With the rapid development of impact investing practice – and the growth in firms offering products with the “impact” label – investors face a challenge in identifying authentic impact.
BlueMark, a firm that provides external assessment and rating of impact practices, has for the last three years published a report aggregating the results of its various assignments. This year the data set takes in the results of 60 assessment processes, including work for clients such as Closed Loop Partners, Lightrock, DWS, Two Sigma and Blue Earth Capital.
In this year’s report, BlueMark has identified five investors who achieve top-quartile grades across all eight of the principles in its benchmarking system.
“The desire to encourage continued advancement in market practice is why, for the first time, we are publicly naming those verified investors that most exemplify industry best practices in our new ‘Practice Leaderboard,'” writes Christina Leijonhufvud, CEO and co-founder of BlueMark, in the report.
The five firms who make the leaderboard are Bain Capital Double Impact, Finance in Motion, LeapFrog Investments, Nuveen Private Equity Global Impact and Trill Impact.
“Just like in the credit ratings market, where only a few companies qualify for a AAA rating, our leaderboard suggests that a minority of impact investors are aligned with industry best practices,” the report authors write.
Other findings from this year’s report include:
- The link between impact and compensation remains limited: 38 percent of investors reviewed “explicitly integrate” impact considerations into staff performance management. Only 20 percent have mechanisms – such as bonuses or carry – linked to impact.
- Seventy-seven percent of impact investors have adopted industry frameworks and/or standardised metric sets, with IRIS+ emerging as the most common framework.
- An increasing number of impact investors (28 percent) engage with key stakeholders and actively solicit their input. This is done “in a variety of ways depending on strategy”, including focus groups or external evaluations with stakeholder groups.
Access the full report here.