BlueMark Publishes Research Calling for Market Alignment on the Key Elements of Quality Impact Performance Reporting

BlueMark Publishes Research Calling for Market Alignment on the Key Elements of Quality Impact Performance Reporting

“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 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.

 

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

ANNOUNCEMENT – “BlueMark Raises $3.75 Million to Drive Greater Adoption of Impact Verification and Strengthen Trust in Impact Investing”

ANNOUNCEMENT – “BlueMark Raises $3.75 Million to Drive Greater Adoption of Impact Verification and Strengthen Trust in Impact Investing”

Funding includes a $2.25 million equity investment from Ford Foundation and Radicle Impact, $1.35 million in recoverable grants from The Rockefeller Foundation and an additional grant from the Tipping Point Fund on Impact Investing

BlueMark, a provider of impact verification services for investors and companies, today announced that it had raised $3.75 million in total funding from the Ford Foundation, Radicle Impact, The Rockefeller Foundation, and the Tipping Point Fund on Impact Investing, all organizations with a shared commitment and long-standing leadership in building the impact investing field. The funding will be used to help expand BlueMark’s verification services across different industries and geographies in continuation of the firm’s mission to strengthen trust in impact investing.

As part of the capital raise, BlueMark has now closed its seed round with $2.25 million in equity funding with the Ford Foundation as the lead investor and Radicle Impact as a co-investor. BlueMark has also received a combined $1.35 million in recoverable grants from The Rockefeller Foundation to advance the market’s understanding of best practices for impact management and impact performance reporting, such as through the publication of research reports based on completed verifications of client alignment with industry standards or frameworks.

In July 2021, BlueMark also received a grant from the Tipping Point Fund on Impact Investing, a donor collaborative with a mission of scaling the impact investing market with integrity, to support research and development around best practices for impact performance reporting.

BlueMark today also announced the appointment of Lauren Booker Allen and Shaun Mays as Independent Directors. Allen is Partner and Head of Impact Advisory at Jordan Park, which provides investment management and financial advice to a distinct community of individuals, families, and institutions. She was previously Senior Manager of Impact Investing at Omidyar Network and began her career at Goldman Sachs. Mays has over 30 years of experience as a Chief Executive and Chief Investment Officer in the investment industry for organizations around the world, including as Head of Aventicum Infrastructure Partners (a joint venture between Credit Suisse and Qatar Investment Authority) in Zurich, CEO of Deutsche Asset Management in Australia, Global Head of Infrastructure Investments for Deutsche Asset Management in New York, and CEO and CIO of Climate Change Capital in London.

The latest funding for BlueMark comes at a pivotal time in the maturation of the impact investing industry. In November 2021 at COP26, the International Financial Reporting Standards Foundation (IFRS Foundation) announced the formation of the International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of high-quality sustainability disclosure standards in an effort to harmonize different ESG and impact reporting practices. However, the market still lacks an accountability mechanism to ensure that reported sustainability and impact information is relevant, accurate, and useful for investment decision-making. The need for stronger accountability mechanisms was specifically highlighted in the December 2021 reports from the Impact Taskforce on “mobilising private capital at scale for people and planet,” which included the expansion of external verification and assurance of impact among the list of recommendations.

“BlueMark fills an important gap in the impact investment market as an expert, third-party that can look under the hood of investor practices and performance,” said Roy Swan, director of Mission Investments for the Ford Foundation. “At the Ford Foundation, we share their desire to improve accountability, discipline and comparability among impact investors so that the field delivers equitable and sustainable outcomes for all.”

“Even with the continued progress towards harmonization of standards, the impact investing industry still lacks consensus on what constitutes quality and complete impact performance reporting and needs an expert, third-party that can interpret what and how investors are reporting on both their positive and negative impacts,” said Maria Kozloski, Senior Vice President of Innovative Finance at The Rockefeller Foundation. “BlueMark fills a big gap in the market and the firm’s holistic approach to verification encourages impact investors to reach for a higher bar with their impact performance.”

“We are grateful for the support from both funders and clients as we continue to build out our verification services and share with the market our data and insights on market gaps and challenges,” said Christina Leijonhufvud, CEO of BlueMark. “This funding will allow us to reach a larger share of the impact investing market, which depends on third-party verification to accelerate the maturation of the industry and improve transparency, integrity and comparability among impact investors.”

BlueMark’s verification services are structured around two key pillars of accountability for impact:

  • Impact Management Practice, in which BlueMark verifies the systems and processes used by an investor or company to manage their impact
  • Impact Performance, in which BlueMark verifies the reporting approach used by an investor or company to communicate their impact strategy, goals and results

To date, BlueMark has completed more than 60 impact verifications for a wide range of investors, including asset managers (e.g., private equity, private credit, infrastructure, fixed income, public equity, and multi-asset managers) and asset owners (e.g., institutional investors, development finance institutions, foundations, and wealth management firms).

BlueMark’s verification services also extend to other key aspects of sustainable and impact investing, including impact labeling and classification—for example in alignment with the Sustainable Finance Disclosure Regulation (SFDR) requirements in Europe and the UN Sustainable Development Goals (SDGs)—as well as ESG practices and performance reporting by portfolio companies and fund managers.

 

About BlueMark

BlueMark is a leading provider of impact verification with a mission to strengthen trust in impact investing and to increase accountability for impact. BlueMark is an independent subsidiary of Tideline, a certified women-owned advisory firm in impact investing. Learn more at www.BlueMarkTideline.com.

 

About the Ford Foundation

The Ford Foundation is an independent, nonprofit grant-making organization. For more than 85 years it has worked with courageous people on the frontlines of social change worldwide, guided by its mission to strengthen democratic values, reduce poverty and injustice, promote international cooperation, and advance human achievement. With headquarters in New York, the foundation has offices in Latin America, Africa, the Middle East, and Asia.

 

About The Rockefeller Foundation

The Rockefeller Foundation is a pioneering philanthropy built on collaborative partnerships at the frontiers of science, technology, and innovation to enable individuals, families, and communities to flourish. We work to promote the well-being of humanity and make opportunity universal. Our focus is on scaling renewable energy for all, stimulating economic mobility, and ensuring equitable access to healthy and nutritious food. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on Twitter @RockefellerFdn.

 

About Radicle Impact Partners

Radicle Impact is an impact venture fund focused on social justice, environmental resilience and economic sustainability. Radicle invests in early-stage businesses in Good Food, Good Money and Good Climate. The firm has a foundational emphasis on diversity, equity and inclusion. Radicle’s objective is strong social and environmental impact with attractive financial returns. Founded in 2013, the firm’s mission is to change the venture industry for good. http://www.radicleimpact.com

 

About the Tipping Point Fund on Impact Investing

The Tipping Point Fund on Impact Investing (TPF) is a donor collaborative vehicle developed with the mission of creating and supporting public goods that are critical to the continued growth and fidelity of the impact investing market. The TPF was launched in December 2019 with an initial $14 million in philanthropic capital, which will be used to develop the infrastructure that is needed to mobilize more private capital for impact. The funding will build on existing field building efforts by prioritizing the areas that are chronically underfunded, are best suited for collective action and require additional support beyond that provided by individual grantmakers. Learn more at www.tpfii.org.

BlueMark and Morgan Lewis publish report on “Making Sense of Sustainable Investing”

BlueMark and Morgan Lewis publish report on “Making Sense of Sustainable Investing”

BlueMark and Morgan Lewis Publish Whitepaper for Sustainable Investors on Best Practices for Complying with Financial Regulations and Aligning with Industry Standards

Asset managers today must address an ever-growing list of rules and expectations from regulators, investors and other stakeholders about their approach to sustainable investing. From the passage of anti-greenwashing rules in Europe to the launch of new standards for sustainability reporting, it can be a daunting task for investment firms to keep up with the market’s rapidly evolving requirements.

A new report from BlueMark and Morgan Lewis — “Making Sense of Sustainable Investing: How Asset Managers Can Comply with Financial Regulations and Align with Industry Standards” — shows that there are several areas of overlap between regulatory frameworks and market-based frameworks, and offers a four-step roadmap that any asset manager can use to align and comply with these frameworks.

These four steps include:

  1. Clarify the specific label or classification used for the sustainable investment strategy;
  2. Identify the practices necessary to substantiate the execution of the strategy;
  3. Identify applicable financial regulations and validate that existing practices and disclosures meet the relevant requirements; and
  4. Verify that practices and disclosures align with prevailing standards.

DOWNLOAD the report to learn more.

READ the announcement about the joint report.

WATCH a recording of a webinar introducing the report that inclues perspectives from two asset managers who have been working to adapt their policies and practices to keep apace with the market.