Impact Measurement and Reporting

Abstract

Impact investing requires an intention to generate social and environmental impact alongside a financial return, which means that impact investors must have a means for identify and measuring “impact” and reporting on the results of their efforts to the ultimate owners of the assets that are being invested. One of the challenges with the evolution of impact investing has been developing reliable and consistent measures and ratings of performance (i.e., environmental and/or social impact) for individual projects and the overall progress of enterprises with respect to environmental, social and governance (“ESG”) criteria. A number of ESG ratings schemes have emerged and companies have been provided with opportunities to seek and obtain certification of their sustainability credentials by external assessors. As time has gone by there has been more interest in quantifying the relative environmental and social impacts of projects and companies in order to facilitate comparisons and there is also greater scrutiny of the ESG ratings schemes themselves.