Building A Common Framework for Impact Assessment

Impact investing is increasingly being recognized as a distinct asset class. At the foundation of impact investing is a shared commitment among investors and financial institutions (FIs) to promote the well being and sustainable development of the communities where investments are made.

Over the past decade, growing consumer and private sector demand for sustainable products has given rise to a host of new needs and opportunities for investment in agricultural sectors around the developing world. Moreover, as mainstream players such as Cadbury’s, Walmart, Kraft, Unilever and others make explicit commitments to sourcing products through certified supply chains, these opportunities are expected to continue to grow significantly for the foreseeable future.

This context has also set the stage for a rapid expansion in the range and number of players seeking opportunities for impact in- vesting in the agricultural sector across the developing world.

As investors move into this field, however, they are raising important questions about what the impacts of such investments might be and how such impact should be measured and man- aged throughout the investment process.

To date financial institutions have had to rely on their own re- sources and self-styled metrics to determine where impact can be expected and when impact is achieved. The lack of consistency of impact metrics for agricultural investments has made it extremely difficult for investors and financial institutions to operate strategically and with maximum impact.

Indeed, the interest and need for a common and consistent set of metrics for measuring the impacts of investments in agricultural Small and Medium Enterprises (SMEs) in the developing world expands beyond the investment community itself. Supply chain actors, SMEs, certification agencies and consumers are all increasingly in need of data on the impacts associated with “certified” sustainable supply chains.

Website:

Pages:

92

Publisher:

Finance Alliance for Sustainable Trade (FAST)

Place:

Montreal, Quebec

Author:

Cristina Larrea, Jason Potts, Geert Jan Schuite

Date:

January 1, 2011

Media Type:

Report

Category:

Impact Investing, Impact Measurement