One to Watch prepares for a major test: do we make the impact that we promise? And how do we measure that properly?
One to Watch steps up its efforts to prove that the organization is making the impact it promises investors. “We have been measuring impact in the past, but not systematically,” says One to Watch director Willem Grimminck. “With 17 companies in our portfolio, time has come to set up a professional, structural and comprehensive impact assessment.” In July, a first impact assessment will be undertaken at solar energy firm Gham Power, Café Red Mud Coffee, waste collection company Waste Concern and ginger producer Organic Mountain Flavour. During these assessments, impact data will be collected that are relevant to impact investors, the One to Watch investment team and the entrepreneurs themselves.
Keep it simple
In preparation of the initial impact assessments, Swati Pujari and Henriette Mansell of One to Watch interviewed various stakeholders and studied the industry standard for impact measurement by The Global Impact Investing Network (GIIN). Mansell: “GIIN distinguishes over 600different impact variables. It would be too much of a burden to measure all those variables. We do not intend to create massive impact reports that no one reads.” Bernard Rijpstra of Purplefield Investments agrees.“It is good that One to Watch is looking into this and doing more research to come up with realistic impact claims. However, the challenge is to keep it simple.”
Twenty impact indicators
A core belief among all stakeholders is that profit is the most important impact indicator, because profit will ultimately generate growth and jobs. But impact should go beyond the creation of jobs, underlines Joris de Vries, investment manager at Hooge Raedt Social Venture (HRSV).“Impact investments need to impact people otherwise excluded, the environment, and it should be about new services and products.”In order to measure all that, One to Watch strives to formulate twenty impact indicators during the pilot: ten common impact indicators and ten company specific indicators, such as the number of students enrolled at Bloom School, the amount of household waste that is collected by Waste Concern or the amount of diesel saved by Gham Power.
Can all impact be measured?
Some companies, like Gham Power are already measuring impact data. Not because they have to report to One to Watch or investors, but because they truly believe that these data are crucial for their decision making process. For others, like Waste Concern and Red Mud, the whole concept is rather new. Red Mud founder Aashish Adhikari also wonders if all impact can be measured. “How do we measure the impact of the social hub we are creating in our café? Similarly, I am curious to know how to measure the impact that working at Red Mud has on the life of my employees?” These and similar questions will be answered in the upcoming months. The first results are expected in August. The 13 other companies will follow afterwards. By the end of the year, One to Watch will deliver its first annual impact booklet to show investors the impact they have helped to realize. Look, that’s something to look forward to for Christmas!