ImpactAlpha – “Adopting impact performance standards to hold sustainable investing accountable for real-world outcomes”

ImpactAlpha – “Adopting impact performance standards to hold sustainable investing accountable for real-world outcomes”

This article was originally published in ImpactAlpha and is jointly authored by BlueMark (Christina Leijonhufvud & Sarah Gelfand) and the Global Impact Investing Network (Kelly McCarthy & Dean Hand).

“You can’t manage what you can’t measure” is a now familiar trope in sustainable investing circles, reflecting the belief held by some that the answer to our sustainability challenges is a universal ESG metrics set.

With growing scrutiny over whether sustainable and impact investments are actually contributing to achieving the Sustainable Development Goals, the need for more reliable and verifiable performance reporting on sustainability and impact results is undisputable. A standardized, consistent set of metrics is undoubtedly a helpful tool for achieving comparability across investors against a baseline set of ESG considerations but is distinct from what is needed to achieve accountability for impact outcomes.

Acting on impact data is not about tracking a handful of universal metrics, but rather about evaluating how and which investment decisions can lead to better and longer-lasting outcomes for society and the planet. Investors and other stakeholders need access to information about the intentionality, context and distinct contribution to impact associated with impact investments.

  • Clarity about the intentionality of an investment is key to understanding and evaluating the relevance of an investor’s goals and KPIs.
  • Contextual information is key to interpreting the results. The scale of impact at a point in time, versus the pace of change over time, can tell an investor two very different stories of impact. Context also helps account for the qualitative aspects of pursuing impact, such as the scale of the sustainability challenge in a given market.
  • Further, information about an investor’s engagement with their underlying portfolio is key to understanding their role in enabling impact, including the relative contribution of their capital and expertise.

To put it another way, investors need access to a more complete set of information about impact. They also need tools to be able to interpret and confidently act on the information, especially if they are going to be able to make and manage investments in accordance with sustainability and impact goals and be accountable to the stakeholders they seek to benefit.

Private Markets ESG

Several initiatives are underway to harmonize measurement and reporting of ESG data, efforts that reflect the market’s thirst for more widely available, standardized and comparable information. While these initiatives could help establish a baseline requirement for ESG transparency, understanding progress towards and achievement of sustainability goals requires significant additional effort.

Two recent announcements aimed at improving the use of ESG data in the private markets signal progress, but also how much further we still have to go.

In the first announcement, a group of leading GPs and LPs with more than $4 trillion in combined AUM launched the ESG Data Convergence Project to “advance an initial standardized set of ESG metrics and mechanism for comparative reporting.”

As part of the initiative, several GPs have agreed to track and report to LPs on six metrics across their investment portfolios, including: Scopes 1 and 2 greenhouse gas emissions, renewable energy, board diversity, work-related injuries, net new hires, and employee engagement. These metrics borrow from existing ESG measurement frameworks created by CDP, CDSB, GRI, SASB, TCFD, and others, and broadly align with the ‘Stakeholder Capitalism Metrics’ introduced in September 2020 by the World Economic Forum’s International Business Council (IBC).

As Marcie Frost, CEO of CalPERS, put it: “We have found it challenging to effectively measure impact in our private equity portfolio because of the multitude of frameworks and definitions used by GPs and LPs. This initiative simplifies sustainability reporting by using comparable metrics which allow us to gain insight into the investment risks and opportunities in our private markets portfolio.”

The second announcement (less than a week later) was the launch of Novata, an ESG data hub designed to “enable private companies to collect, analyze, benchmark, and report relevant ESG information,” which was backed by a consortium of non-profit and for-profit leaders including the Ford Foundation, Omidyar Network, S&P Global, and Hamilton Lane. The 10 metrics chosen by Novata include a combination of Environmental issues (e.g., GHG emissions, water and wastewater management), Social issues (e.g., employee safety, data security), and Governance issues (e.g., board diversity, business ethics), all of which align to various established ESG frameworks.

Meanwhile, in the broader financial markets, the IFRS Foundation announced the much-anticipated launch of the International Sustainability Standards Board (ISSB) to develop “a comprehensive global baseline of high-quality sustainability disclosure standards.” The ISSB will build on the work of existing investor-focused reporting initiatives, with the IFRS Foundation committing to consolidate the teams and expertise of the Climate Disclosure Standards Board (CDSB) and Value Reporting Foundation (VRF) under a new board.

The inspiration behind this effort, according to Erkki Liikanen, Chair of the IFRS Foundation Trustees, is that “to properly assess related opportunities and risks, investors require high-quality, transparent and globally comparable sustainability disclosures that are compatible with the financial statements.”

Impact performance reporting

If only the answer to decision-useful impact performance reporting were as simple as aligning on a universal, standardized set of metrics.

Harmonized metrics, data aggregation platforms, and widely accepted disclosure standards are all foundational elements of a marketplace that supports greater ease of comparison, benchmarking, and investment decision-making. But the question remains: will such data contribute to better understanding of achievement of sustainability and impact outcomes and improved capital allocation towards investments that steward human and natural capital?

It’s one thing for investors to report on a universal set of ESG datapoints, based primarily on their relevance to financial performance. But it’s quite another to provide reliable and balanced information about the contribution of investments to broader social and environmental outcomes.

This higher bar for impact performance reporting is the north star for the impact investing industry, and a prerequisite for unlocking capital at a scale large enough to address today’s urgent climate and social inequity crises.

To address the information gap that limits flows of capital to and contributes to skepticism of sustainable investing, the market needs reporting and disclosure standards that reflect the broader set of factors required to assess impact results (positive and negative) and risks.

Clearly, more work remains to be done to harmonize impact performance reporting, including agreeing on the scope of content to be included, the desired frequency and format of reports, and a market-acceptable mechanism for independently verifying the completeness and quality of these reports. Several organizations are actively working to address this challenge, including the GIIN, B Lab, BlueMark and UNDP’s SDG Impact team, each of which is committed to a stakeholder-centered approach that goes beyond the financial materiality prism still governing much of the sustainable investing market in the U.S. and other jurisdictions.

In May 2021, after a lengthy public comment period, the GIIN released COMPASS: The Methodology for Comparing and Assessing Impact to provide impact investors and service providers with a “methodology to assess and, most critically, compare impact results.” This work builds on the GIIN’s IRIS+ system, and several years of gathering real-world impact performance data at the investment level, to provide guidance on calculations and approaches for interpreting change in impact over time as well as for assessing impact performance relative to the size of specific social and environmental solutions gaps. The COMPASS methodology reflects aspects of several industry-wide efforts designed to bring more rigor and meaning to analysis and comparisons of impact performance data.

In July 2021, BlueMark and the GIIN each received funding from the Tipping Point Fund on Impact Investing to conduct separate yet complementary research, in consultation with market actors, to clarify needs and opportunities related to the verification of impact performance data. These research efforts build on the recognition that independent assurance is key to increasing confidence in the quality and objectivity of reported information as well as to facilitating impact performance benchmarks that are built from a base of relevant and reliable data. For the industry, this work is foundational to evaluating impact performance at scale, and essential to driving the market upward toward ever improved impact yardsticks (disclosure: BlueMark is a sponsor of ImpactAlpha).

Ultimately, the emergence and market adoption of robust impact performance reporting standards and verification services, and the public availability of data about industry performance will contribute to enhanced accountability and confidence in impact investing and its role in helping to achieve our shared sustainability goals. These additional pieces of the puzzle are critically needed for a marketplace to effectively allocate capital for transformative impact.


Christina Leijonhufvud is CEO and Sarah Gelfand is managing director at BlueMark. Kelly McCarthy is director of Iris and impact measurement and management and Dean Hand is research director at the Global Impact Investing Network.

ImpactAlpha – “Adopting impact performance standards to hold sustainable investing accountable for real-world outcomes”

ImpactAlpha – “What we learned from 30 impact verifications of investor alignment with the Operating Principles for Impact Management”

This piece was originally published in ImpactAlpha.

Just like you can learn a lot about a car by looking under the hood, you can learn a lot about an impact investor’s practices and processes by analyzing their impact management systems.

The Operating Principles for Impact Management (the “Impact Principles”) were introduced in April 2019 to help address the market’s need for a shared set of best practices for impact management. BlueMark was founded a few months later, in January 2020, to meet the market demand for an expert, third-party that could verify impact investors’ alignment with the Impact Principles.

To date, we have completed more than 35 of these impact practice verifications, and recently published our second annual ‘Making the Mark’ report with data and insights based on our first 30 verifications. The full report, “Making the Mark: The Benchmark for Impact Investing Practice,” has more than 40 individual data points on everything from how impact investors are setting impact objectives to how they manage ESG risks in their investment portfolios. By analyzing each data point as part of a larger overall picture, we identified three major themes that show where the impact investing industry is today and what key developments will define the market’s future.

Key Learning #1: Impact investors have work to do to deliver on their good intentions

In BlueMark’s inaugural 2020 Making the Mark report, we highlighted that investors’ impact management practices are often less robust at later stages of the investment lifecycle. BlueMark’s first 30 verifications reaffirm this pattern. Impact investors in our sample typically excel at establishing credible strategic impact objectives aligned to the Sustainable Development Goals (SDGs) and at assessing impact at the portfolio level (corresponding to Impact Principles 1 and 2).

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This image provides a snapshot of BlueMark’s Practice Benchmark Dashboard, which shows the key practice indicators associated with Practice Leaders, the Practice Median, and Practice Leaders.

However, while most impact investors evaluate potential (ex ante) impact performance and ESG risks in due diligence and subsequently monitor impact and ESG performance (Principles 3-6), the majority of investors still have room to improve on assessing their contribution to investees’ impact and on following up with investees on impact underperformance, among other areas. Verified investors struggle most to ensure impact endures at and beyond exit (Principle 7) and to consistently adapt their processes based on lessons learned (Principle 8).

Given that impact investing has only emerged as a mainstream investment approach in the last few years, it’s reasonable to expect that some investors may lack experience with the latter stages of the impact investment lifecycle. This should improve as more impact investors become familiar with best practices for many of the more nuanced aspects of impact management.

Key Learning #2: Strengths and challenges vary by investor type 

We also found evidence that shows how different investor types have different strengths and areas for improvement when it comes to impact management.

For example, based on our research sample, development finance institutions (DFIs) tend to have more robust ESG risk and performance management systems (Principle 5), while specialized asset managers that invest only in impact strategies often have stronger practices to ensure impact is sustained beyond exit and to apply lessons learned from reviewing impact performance (Principles 7-8). These “impact-only” managers tend to be less consistent in comparing expected and actual impact performance (Principle 6), though, while “diversified” managers pursuing impact as one of multiple investment strategies are less likely to align staff incentive systems with impact performance (Principle 2).

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This chart shows the median rating by impact investor type based on BlueMark’s analysis of investor alignment with the Impact Principles. BlueMark’s proprietary rating system uses a four-party scale (Low, Moderate, High, Advanced), providing a shorthand way for impact investors to assess where in the investment process they excel and where they have room for improvement. 

These differences suggest that there are opportunities for impact investors to learn from one another and collaborate in addressing shared challenges.

Key Learning #3: New and smaller managers can be leaders in impact management

The largest (by AUM) and most experienced (by track record) impact investors aren’t necessarily the best.

This finding is based on a regression analysis of BlueMark’s first 30 verifications designed to see if there was any correlation between investor type and overall alignment to the Impact Principles. The results showed that there are no significant correlations between the size of the firm (i.e., overall AUM), the size of the firm’s impact portfolio (i.e., impact AUM), or that firm’s tenure (i.e., years making impact investments) and that firm’s level of alignment with the Impact Principles.

In our experience, neither being a veteran nor a large impact investor equates to having a more sophisticated impact management system. In fact, the opposite may sometimes be true. Newly formed impact investment firms may have the advantage of not having to conform to a legacy investment management system and can instead focus on developing a best-in-class impact management system from the start. Meanwhile, small or niche impact investment firms may have an advantage in being able to better focus on maximizing the impact of a small number of portfolio companies rather than being spread thin trying to manage dozens or even hundreds of companies.

We will reflect back on these key learnings in future research to see how the impact investing market is developing. In the meantime, read the full ‘Making the Mark’ report for additional key takeaways and data points on how impact investors are approaching impact management.

Christina Leijonhufvud is the CEO of BlueMark, Tideline’s new verification business. She manages all aspects of business strategy, new product development, and external relations, and has directly led 30+ impact verification assignments across investor types and asset classes.

ANNOUNCEMENT – “Sarah Gelfand Joins BlueMark As Managing Director”

ANNOUNCEMENT – “Sarah Gelfand Joins BlueMark As Managing Director”

As a founding Director of the Global Impact Investing Network, Gelfand is a leading expert on impact measurement and management standards

BlueMark, a leading provider of impact verification services for investors and companies, today announced the hiring of Sarah Gelfand as Managing Director. Gelfand will report to BlueMark CEO Christina Leijonhufvud and will co-lead BlueMark’s business strategy and team, business and product development efforts, and various market-building and standard-setting initiatives.

“Sarah is one of the impact investing market’s early pioneers, highly respected for her integrity and expertise in impact management and measurement, not to mention, equally well-liked and admired by her colleagues,” said Leijonhufvud. “Her experience building innovative platforms and managing multi-disciplinary teams makes her a perfect fit for BlueMark as we take this next step to bring impact verification to the global impact investing market.”

Gelfand was a founding Director at the Global Impact Investing Network (GIIN), where she led development of the industry’s leading system for measuring and managing impact “IRIS” (now IRIS+), growing the user base from five pilot investors to several thousand organizations across the industry.

More recently, as the Vice President of Social Impact Programs at Fidelity Charitable, Gelfand launched several new impact investing programs and led a grant-making initiative for the Board of Trustees. She also developed and ran a specialty business unit focused on providing philanthropic consulting services to clients.

“Over the past 12 years working in different parts of the impact investing market, I have consistently seen first-hand the need for independent verification to ensure the industry grows with integrity and credibility,” said Gelfand. “I share BlueMark’s vision of bringing increased transparency and accountability to the impact investing market and am eager to get to work in building the business and exploring new service areas.”

Before joining Fidelity Charitable, Gelfand was a Deputy Director at Duke University where she oversaw strategy and operations for an accelerator program that produced research and provided consulting services to a network of 50 nonprofit and for-profit healthcare-focused social enterprises.

Tideline, a specialist consultant for the impact investing industry, launched a separate independent impact verification business, BlueMark, in January 2020. BlueMark offers a range of impact verification services, helping evaluate the alignment of clients’ impact mandates, impact management practices, and impact reporting with industry standards like the Global Reporting Initiative (GRI), Impact Management Project (IMP), IRIS+, Operating Principles for Impact Management (OPIM), UN’s Sustainable Development Goals (SDGs), and others.

Here is a link to the full announcement:

About BlueMark
BlueMark provides independent impact verification services for investors and companies. With a mission to strengthen trust in impact investing, BlueMark’s services are designed to meet the need for reliable, third-party assurance of impact claims and practices. Learn more at

About Tideline
Tideline is a specialist consultant for the impact investing industry providing expert, tailored and actionable advice to clients developing impact investment strategies, products and solutions. Learn more at

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