are looking for ways to do more to meet the healthcare needs of the world’s poorest populations.

In all these parts of the healthcare sector, private capital is set to play a bigger role as national governments as well as development agencies and healthcare nonprofits look for innovating ways to finance healthcare.

Impact steps up

Healthcare is a natural area for impact investors, as a few pioneers have already realized. In a recent survey of the sector, just 6% of impact assets under management were committed to healthcare (as opposed to 21% in finance and 11% in energy). It’s a modest beginning. However, interest is on the rise among fund managers, with 39% of those surveyed planning to increase their allocation in the coming year.

This upswing in interest is evident across the sector. New impact metrics have already been designed for healthcare and June 2014 marked the first convening of SOCAP Health, an event dedicated to social investing in the “untapped” health market. Pay for performance, community health initiatives, and the importance of gathering health and wellness data were some of the topics discussed, giving a taste of the conversation to come.

Foundations with a mission commitment to healthcare are also getting into the impact investing arena. California has recently been a proving ground for impact investing by foundations who are playing an important role in developing the impact market for other investors. A 2012 survey from the California Healthcare Foundation, itself an impact investor, revealed that 13 US foundations (and 3 non-foundations) made over $81 million dollars of investment in healthcare in 2012, some of it directly, some through intermediaries. Investment continues, especially in community health clinics in the wake of the ACA, with demand up and impact being carefully monitored.

Collaboration with governments

As the G8 taskforce report on social impact investing suggests, governments will be likely partners for impact investors of all kinds in the years ahead. With private finance playing a greater role in footing the bill for healthcare in many countries, impact investors will have many more opportunities to collaborate with governments, for example helping finance Social Impact Bonds (SIBs) and other pay for performance schemes.

The most successful impact investors are already doing this, according to a recent study of leading impact funds. Working with governments in sophisticated ways, they view the relationship as  “an ongoing, evolving partnership, directly or indirectly influencing the development of public policy at the investee, market, and field levels”.

This “policy symbiosis” between governments and impact investors has the potential to bring needed capital into the public sphere in many areas, but especially in the growing healthcare market. Development agencies, too, are liberalizing their approaches to financing social benefit work, and impact investors will have collaborative role to play here.

Are we fit for the future?

The private healthcare marketplace is taking off around the world. There’s no question that there will be multiple opportunities for all kinds of private investors to make money and, possibly, to do good.

But impact investing, with its blended value approach, has a special role to play in making sure the benefits of the healthcare boom reach the people who really need them. Working side by side with governments, nonprofits and development agencies, impact can take the lead in bringing affordable, accessible healthcare to a world in need.

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Services to Impact Funds: Why Data Can’t Give Us Everything We Need

By Marta Maretich

The impact investing sector is developing at an amazing rate and so are the needs of impact funds, investors, advisors and companies. As we move rapidly beyond the early development stages, services are starting to emerge as an important theme for 2014.

A recent article charted one aspect of the emerging trend. BCorp plan to use their data aggregation systems as a basis for providing a variety of services to the sector. The introduction of BAnalytics, a merger between the investment management tool Pulse and BCorp’s GIIRS, will allow the group to offer a range of data-based services including rating, evaluation and analysis.

BCorp is following in the footsteps of traditional financial services industry where advances in technology have delivered the ability to manage mind-blowing amounts of live data; and turn profits from them. As traditional financial service providers have discovered to their joy, data, crunched at this speed and at this scale, has the power to transform business performance; and data aggregation and analysis is itself big business for firms who make wrangling data their focus.

BCorp’s move toward offering data-based services is a welcome sign of a maturing impact marketplace and it indicates the shape of things to come. Fund and company ratings are needed to establish standards in the sector; benchmarking holds out the hope of creating comparisons, while more transparency can do no harm. We’d be remiss not to develop these systems.

Yet for now the most important application of data may be that it proves convincing to investors. Mainstream investors, who include large institutional investors and foundations, could unlock huge amounts of capital provided they can be persuaded to trust in the impact approach. Data is reassuring both to them and to the financial professionals who advise them, according to research by the WEF.

However, although important, data-based services won’t offer everything the impact sector needs to grow today. The nature and ecosystem of impact investing makes it different from traditional investing in fundamental ways; and this will drive the need for a whole range of specialist services not necessarily dependent on data.

Beyond data-based services

Take metrics for example.

Impact businesses and funds must build social and environmental impact metrics into their plans along with all the usual financial ones, correct? Straight financial metrics are no mystery to most businesspeople and financiers; years of trial and error have taught us how to “do” them. The same can’t be said for social and environmental impact metrics, which have been around for a relatively short time.

The recent emergence of IRIS as the leading measurement system, developed by GIIN and now administered, along with GIIRS and PULSE, though BCorp, means that the sector now has access to tools for measurement. (Whether it’s a good idea to make a single metrics approach so dominant at this early stage is a question we won’t tackle here.)

However, the mere existence of IRIS doesn’t mean impact measurement is now taken care of; and here is where the need for services comes in: How do impact enterprises and funds use IRIS? How do they know which measures to choose from the long list? How do they embed impact metrics into their business plans and their operations? How do they translate these processes across geographies and cultures?

The answer is that many will need expert help to set up impact data collection, reporting and analysis. There is a role for impact metrics specialists who can help establish processes and create systems that deliver accurate impact information while supporting business objectives.

Call in the specialists

This is only a small example of the kind of specialist service impact sector businesses and funds will need as the sector takes off, “specialist” being the operative word here.

Impact investing is a new sector; and it’s a complex one due to the range of actors and agencies involved. Hybrid financial arrangements are common and collaborative partnerships, blending public, private, philanthropic and government capital, are increasingly seen. Impact businesses often pass through a number of agencies, including philanthropic intermediaries, on their way to market viability and there is a growing spectrum of kinds, flavors, types and sizes of impact businesses.

Fund managers, investors and financial advisors; even very clever ones; will need help navigating this expanding field of opportunity. Impact business people will need access to expertise as they grow their businesses in a multi-stakeholder context and roll them out across the globe.

In both cases, having access to specialists; that is, experts who understand the unique requirements of impact investing; will be a decisive factor in success. Media, finance, legal, governance, research, scientific, managerial and HR expertise, with a spin on impact, will all be in demand, as will specialists capable of working in cross-sector partnerships and internationally.

Finding the expertise we need

Where will these experts come from? Some will come from the sector itself. Graduate programs are already incorporating social investing into their curriculi and a generation of “multilingual” professionals is beginning to emerge. These new impact investing leaders will understand the language of finance as well as they do that of social and environmental benefit. Their contribution will undoubtedly fill some of the sector’s need for services, but not all.

In the immediate future, the impact investing sector will need to reach out to the wider finance and business community to find the services it needs to grow. There will be a role for agencies who can help impact investing financiers and businesses source expertise from a pool of impact-able specialists in a range of fields. As the sector continues to become more accepted by the mainstream, and the needs of impact finance and business become better understood, this pool should become larger and better adapted to meet the needs of impact. The challenge lies in finding a way to give the sector easy access to the expertise it needs now.

So, data, though essential, will not provide us with all the answers. Instituting systems for capturing and analyzing data (both financial and social) is a step in the right direction but there is a risk that the focus on data and data-driven services may distract us from the real task at hand: building impact businesses and funds that deliver tangible social and environmental benefit along with financial profit. To do this will take huge amounts of human ingenuity, innovation, “hard” as well as “soft” expertise; and, yes, data too.

[Image credit: 123RF ]

 

 

Changing the Way We Measure Impact

by Marta Maretich @maximpactdotcom

measuring 302x302Let’s face it: metrics are a pain. Even impact investors, committed to the principle of measuring social and environmental impact, find them so.

While it’s true that the art and science of impact performance measurement have made strides in recent years (GIIN’s IRIS now gives the impact investing sector standardized tools to work with; projects including ImpactBase and the open platform WikiVOIS are beginning to aggregate data) impact investing organizations are still finding it difficult to “do metrics”; that is, to build impact performance measurement systems that produce reliable, meaningful and above all useful data.

Frustration about metrics is common in the sector, as is skepticism about their value. Many organizations find impact measurement expensive and time consuming, draining resources that could be put to better use. Investees complain that reporting is burdensome, especially when their time could be spent developing core aspects of their businesses such as management, financial processes and governance. Even when impact investors successfully collect performance data, they often don’t know how to analyze or make use of it.

With all these difficulties, are impact performance metrics really worth the trouble? Are they there merely to satisfy funders or as window dressing? Or do they have a more central role in the long-term success of impact investing?

The rubber hits the road— at last

These questions were explored by the participants of Aspen Network of Development Entrepreneurs (ANDE) Metrics Conference. ANDE has been at the forefront of establishing impact performance measurement standards and practices from early days. In June it convened a group of seasoned impact investors including Grassroots Business Fund (GBF), GIIN and Village Capital among others to explore the reality of impact metrics as they are today and consider their future. ANDE Executive Director Randall Kempner wrote about his experience in this recent post for Forbes.

The key message emerging from this conference is that the sector’s understanding of impact performance metrics is moving to a new level. In 2009 when ANDE held the first metrics convening, “the bulk of the conversation focused on standardization and this new metrics taxonomy called IRIS”, writes Kempner. Today, real-world experience is bringing a deeper understanding of the value of metrics to developing impact businesses. The rubber, as they say, is hitting the road and inspiring a re-evaluation of the practice of evaluation.

Impact metrics that work in the real world

At Maximpact we believe that the only way for all of us to get better at impact investing is to do more impact investing: to get involved, make deals, build businesses and, crucially, to share what we learn. As the sector grows up, moving from theories of how impact investing should work to an understanding of how it really works,what should effective impact measurement look like?

Simpler: As GBF Director Harold Rosen pointed out in this interview, recent years have seen a push toward more and more sophisticated measurement, applying an ever-greater number of standards, calling for ever more data. Yet in practice this approach is burdensome for impact investors and investees alike. According to Rosen, the multiplication of performance measures runs the risk of creating “scaffolding as opposed to substance” that is, building a complicated superstructure of metrics over a void of meaning. It might look impressive, but it achieves nothing.

A better way, suggested Rosen, is to cut back on the number of measurements and make them count more. GBF has scaled its data gathering down some 80%. Where they once used 8-10 indicators per project, they now use 2-3. The key, he says, is choosing the right impact measures for the particular investment. But, of the dozens of performance metrics offered in the IRIS catalogue, what would those be?

Strategic: Performance indicators should be tied to business development strategy, said Rosen an opinion confirmed by other ANDE conference participants. The IRIS catalogue’s broad range of standards means planners can choose those measures that will feed their businesses; strategic needs. They can be identified during the due diligence process and built into the strategic plan for the business. In this way, the business gets the benefit of the metrics; and the metrics make sense to investees and investors alike.

This approach delivers a double benefit: it provides data for use in developing the business while demonstrating the value of metrics to investees. Most successful businesses invest in metrics as a way to garner strategic information and maximize learning. The same opportunity exists for impact businesses even when they use metrics in a much more limited way. When metrics are strategic, the process of collecting and analyzing data and applying the lessons learned from performance measurement becomes normal a part of doing business.

Light touch: Measurement takes time and costs money; the outlay can go as high as 5-10% of total assets invested for some businesses. Using fewer, more select metrics is one way to bring down the cost as well as the burden to businesses. Another is to establish measurement processes that use a light touch and dovetail easily into the day-to-day operations of the business.

GBF employs asocial metrics expert shared across a number of impact businesses in the same region. This professional becomes a part of the staff for impact businesses,supporting their data collection efforts and easing the workload. Randomized sampling, using good survey design and high-quality professional analysis,means that a smaller amount of data can provide most of the strategic information the business needs.

Tailored to fit: The ANDE conference reflected a move away from standardization in metrics. Participants largely agreed: one size does not fit all. Each business in an impact fund portfolio will have different strategic development needs so each will need to measure different aspects of performance. Choosing metrics with an understanding of the special needs and context of each investee requires skill.But it means that impact reporting helps rather than hinders growth; and it maximizes positive impact.

Client-led: Impact investing produces social and environmental returns, not just profits. To find out if these “soft” returns are happening, businesses and the impact investors that finance them need to look to the beneficiaries. Several participants at ANDE including Root Capital stressed the importance of collecting client data and feeding it back into the metrics loop. Well-designed surveys and random sampling were key to the success of this approach on the ground. Verifying the accuracy of this data is essential and should be built into the reporting process.

Consistent: The impact investing arena is broad; and getting broader every day. Today there are many different kinds of impact investors in the field: philanthropists, intermediaries, pure financiers. These investors have different philosophies of impact and different expectations when it comes to outcome. This is reflected in the way they apply metrics.

It’s natural that different kinds of impact investors will require different metrics from the businesses they finance. However, the consistent application of impact performance metrics is key to establishing impact investing as a legitimate asset class. This is one argument for using standardized tools, such as IRIS, which will eventually allow comparisons between businesses and projects. But a diversity of systems can be valuable, too. For impact investors using their own measurement systems (for example some foundations) the onus is on sharing their methods and their data with the broader impact community. Only by aggregating data and experience will the sector move forward with impact performance metrics.

Transparent: The ANDE conference demonstrates that the practice of impact measurement has advanced,yet it still has far to go. Definitions remain fluid, making transparency an issue: it’s not unusual for IRIS-compliant partners in a single impact project to come up with very different numbers for the same IRIS measurement. This undermines the value of metrics and erodes confidence. To improve, the sector needs to keep working toward clear, shared definitions.

And then there’s the question of inputs versus outcomes. Many impact investors support businesses using range of methods, often providing grants or expertise in addition to pure impact finance. Smart subsidies of this kind are an effective way of building capacity in key areas; not least in metrics; but their effect needs to be accounted for when it comes to reporting impact outcomes. By building transparency and consistency, the sector is building up a system of metrics that allows comparison and aids learning.

So, does impact investing need metrics?

The answer emerging from the ANDE conference is yes; with conditions. Impact investing is defined by its commitment to demonstrating social and environmental impact. Arguably, the only way to do this is to monitor, evaluate and then share, social and environmental performance data. This is the best case for why the whole sector needs to keep measuring,even though its not easy.

It has to be the right data, of course. And it has to be used in the right way. The ANDE conference shows how committed impact investors are working to refine their measurement practices, including systems like IRIS, and find ways to make them better serve businesses, client groups and investors alike.

Further metrics resources

ANDE 2013 Metrics Conference videos and resources

When Measuring Impact, We Need to Move Beyond Counting by Mike McCreless for Forbes

Impact Investing’s Three Measurement Tools by Margot Brandenburg for the SSIR

How to Measure Social Impact by Melissa Ip for Social Enterprise Buzz

DATA FOR IMPACT

data 302x302by Marta Maretich @maximpactdotcom

Data is a hot topic in the worlds of government, business and philanthropy. As information technologies mature, the increased availability of data, coupled with advances in analysis, mean that many sectors are reaping the long-promised rewards; and feeling the pressure of a new age of data immersion.

This data boom will affect the growing impact investment sector on several levels. First, it will provide new opportunities for research and development. As others follow the lead of institutions like the World Bank and the UNDP, and governments like the Netherlands and Sweden, and begin to make their data public in open data initiatives, huge amounts of information about countries, communities and projects will be available online for the first time. This information is are source for entrepreneurs and investors, who can use it to identify markets, develop deals and target capital where it will have the most impact.

Impact measurement will be another field influenced by the rise of data. As the sector develops, investors from every part of the spectrum will come under increasing pressure to collect data and use it to demonstrate impact. How to measure impact is still an issue and the race is on to find the right tools for the job: IRIS and GIIRS are already available and other systems will emerge as the sector expands. Yet measurement is here to stay. As impact investing gains popularity, the call for evidence-based accountability grows louder and serious players will need to answer.

The call for transparency is another dimension of data. Like many other sectors, the impact sector is coming under more pressure to share its data publicly. ImpactIQ,a nonprofit media platform for social finance, has challenged the sector to “put its data where its mouth is” and contribute deal information to an open database. The aim is to collect data for analysis and research to build the sector. Several Maximpact funds, including Toniic, the Unreasonable Institute and Impact Engine, are already taking part. For more, see this blogpost by ImpactIQ editor David Bank.

The overall message for the sector is to get ready for data: using it, collecting it, analyzing it, sharing it and publishing it as never before. With its philosophy of openness, Maximpact supports this move to a more transparent future for data and for the sector as a whole. By sharing more, we stand to gain a lot.