The Global Impact Investing Network (GIIN) released a user guide last month to help impact investors get started on measuring social, environmental, and financial performance with IRIS. IRIS was conceived in 2008 by the Rockefeller Foundation, Acumen Fund, and B Lab. In 2009, the GIIN, a nonprofit formed with the intention to increase the scale and effectiveness of impact investing, was brought on to oversee its development.
The user guide teaches how to navigate IRIS and presents case studies of organizations that have been using it. It also provides a walkthrough to help users choose performance metrics by addressing three questions: Why do you want impact data? What do you really want or need to know about your investees? How do you want to use data once you have it?
What IRIS is and isn’t
IRIS was designed because “Things are going well” or “It was a good year” lack rigor in describing the non-financial results of an investment. IRIS is a free, online catalog that contains over 400 quantitative and qualitative performance metrics commonly used in impact sectors such as agriculture, energy, health, and financial services. Rather than trying to reinvent the wheel, IRIS metrics mirror widely accepted standards, therefore familiar metrics exist in the catalog.
The tool is versatile. Acting as a library, IRIS users can browse to find the metrics most suitable for them, and are not required to select specific metrics. Impact investors are free to choose as few or as many metrics as is necessary to measure performance. By having metrics that span across multiple industries, IRIS users may select, for example, a set of microfinance metrics, health metrics, and agriculture metrics where they may have otherwise had to use different metric systems for each of those industries.
Because it’s a catalog, the GIIN describes IRIS as only one part of an impact measurement program. Impact measurement doesn’t stop at metrics selection. Users need to collect and manage performance data, analyze performance data, and report performance data to stakeholders. IRIS is not a data management platform to collect and store performance data. It does not evaluate and rate performance nor does it provide reporting guidelines. But it can be used, although not necessarily, in conjunction with impact measurement tools and platforms such as GIIRS, PULSE, or Social Return on Investment.
Currently, there are over 100 organizations listed on the IRIS User Registry. IRIS users, which are commonly impact funds, can voluntarily include their organizations on the Registry and acknowledge that they use IRIS. The Registry thus acts as a resource by listing metrics selected by IRIS users and information including their sector and social or environmental objectives.
Key advice from the user guide
While metrics selection is one of the first steps to impact measurement, the GIIN advises that it’s important to engage investees in the whole process and to keep in mind how practical and useful the metrics are to the investees. Investees must see value in tracking the data and have to actually be able to produce the data.
A second matter to consider is how will IRIS data be collected and managed? Organizations approach this differently. Some may have a centralized team to collect, report, and analyze data while others may pursue a decentralized approach, making impact measurement everyone’s job. Some may use sophisticated software while others rely on simple spreadsheets.
One more thing
A final word from the GIIN is that a new version of the IRIS catalog is scheduled for release in early 2014. Usually these updates, which are made every two years, are for adding new metrics rather than revising existing metrics.
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