Beyond Good Intentions: The Work of Change

One of the most significant impediments encountered at the outset of our project was achieving a comprehensive understanding of the client's desired scope. We approached the task with a presumptive understanding of the nuances between Impact and ESG (Environmental, Social, and Governance) factors. Having undertaken a course in Impact Investing and participated in a relevant deal, I felt adequately prepared for the challenges ahead. After a protracted period of deliberation, iterative discussions, and collaborative efforts, we finally presented the project scope and plan. The client's enthusiastic reception, marked by applause, led us to believe that a significant portion of the work had been accomplished. We possessed the requisite research skills, understood the measurement criteria, and envisioned a clear path towards delivering impactful results. The project trajectory, at that point, appeared well-defined, and success seemed attainable.

However, as is often the case, things don't work out according to plan. The initial stage of our project involved identifying metrics capable of quantifying impact. To facilitate this , we divided ourselves according to industry, focusing on areas such as healthcare and agribusiness. We opted to leverage established industry standards as the foundation for our research, including IRIS+, Impact Alpha, and the impact reports of relevant companies. This collaborative effort yielded a comprehensive set of metrics culled from these credible sources. Furthermore, we aligned these metrics with the Sustainable Development Goals (SDGs) and established Impact criterion. We harbored a firm conviction that our efforts had been successful, bolstered by the positive client feedback received up to that point. 

However, during the interim presentation, we received feedback that unequivocally exposed the limitations in our initial understanding of the project. The feedback emphasized the critical distinction between ESG and Impact, a concept we previously believed to be grasped. We discovered that ESG factors had inadvertently infiltrated our findings. This realization underscored the necessity for a deeper comprehension of the essence of Impact. Our team collectively grappled with the concept of intentionality, a core element of Impact investing. 

Another crucial revelation emerged during this process: all businesses, by their very nature, exert some form of impact. However, this impact does not necessarily translate into positive social change. For instance, while all hospitals provide life-saving services, not all adhere to ethical practices with the explicit goal of maximizing societal impact. This realization made me acutely aware of the responsibility I had towards practitioners in this field and all stakeholders involved. While the measurement of Impact is a noble pursuit, we must remain vigilant against the pitfall of "impact washing." This situation, even if unintentional, can be misleading and lead to suboptimal outcomes. The domain of impact investing is fraught with significant challenges. While it enjoys the backing of dedicated proponents, it also faces scrutiny from a contingent of skeptics. As both students and practitioners in this field, we are duty-bound to deliver results characterized by utmost rigor and maintain the highest ethical standards in our work. Sustainable investing, if it is to serve as a catalyst for positive social change, necessitates holding not only ourselves accountable but also the companies and funds with which we collaborate. 

My initial approach to impact measurement involved the creation of a counterfactual scenario. However, I now recognize the limitations of this method. Particularly in the healthcare sector, it is imperative to draw comparisons against benchmarks, such as industry averages, and gain a nuanced understanding of prevailing standards. Our current approach also incorporates the IRIS+ 5 Dimensions of Impact framework, which dissects the context by considering "WHAT" impact is being generated, "WHO" is being affected, and "HOW MUCH" impact is being achieved. This framework has proven to be an invaluable tool in both refining the categorization of metrics and identifying areas where my own analysis of impactful metrics may be deficient. 

The most significant takeaway from this experience is the realization that positive intentions, while necessary, are insufficient. Rigorous work and unwavering dedication are fundamental to effecting positive change.