The Role of Impact Metrics

How IRIS, PULSE, and GIIRS can further impact investing.

If you ask a room of 100 impact investors—representatives from funds, foundations, institutional banks, family offices—how many measure their social and environmental performance, roughly 80 percent will raise their hands. When you ask how many think that they are doing so effectively, only a few scattered hands will remain raised.

Impact investors know it’s important to credibly measure and monitor their impact, but too many are stuck at the starting block. The Global Impact Investing Network (GIIN), a nonprofit organization that helps investors overcome barriers to successful impact investing, recognizes that there are real challenges to establishing an effective impact measurement program which have led to a state of impact measurement inertia among many investors today. In response, we are releasing new tools to make our Impact Reporting and Investment Standards (IRIS) easier to use and to help investors get started establishing and upgrading their impact measurement programs.

At its core, IRIS is a set of standardized metrics that can be used to measure and describe the social, environmental, and financial performance of organizations and businesses receiving impact investment capital. Similar to International Financial Reporting Standards or the Generally Accepted Accounting Principles, IRIS can be integrated into most approaches to impact reporting and data management platforms. For example, IRIS metrics underpin the Global Impact Investing Rating System (GIIRS) and are pre-populated into PULSE, the data management platform available from App-X through Salesforce. IRIS metrics can also be easily integrated into custom impact measurement systems used by investors across the field. The IRIS metrics have been available as a free public good since 2009, and as more investors enter the impact investment market, we are taking steps to ensure that IRIS is more accessible for widespread market use.

Standardized impact measurement is critical to impact investing

Impact investments are made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return. Credibility in impact investing, both for individual investors and for the industry as a whole, requires sound social, environmental, and financial performance measurement practices. At a minimum, these must include the use of performance metrics whose definitions are standardized across the field. Not only does this establish legitimacy for impact investing, it also enables data-driven evaluation and management of investment portfolios and the market broadly.

Impact investing leaders agree. Survey results in a 2011 report by J.P. Morgan and the GIIN entitled “Insight in the Impact Investment Market” found that 65 percent of responding pioneering impact investors use IRIS to track their social, environmental, and financial performance.

Still, other impact investors and new market entrants need an entry point. Working with the Monitor Institute earlier this year, we heard from more than 100 investors through a combination of in-person interviews, focus groups, and an online survey. Those who aren’t measuring social performance told us that they value standardized metrics and recognize the importance of impact measurement. However, they also told us that the lack of pragmatic and easy-to-use metrics tools is a hurdle to getting started.  

Step off the starting block with IRIS


IRIS offers a library of around 400 widely used social and environmental metrics, and provides standardized definitions that leverage best practices and expert input. As a result, IRIS is a meaningful and useful reference point for investors and investees implementing or upgrading their impact measurement practices.

IRIS was also designed to be non-prescriptive, which means that investors using IRIS may choose to track whichever IRIS metrics are most relevant to their social, environmental, and financial goals. Although this gives investors flexibility to incorporate IRIS into different platforms and methodologies, it also means that investors approaching IRIS for the first time may benefit by referencing real-life examples of IRIS use from other investors in the field. To provide these examples, the GIIN recently launched an IRIS Registry that currently provides examples of the metrics used by dozens of IRIS users, including impact investment funds, direct investors, and capacity builders.

Additionally, we have posted sets of IRIS metrics recommended by field-building groups in specific impact sectors, including sustainable agriculture, microfinance, and small and growing businesses in emerging markets. IRIS metrics embedded into GIIRS are also available for download. Over the coming months, IRIS will be publishing additional metrics recommendations from industry associations, including a set for U.S. community banking.

For those who are interested in reading more detail about implementing portfolio management and evaluation practices that leverage IRIS metrics, we are publishing a series of use cases throughout the remainder of this year that document the important lessons from organizations that have successfully improved impact measurement by incorporating IRIS into their systems. A study of IRIS metrics selection written in partnership with the KL Felicitas Foundation is currently available on the IRIS website.

By taking a pragmatic approach and meeting the diverse investor community where it is, we hope that the field comes to expect and demand impact measurement practices that include IRIS as a keystone. As participants continue to enter the market, a growing and persistent practice of impact measurement across the field is central to establishing standardized metrics as the de facto industry norm, which is critical to ensure that the market keeps its commitment to social and environmental impact.

The time is now: standards require collective action

Impact measurement will become more sophisticated as behaviors change across the investment value chain—from asset owners to mission-driven organizations. The growth of the impact investing market already has many stakeholders rethinking how they make investment decisions, acquiring new skills and familiarity with non-financial measurement concepts, and applying social and environmental performance data to activities like due diligence and investment management. But, the data we collect and the processes we build can go only so far if investors are using incompatible impact metrics. IRIS is fast becoming the industry standard for impact metrics, and it is important and urgent for everyone in the field to incorporate IRIS into their social and environmental performance measurement. Not only will it ensure comparable data and credible aggregation and analysis across the growing impact investing industry, it will also help investors and mission-driven businesses better track, manage, and communicate their own impact.