Es esencial que las empresas que están generando impacto social y medioambiental, sepan medir y comunicar dicho impacto
To realize the vision of a future in which social impact venture capital investments take a leading role in the private investment landscape, and for this vision to continue to spread among the business community, the Beka Finance team believes it is essential that companies that are generating social and environmental impact (either because they are social enterprises, or because they are companies that carry out certain social programs), know how to measure and communicate this impact.
Thus, companies, as they already do with their finances or marketing plans, must learn to generate a series of social metrics that serve to measure and evaluate their social activity objectively and, as far as possible, allow comparability between companies. In addition, these companies must communicate these metrics in a clear, concise and absolutely transparent manner.
What are impact metrics?
Impact metrics are a set of pre-established indicators that serve to measure and evaluate a company's social activity in an objective and, as far as possible, comparable manner.
The purpose of impact measurement is to maximize the impact of social enterprises (and the investors who invest in them) as well as to communicate this impact clearly to the stakeholders of these enterprises/investors . The data obtained through the metrics allows us to analyze how the company's work has been, to see where it can improve, to set up incentive systems as an investor, etc.
Metrics aligned with the Theory of Change
The first thing we have to keep in mind is that the important thing about social impact metrics is that they are aligned with the Theory of Change the company's thesis, i.e. with the company's thesis on:
- what social problem it seeks to solve
- what solution do you propose (and what inputs do you invest for it),
- and to whom it is addressed (who are its stakeholders).
Impact metrics should be an extension of this thesis by measuring the success of the solution in solving or addressing the problem.
How to measure the social impact of a company?
Measuringsocial impact is a complex task whose success depends largely on the correct selection of social metrics . To ensure a homogeneous process by which to assess a company's social impact, the GIIN (Global Impact Investment Network) has created the IRIS+ indicators, standardized metrics that lend greater credibility to the data obtained and make it possible to compare results between global competitors. Social impact metrics can be divided into three categories according to how they measure:
- tangible goods and services that arise as a result of the organization's activities(Output),
- the transformations, benefits, learning and other effects that derive from the organization's activities(Outcome).
- o the more long-term and far-reaching effects attributable to the organization's activities(Impact).
In turn, the EVPA (European Venture Philanthropy Association) has published several reports on impact measurement, including the "Practical Guide to Impact Measurement and Management" in which it proposes a measurement system structured in several steps:
- First of all, it is necessary to set the objectives of the impact measurement and define its scope, and then proceed to an analysis of the main stakeholdersinvolved .
- Then, the activities carried out by the company and the results obtained through them will be measured using the most appropriate indicators.
- It is then necessary to verify and assess the impact achieved, to determine whether and to what extent the desired impact is being achieved.
- Finally, progress is monitored and the data obtained is presented in reports containing the relevant information for the agents involved.
Following these premises, together with a proprietary methodology developed since 2002, Beka Finance creates in its impact funds, prior to investment, a strategy tailored to each social enterprise and defines together with the entrepreneur the most appropriate social (and financial) performance indicators. This strategy was designed for the launch of Vivergi, one of the first social impact funds in the country.
For each investee company, the Beka Finance team works with the entrepreneurs to define 2 to 4 social metrics of which at least 1 is compatible with IRIS+ international standards to ensure comparability with other funds in the sector worldwide. Following the completion of the investment, the team reviews the achievement of objectives periodically and links social and financial results to capital disbursements, thus ensuring that the fund is maximizing the social and financial impact of the invested capital.
Examples of impact metrics
By way of example, below are some examples of impact metrics that we have considered in previous investments in the Education sector:
- The percentage improvement in students' school and academic performance.
- Reduction in the school dropout rate.
- The increase in the transition rate from primary to secondary school, and from secondary school to high school and subsequent academic levels.
- Improvement in other basic student competencies.
- Ensure a broad socio-economic spectrum among students.
The measurement of social and environmental impact, far from being in an established period of maturity, is an art that continues to grow in sophistication by leaps and bounds.
Beka Finance has been one of the pioneering players in this area in Spain, and will continue to promote its development at the investment level, as well as a fundamental part of the national ecosystem.
