ANDE - Summer 2011 Aspen Network of Development Entrepreneurs Measuring Social, Financial and Environmental Performance

ANDE - Summer 2011 Agenda Why measure? What to measure? How do you collect what you measure? Analyzing measurements Discussion

ANDE - Summer 2011 SGB Small and growing businesses (SGBs) are commercially viable businesses, typically from 5 to 250 employees, that have strong potential for growth -- and thus for creating economic, social and environmental benefits SGB

ANDE - Summer 2011 SGBs Will Create Impacts Job Growth Wage Growth Revenue Growth Net Income Growth New Products Customers Served Suppliers Supported Economic Benefits Steady jobs Increased incomes Wealth creation Social Benefits Social goods (glasses) Social infrastructure (toilets) Environmental Benefits Reduce deforestation Improve air quality (LPG) Leading To: The Promise of SGBs

ANDE - Summer 2011 Financial Flow Schematic of SGB Sector Social impact investment Commercial investment Grants for capacity building Blended capital investment Capacity building only provider Capital and capacity building provider Capital only provider Small and growing businesses Microfinance provider Traditional private equity provider Medium businesses Microfinance clients SGB Sector Private Equity Microfinance 5/$25k 250/$2m

ANDE - Summer Capacity Development Providers 36 Investors 25 Research, Academic and Corporate Institutions 20 Foundations 5 Other* *Includes individual and strategic partner members 142 ANDE Members

ANDE - Summer 2011 Why Measure?

ANDE - Summer 2011 Some reasons... Provide greater legitimacy to individual performance reports Validate that SGBs can generate tremendous impact Eradicate inconsistent definitions across investments and throughout the sector Improve performance of investees and funds Increase the credibility of the sector Conclusion: Measuring social, financial and environmental performance can help increase impact

ANDE - Summer 2011 What to measure?

ANDE - Summer 2011 The Impact Reporting and Investment Standards (IRIS) is a common framework for defining, tracking, and reporting the social and environmental performance of impact investments.

ANDE - Summer 2011 Full Time Employees Company A Company B Company C Full Time EmployeesEmployees Same term, different definitions Same definition, different terms Without IRIS Full Time Employees Company A Company B Company C Full Time Employees Consistent terms & definitions across companies With IRIS

ANDE - Summer 2011 IRIS Framework The IRIS Framework

ANDE - Summer 2011 A Meta Standard Operational Impact Product Impact Financial Performance Examples of Frameworks Leveraged  International Financial Reporting Standards (IFRS)  U.S. Generally Accepted Accounting Principles (GAAP)  Microfinance Information Exchange (MIX)  Community Development Finance Data Project (CDP)  International Labour Organization (ILO)  Organisation for Economic and Cooperation and Development (OECD)  Global Reporting Initiative (GRI)  B Lab  Certification schemes (FLO, FSC, SAI, etc)  Sector-specific protocols (SPTF, NCIF, etc)  Proprietary systems (IFC, WRI, etc)

ANDE - Summer 2011 IRIS Data Repository Performance Data Repository  A standard set of social and environmental definitions and metrics available as a public good  Developed by an objective governance process and with broad participation  Hub for performance data reported using standards  Data submitted anonymously  Utilize aggregated data for benchmarking and to capture industry scope

ANDE - Summer 2011 Measuring Impact at ANDE Create consistency Communicate Impact Peer Education Support members in aligning and adopting IRIS Maintain a core set of indicators (ANDE Core Metrics) to develop performance benchmarks Collect data from members on annual basis to produces sector level data reports on the impact small and growing businesses Metrics From the Ground Up Workshop Metrics Working Group

ANDE - Summer 2011 ANDE Core Metrics Demonstrate the growth and sustainability of SGBs Earned Revenue (IRIS ID FP5958) Full Time Employees (OI3160) Full Time Employee Wages (OI5887) New Investment Capital (FP8293) GHG Emissions (OI1479) Determine the Area of Impact for your Portfolio or each SGB (choose one or more) Clients (PI7094) Products Sold (PI1263) Suppliers (PI9566) 1 2 Core Metrics Plus For organizations seeking to speak more deeply to their impact Report in conjunction with the area of impact you are reporting on to more deeply speak to reaching target populations or responding directly to the needs of a community. Example: Impact Objective: Supporting Female Access to Jobs Sector Focus: Agriculture ANDE Core Metric: Suppliers ANDE Core Metrics Plus: Supplier Individuals: Female (PI1728) 3

ANDE - Summer 2011 Impact Investing Infrastructure STANDARDS SYSTEMS DATA WAREHOUSE RATINGS Definitions and metrics Performance management Repository and aggregator Assessment tool GAAP SAP EDGAR Morningstar IRIS Pulse IRIS Repository GIIRS FINANCIAL REPORTING IMPACT REPORTING

ANDE - Summer 2011 Data collection tools

ANDE - Summer 2011

Pulse A management information system to track environmental, social and financial performance -Data collection and reporting tool -Web based -Application that plugs into salesforce.com -Pulse (the application) is free

ANDE - Summer 2011 Pulse and IRIS You can track both IRIS and unique metrics in Pulse Pulse and IRIS partner to ensure Pulse has latest versions of IRIS Simplified reporting to enable contribution to IRIS data repository

ANDE - Summer 2011 Collecting and Assessing

ANDE - Summer 2011 is powered by a 501(c)3 non-profit whose mission is to harness the power of business to solve social and environmental problems

ANDE - Summer 2011 Capital to Impact Social and environmental performance ratings 3 Products Company Ratings Fund Ratings GIIRS Analytics

ANDE - Summer 2011 Company Ratings Process Assessment Review & Verification Ratings Report Register company Complete the assessment (1.5 – 4 hours) Complete Disclosure Questionnaire Complete optional Metrics page Survey review with GIIRS Team Member (1-2 hours) Document Verification (conducted by Deloitte) Company receives Rating Report Company attaches optional Management Letter

ANDE - Summer 2011 Company Assessment Contents Governance Workers Community Environment Social Enterprise Models infused into each area Disclosure Questionnaire

ANDE - Summer 2011 Supplement to Standard Assessment

ANDE - Summer 2011 Assessment Structure 40 Versions of Assessments Coming Soon: Industry Addenda

ANDE - Summer Pioneer Funds North American Pioneers Emerging Markets Pioneers

ANDE - Summer 2011 GIIRS Analytics: Fall 2011

ANDE - Summer 2011 Putting it Together: IRIS Data Report

ANDE - Summer 2011 IRIS Data Report 32  Data from 463 companies across 6 funds and 1 technical assistance provider  Process included alignment of performance measures and review of data for submission to the database  Data from 1,931 MFIs  Data based on alignment and integration work with the MIX Microfinance Institutions

ANDE - Summer 2011 Overall Statistics

ANDE - Summer 2011 Percentage of Profitable Organizations * Companies showing a positive net income in the last year reported Note: Financial Services sector includes data from the MIX; regional totals do not

ANDE - Summer 2011 Energy Sector: Profitability by Region Note: Based upon last reported year of data: 2009 or 2010

ANDE - Summer 2011 * Companies showing a positive EBITDA in last year reported Analysis by Social Impact Objective

ANDE - Summer 2011 Note: Purchasing Power Parity (PPP) based on 2009 World Bank PPP conversion rate; data Agriculture Sector: Social Indicators

ANDE - Summer 2011 Online Resources network-development-entrepreneurs/metrics-impact

ANDE - Summer 2011 Thank You