BlueMark’s framework is designed to evaluate the completeness and reliability of impact reporting prepared by fund managers for their investors.
BlueMark, a leading provider of independent impact verification and intelligence for the impact and sustainable investing market, today published a framework for evaluating the completeness and reliability of fund managers’ impact reports. The framework is designed to help impact fund managers improve how they disclose their impact results to their investors and to make it easier for investors to assess the quality of the impact reports they receive. The framework, which also provides the basis for BlueMark’s approach to verifying impact reports, is available for download at www.bluemarktideline.com/raising-the-bar-2.
BlueMark’s reporting verification methodology was developed after more than 18 months of research, which included 19 verifications of client impact reports, analyses of 30+ other impact reports and interviews with more than 50 impact investing experts. The most recent phase of the research involved a pilot project with Impact Frontiers, a market-building collaborative for impact investors, and seven of its member-impact fund managers, each of whom paid to have their impact reports verified by BlueMark using the new framework. These seven firms – which work across diverse sectors, geographies, and asset classes – included Anthos Fund & Asset Management, Big Society Capital, Impact Engine, Rally Assets, Japan Social Innovation and Investment Foundation (SIIF), and TELUS.
“Impact reporting is an important part of how impact investors are held accountable for their impact claims,” said Christina Leijonhufvud, CEO of BlueMark. “With this new framework for evaluating impact reports, our goal is to improve transparency and credibility by driving stronger alignment around how we as a field define quality impact reporting, including the specific steps impact investors can take to level up their reports.”
“The impact fund managers we collaborate with have a shared desire for a clear and transparent approach to impact reporting that allows for a more holistic understanding of impact performance,” said Mike McCreless, Executive Director of Impact Frontiers. “BlueMark’s framework helps fill this critical gap in the impact investing market by clarifying the types of information that impact reports should include.”
BlueMark’s reporting verification framework
BlueMark’s research and stakeholder consultation on best practices in impact reporting revealed a great deal of agreement among market actors as to what constitutes quality and decision-useful reporting. Based on these insights, BlueMark designed a framework for verifying impact reporting that is anchored around two key pillars — Completeness and Reliability.
Under the Completeness pillar, BlueMark assesses the scope and relevance of reported information related to an investor’s impact strategy and results at both the portfolio- and investment-level.
Under the Reliability pillar, BlueMark assesses the clarity and quality of impact data presented in the report, including underlying data management practices and systems.
As part of the verification methodology, BlueMark assigns ratings to these criteria to help impact investors understand where they excel in their reporting and where they still have room for improvement. These ratings will be used to create industry benchmarks similar to the BlueMark Practice Benchmark, which was introduced in BlueMark’s “Making the Mark” research series on trends and best practices in impact management.
BlueMark’s methodology focuses on information that is essential for external stakeholders–in particular investors in impact funds–to gauge whether those funds are reporting on the right things and in the right way. It stops short of defining what “good” or “bad” impact performance looks like, which remains a challenge across the impact investing industry due to the limited availability of data on performance measures that would allow for appropriate comparisons across different types of impact funds and strategies.
To date, BlueMark has completed 100+ impact verifications for impact investors managing a combined $192 billion in impact AUM. Approximately 80% of these have been verifications of an investor’s impact management (IM) practices, while the remaining 20% have been impact reporting verifications. BlueMark plans to conduct additional research on the relationship between robust IM practice and quality impact reporting to help advance best practices across the field.
About BlueMark
BlueMark is the leading provider of independent impact verification and intelligence for the impact and sustainable investing market. As a certified B Corp, BlueMark’s mission is to “strengthen trust in impact investing.” BlueMark’s verification methodologies draw on a range of industry standards, frameworks and regulations, including the Impact Management Project (IMP), the Operating Principles for Impact Management (Impact Principles), the Principles for Responsible Investment (PRI), SDG Impact, and the Sustainable Finance Disclosure Regulation (SFDR). Learn more about BlueMark and impact verification at www.bluemarktideline.com.
BlueMark, a leading provider of independent impact verification and intelligence for the impact investing market, today announced that it was certified as a B Corp, joining thousands of businesses around the world that are committed to using business as a force for good.
“Our goal is to strengthen trust in sustainable and impact investing by bringing more transparency and accountability to the industry,” said Christina Leijonhufvud, CEO & Co-Founder of BlueMark. “We know that in order to hold our clients accountable, we must also be willing to hold ourselves accountable. Achieving B Corp verification signals to the rest of the field our own commitment to the kind of transparency and learning that we ask of our clients.”
“BlueMark fills a critical need in the sustainable and impact investing market with its verification services, ensuring that investors are held accountable for their impact claims and practices,” said Roy Swan, Director of Mission Investment at the Ford Foundation, one of the initial investors in BlueMark. “This next step towards B Corp certification shows that BlueMark doesn’t just talk the talk on accountability—they are also walking the walk by holding themselves to the same standards as their clients.”
Founded in January 2020, BlueMark has completed more than 100 verifications for impact investors managing a combined $189 billion in impact-oriented assets under management. These verifications are structured around the two key pillars of accountability for impact — impact management practices and impact reporting — which form the foundation for BlueMark’s verification services.
Practice Verification – assessment of the extent to which a client has implemented the policies, tools, and processes necessary to execute on their impact strategy
Reporting Verification – assessment of the extent to which a client’s reporting of its impact performance is complete and reliable
By aggregating data from these verifications, BlueMark is also able to generate a wealth of insights into industry trends, market challenges and emerging best practices. BlueMark regularly shares these insights with the impact investing field via a research series on impact management practices (“Making the Mark”) and a series on impact reporting (“Raising the Bar”). These research reports are widely shared across the impact investing industry and can be used as a guideline to best practices for both new and established impact investors.
B Corp Certification is awarded by B Lab, a non-profit organization that is committed to transforming the global economy to benefit all people, communities, and the planet. In order to become a certified B Corp, a company must earn a minimum audited score of 80 out of 200 possible points on the B Impact Assessment (BIA), a rigorous evaluation of a company’s business practices and its impact on key stakeholder groups. B Corps are expected to meet the highest standards of social and environmental performance, accountability, and transparency. To maintain their B Corp status, B Corps must also recertify every three years and receive an updated score.
BlueMark is the leading provider of independent impact verification and intelligence for the impact and sustainable investing market. Founded in 2020, BlueMark’s mission is to “strengthen trust in impact investing.” BlueMark’s verification methodologies draw on a range of industry standards, frameworks and regulations, including the Impact Management Project (IMP), the Operating Principles for Impact Management (Impact Principles), the Principles for Responsible Investment (PRI), SDG Impact, and the Sustainable Finance Disclosure Regulation (SFDR). Learn more about BlueMark and impact verification at www.bluemarktideline.com.
Leaderboard and expanded data set on best practices in impact management released as part of BlueMark’s third annual ‘Making the Mark’ report
BlueMark, an impact verification specialist, today published its third annual report on best practices and trends in impact management featuring data and insights gleaned from the firm’s verifications of investor impact management practices. BlueMark’s methodology is grounded in the Operating Principles for Impact Management (“Impact Principles”), a leading market standard for impact management practices. The full report — “Making the Mark: Spotlighting Leadership in Impact Management” — is available at www.bluemarktideline.com/making-the-mark-2022.
The analysis is based on 60 verifications for impact investors managing a combined $160 billion in impact assets under management. This is double the sample size of last year’s edition of “Making the Mark,” which was based on 30 verifications for investors managing a combined $99 billion in impact AUM. The larger sample size reflects the growing demand for impact verification and brings additional clarity into trends and challenges across the market.
“We continue to see healthy competition among impact investors seeking to demonstrate best practices in impact management and learn valuable lessons from their peers,” said Christina Leijonhufvud, CEO of BlueMark. “BlueMark’s verification approach and dissemination of aggregated findings and benchmarks are designed to facilitate a race to the top by encouraging impact investors to adopt industry best practices and address shared challenges.”
New features in this year’s ‘Making the Mark’ report include:
Introduction of the BlueMark Practice Leaderboard, which highlights the five BlueMark clients that scored in the top quartile against eight of the nine core features of robust impact management as reflected in the Impact Principles (the ninth Principle–independent verification–is not scored). The inaugural edition of the Leaderboard features Bain Capital Double Impact, Finance in Motion, LeapFrog Investments, Nuveen Private Equity Global Impact, and Trill Impact.
An updated BlueMark Practice Benchmark, which shows the distribution of investor impact management practices by quartile, and an expanded Dashboard of Practice Indicators, which provides a tool for investors to assess their own practices against a peer set. This year’s Dashboard features additional data points on leading practices, such as the use of the IMP’s ABC framework (Avoid, Benefit, Contribute) to determine impact objectives (8% of verified investors) and the use of a composite scoring methodology to evaluate portfolio performance (28% of verified investors).
Overview of the current state of the impact verification market based on analysis of the 100 signatories to the Impact Principles that have completed an independent verification as of May 2022. BlueMark was responsible for 41% of all third-party verifications (excluding internal verifications) for signatories to the Impact Principles, more than four times as many as the next closest verification provider.
Case studies highlighting unique or innovative impact management practices, featuring Trill Impact (aligning staff incentives to impact achievement, a component of Principle 2), MedAccess (assessing investor contribution, a component of Principle 3), Lightrock (assessing impact risks and negative impacts, a feature of Principle 4), Finance in Motion (incorporating the voice of stakeholders, related to Principle 6), and British International Investment (assessing the sustainability of impact at exit, Principle 7).
BlueMark’s analysis also revealed several interesting trends across the impact investing industry.
Despite growing discussion about impact-linked compensation structures, the practice remains limited. Only 38% of impact management systems explicitly integrate impact considerations into staff incentives, with performance development and review processes identified as the most common method (25% of verified investors). Meanwhile, more direct financial accountability mechanisms — such as annual bonuses or impact-linked carry — are less common at 17% and 3% adoption, respectively.
Impact investors are aligning around a handful of measurement frameworks. A majority of impact investors (77%) have adopted industry frameworks and/or taxonomies for selecting their impact metrics, with IRIS+ emerging as the most common framework followed by HIPSO and an array of ESG reporting standards. Similarly, when it comes to ESG management, 78% of verified investors have adopted an industry standard or framework to inform their approach, led by the IFC Performance Standards (43%) and SASB (25%).
Investors vary significantly in their establishment of ex-ante impact targets, compromising the market’s ability to gauge success. While 63% of impact investors monitor impact performance against an expectation — such as a baseline KPI or qualitative impact rating — the quality of target-setting practices varies widely. For instance, only 22% of verified investors have a clear protocol for engaging investees in the event of impact performance, partly due to the lack of clarity on what over- or under-achievement looks like from an impact perspective.
An increasing number of impact investors are engaging with key stakeholders and actively solicit their input. Less than a third of impact investors (28%) engage with key affected stakeholders and actively solicit their input, an increase of 17 percentage points compared to last year’s research sample. While still a minority practice, the commitment to solicit input from target stakeholders experiencing the impact outcomes is a key part of impact management and monitoring.
“These findings corroborate what we’ve observed across the impact investing industry and in previously published research,” said Leijonhufvud. “While there are several encouraging signs of improvement in impact management practices, many impact investors still have a long way to go if they want to be seen as market leaders.”
BlueMark’s current verification services are structured around the two key pillars of accountability for impact: Impact Management Practice (the extent to which an investor or company has the systems, processes, and capabilities to contribute to achieving the intended impact); and Impact Performance (the extent to which an investor or company has achieved the intended impact results). To date, BlueMark has completed 75 verifications for organizations managing a combined $164+ billion in impact assets.
About BlueMark
BlueMark is a leading provider of impact verification services for investors and companies. Founded in 2020, BlueMark’s mission is to “strengthen trust in impact investing.” BlueMark’s verification methodologies draw on a range of industry standards, frameworks and regulations, including the Impact Management Project (IMP), the Operating Principles for Impact Management (OPIM), the Principles for Responsible Investment (PRI), SDG Impact, and the Sustainable Finance Disclosure Regulation (SFDR). Learn more about BlueMark and impact verification at www.bluemarktideline.com.
As Limited Partners (LPs) with extensive experience allocating to private market impact investment funds, we expect our General Partners (GPs) who manage these funds to provide us with regular reporting on both the financial performance and the impact performance of their portfolios.
In the same way that financial reports are essential to our analysis and management of financial performance, impact reports are a critical input to our understanding, expectation-setting, and communication with stakeholders around funds’ impact performance. Relevant and interpretable impact performance reporting deepens our trust in existing GPs and is an important input into our due diligence of prospective new GPs.
However, our ability to interpret and draw conclusions from the impact reports we receive today is hindered by the significant variability in the content and quality of these reports. We recognize that this inconsistency stems in part from the lack of widely accepted guidelines for what quality impact reporting looks like. We further recognize that we have an important role to play in establishing a common baseline for how GPs should report on their impact.
In order to increase the value of the impact reports we receive and help drive greater transparency and accountability in the impact investing market more broadly, we are committed to working together as LPs and in concert with other stakeholders to advance best practices in impact performance reporting.
As a signatory to this letter, we encourage GPs to adopt the “Key Elements of Impact Performance Reporting”, as proposed by BlueMark in its 2022 “Raising the Bar” report.
We expect the impact performance reports we receive to abide by the overarching elements of Completeness — providing the full balance of relevant information needed to understand impact results and risks — and Clarity — presenting impact information in a manner that is digestible and that facilitates interpretation. We further expect impact reporting by GPs to include the following specific elements:
Well-defined objectives and expectations: A quality impact report is explicit about the fund’s intent and impact objectives, including clarity on investor contribution and expected results.
Relevant metrics: A quality impact report includes quantitative metrics that are standardized wherever possible and that link to the articulated impact objectives.
Relative performance results: A quality impact report provides information that allows the reader to effectively interpret and contextualize measures of progress and performance against targets or expectations and against external benchmarks, as available.
Integrated stakeholder perspectives: A quality impact report identifies affected stakeholders and incorporates their experiences and voices to the extent possible.
Transparency about risks and lessons learned: A quality impact report is forthcoming about potential impact risks, failures, and lessons learned.
Using BlueMark’s Key Elements as a starting point, we will work with industry standard-setters to develop common frameworks and templates, as useful, to further clarify and align LP demands for quality impact performance reporting from GPs.
We see the movement toward a common framework for quality impact performance reporting as critical to stewarding the continued growth and integrity of the impact investing industry.
“Raising the Bar” report is first in a series aimed at improving the quality and usefulness of impact performance reports produced by impact investors
Apr. 19, 2022 – BlueMark, a specialist provider of impact verification services for investors and companies, today published a report calling for a stronger approach to impact performance reporting that would make it easier for the market to analyze and compare impact performance. The full report, “Raising the Bar: Aligning on the Key Elements of Impact Performance Reporting,” is available at https://bluemarktideline.com/raising-the-bar.
The research was conducted with the support of grant funding from The Rockefeller Foundation and the Tipping Point Fund on Impact Investing.
“While impact reporting by private markets impact investors is a common practice, the lack of widely-accepted guidelines for reporting on impact performance has resulted in heterogeneous approaches and a perception by end readers that the reports are incomplete and insufficient to meaningfully interpret impact results,” said Christina Leijonhufvud, CEO of BlueMark. “Given the market imperative to improve the quality and usefulness of impact performance reports, we wanted to gain a deeper understanding of best practices in impact reporting and propose pathways to accelerate their adoption.”
A two-pronged approach was taken to the research project. First, BlueMark analyzed a sample of 31 recent impact reports by private market general partners (GPs) to identify trends and common practices. Second, BlueMark consulted with 57 diverse industry stakeholders–via both one-on-one interviews and focus groups–to gain insights into the challenges and opportunities related to producing and consuming impact reports.
These research activities surfaced several gaps and challenges that limit the utility of impact performance reports, including: lack of specificity about goals or targets, cherry-picking of data, missing stakeholder perspectives, and emphasis on successes as opposed to risks or underperformance.
However, the research also revealed a high degree of alignment around what constitutes a quality and decision-useful impact performance report. Building on these areas of consensus, BlueMark–in close consultation with industry stakeholders–composed the following proposed “Key Elements” of quality impact performance reports.
Overarching Elements:
Completeness: A quality report provides information about all portfolio holdings and addresses impact performance at the fund and holding level.
Clarity: A quality report presents impact information in a manner that is accessible and that facilitates interpretation, with clear definitions, assumptions and supporting calculations.
Specific Elements:
Well-defined objectives and expectations: A quality impact report is explicit about the fund’s intent and impact objectives, including clarity on investor contribution and expected results.
Relevant metrics: A quality impact report includes quantitative metrics that are drawn from industry standards wherever possible and that link to the articulated impact objectives.
Relative performance results: A quality impact report provides information that allows the reader to effectively interpretand contextualize measures of progress and performance against targets or expectations and against external benchmarks, as available.
Integrated stakeholder perspectives: A quality impact report identifies affected stakeholders and incorporates their experiences and voices to the extent possible.
Transparency about risks and lessons learned: A quality impact report is forthcoming about potential impact risks, failures, and lessons learned.
These elements were tested in focus groups of both GPs and LPs, including members of the BlueMark Allocator Working Group, a learning community of some of the leading institutional allocators with a shared commitment to impact investing.
To help increase adoption of these elements, BlueMark is collaborating with Impact Frontiers, an initiative of the Impact Management Project (IMP), to pilot an approach to verifying impact reports with a select group of firms from the Impact Frontiers community. The verification methodology will build on the research findings in the first “Raising the Bar” report. Key learnings from this pilot will be published in a second report in late 2022.
“The desire to advance beyond impact practice to impact performance is a common refrain among the investors participating in Impact Frontiers cohorts,” said Mike McCreless, Executive Director of Impact Frontiers. “The report launched today represents a great step in that direction and we look forward to collaborating with BlueMark and the Impact Frontiers community of investors to continue the momentum.”
BlueMark’s current verification services are structured around the two key pillars of accountability for impact: Impact Management Practice (the extent to which an investor or company has the systems, processes, and capabilities to contribute to achieving the intended impact); and Impact Performance (the extent to which an investor or company has achieved the intended impact results). To date, BlueMark has completed over 65 verifications for organizations managing a combined $156+ billion in impact assets.
About BlueMark
BlueMark is a leading provider of impact verification services for investors and companies. Founded in 2020, BlueMark’s mission is to “strengthen trust in impact investing.” BlueMark’s verification methodologies draw on a range of industry standards, frameworks and regulations, including the Impact Management Project (IMP), the Operating Principles for Impact Management (OPIM), the Principles for Responsible Investment (PRI), SDG Impact, and the Sustainable Finance Disclosure Regulation (SFDR). Learn more about BlueMark and impact verification at www.bluemarktideline.com.
Social impact professional previously held senior roles at Luminate and Omidyar Network
BlueMark, a provider of impact verification services for investors and companies, today announced the appointment of Paige Nicol as the firm’s new Director for Europe. Nicol will be based in London and oversee BlueMark’s team in Europe.
Nicol has held several leadership roles in impact investing, philanthropy, and professional services throughout her career. She was most recently a Director of Strategy & Insights at Luminate, a philanthropic organization founded by Pierre and Pam Omidyar that is focused on empowering people to work together to build just and fair societies. Nicol was responsible for designing and overseeing the organization’s strategy to maximize the impact of its global portfolio of grants, investments and initiatives. In this role, she also helped to shape and implement Luminate’s approach to impact assessment, impact management and impact reporting.
Before joining Luminate in January 2018, Nicol was a Manager on the Intellectual Capital team at Omidyar Network, where she co-led the development of the firm’s initial strategy and investment thesis around digital identification. She also led multi-stakeholder engagement and advocacy work across a range of start-ups, banks, civil society organizations, governments, development finance institutions, and standard-setting bodies with a focus on crowding in capital and influencing the development of the field so that digital ID could become a tool of empowerment rather than exclusion or control.
“I’m thrilled to be joining BlueMark at an important time in the firm’s growth,” said Nicol. “My career in social impact has taught me the importance of third-party accountability for impact claims and practices, an area where BlueMark is leading the field through specialization in impact verification.”
“Paige is well-respected across the impact investing industry and especially in Europe, where she will work directly with our European clients,” said Christina Leijonhufvud, CEO of BlueMark. “As an adept problem-solver and skilled collaborator, Paige understands the unique challenges that impact investors face in building credibility for their efforts and the role that verification can play in strengthening trust in impact.”
Nicol started her career as a management consultant at Deloitte Consulting. She is a two-time graduate of Georgetown University’s Walsh School of Foreign Service, earning a Master of Science in International Business and Finance and a Bachelor of Science in International Politics.
