Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
decision-making, its level of cost effectiveness, and all together, the value of and regulation of SII practices
as a whole. In short, getting it right is critical.
7.22 Particularly as global interest and activity in social impact investment is growing rapidly, better
metrics for measuring at least primary (or “predetermined”) social impact is needed. However, social
benefits are difficult to value, measure and compare. In addition, the process of tracking and measuring
these returns can be costly in terms time and resources.
7.23 The objectives behind measurement can differ for various stakeholders. Currently, SII
measurement is focused on the achievements of the social delivery organisations. This information is
helpful in evaluating the progress of the social ventures and can be useful in adjusting course as needed.
However, it may not provide all of the necessary information investors are seeking regarding their future
prospects (Rangan et al, 2013).
7.24 Investors need a set of tools for assessing social impact measurement. Further work will need to
be done, likely by intermediaries, to strengthen investor understanding of the variety of impact metrics
currently available (Jackson and Associates, 2012). The development of standard measurement systems
will be an important step in further engaging mainstream investors (HM Government, 2013c). At the same
time, it is critical to help social ventures, across different sectors, build greater capacity to measure social
outcomes (Addis et al, 2013).
7.25 Currently many investors use proprietary measurement systems to determine social and
environmental performance, if they are measuring impact in any systematic way at all (Rangan et al, 2011).
Many investors rely on anecdotal evidence rather than real evidence (O’Donohoe et al., 2010). While a
number of initiatives such as IRIS, SROI and CARS are working to develop standard measures and
methodologies, further work in this area is needed (HM Government, 2013c). The European Commission
has been working on this issue and one of the working groups of the international Social Impact
Investment Taskforce has recently published a set of guidelines (WGIM, 2014), including an “impact value
chain”(see figure 7.1 below).
116 © OECD 2015