WHAT'S NEW

March 16, 2021: Leading Impact Investors Make Progress Toward Harmonized Impact Measurement with Release of Joint Indicators

IFC, a member of the World Bank Group, the Global Impact Investing Network (GIIN), and a group of leading impact investors announced today the launch of the Joint Impact Indicators (JII), a set of high-level indicators that impact investors can use to measure and report on their investment activities. This harmonized set of indicators will help further promote the fast-growing market for impact investing, which has the potential to channel $26 trillion into investments that have a positive social, economic, and environmental impact, alongside financial returns. The JII has been endorsed by leading impact investors and associations that have called for others to join them in using these indicators.

JII is a set of impact indicators – starting with gender, jobs, and climate – aligned between the Harmonized Indicators for Private Sector Operations (HIPSO) and the IRIS Catalogue of Metrics, the two impact indicator sets used by most impact investors.

"These indicators are testament to the excellent leadership, technical expertise, and strong collaboration of all partners involved," said Issa Faye, Director of Sector Economics and Development Impact, IFC. "While we recognize there is much work to be done to fully harmonize impact measurement and reporting, this is an important step forward for the industry."

Institutions adopting the JII are signaling their intent to use these indicators and participate in a broader conversation that builds on the harmonization effort. This is a first step toward identifying a core set of indicators that can help define a minimum scope for impact measurement and reporting for all impact investors. ​

"Rigorous, credible impact measurement and management are fundamental to the integrity of the impact investment market," said Amit Bourit, CEO of the GIIN. "The JII – which complements IRIS+ Core Metric Sets – will increase the understanding of impact performance. Once investors adopt common indicators, the industry can move in the direction of comparability of impact investments, so they can know what will generate the greatest impact. This is crucial, because the challenges the world faces are far too urgent for capital to underperform."

The JII will help reduce reporting burden on investee companies and increase the availability of comparable impact data to inform decision-making. By setting clear and common indicators, the JII will help capture the economic, social, and environmental impacts of investments, allowing investors to improve their effectiveness, transparency, and accountability.

This approach is in line with the Operating Principles for Impact Management launched in 2019 and already adopted by nearly 120 financial institutions from 30 countries managing over $360bn in impact assets

RESOURCES
IRIS+
HIPSO
Operating Principles for Impact Management

ABOUT IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.

ABOUT THE GIIN
The Global Impact Investing Network (GIIN) is the global champion of impact investing, dedicated to increasing the scale and effectiveness of impact investing around the world. Impact investments are investments made into companies, organizations, and funds with the intention to generate positive, measurable, social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets and target a range of returns from below market to market rate, depending upon investors' objectives. The GIIN builds critical infrastructure and supports activities, education, and research that help accelerate the development of a coherent impact investing industry. For more information, please visit www.thegiin.org.​

ABOUT IRIS+
IRIS+ is the generally accepted system for impact investors to measure, manage, and optimize their impact. This comprehensive system makes it easier for investors to translate their impact intentions into real impact results. IRIS+ provides investors with access to Core Metrics Sets to increase data clarity and comparability across portfolios, is aligned to other frameworks such as the United Nations Sustainable Development Goals, and provides practical, how-to guidance and resources—all in one easy-to-navigate system.

ABOUT HIPSO
The broad range of structures, mandates and shareholders of Development Finance Institutions (DFIs) working with the private sector means that there are many different systems used to track development results. However, many DFIs share the same clients or invest in the same sectors, but previously required clients to report their activities based on different sets of criteria. The Harmonized Indicators for Private Sector Operations (HIPSO) represent the collective agreement of 28 DFIs originated in 2008 to standardize indicators and relieve clients from the unintended burden deriving from the DFIs' different reporting requirements, including similar indicators (with different definitions) meant to capture the same data. Today, HIPSO indicators are widely used by DFIs, impact investors, and other development partners. The metrics are also in alignment with the United Nations Sustainable Development Goals.

30th November - December 1st , 2020: HIPSO 2020 Virtual Annual Meeting

Context for the meeting

Background: The 2019 HIPSO Annual meeting provided a platform for rich discussions on wide ranging development impact issues, in addition to facilitating the revamping of the HIPSO initiative. During this meeting, Development Finance Institutions (DFIs) widely expressed a desire to broaden and enhance the scope of the HIPSO by adding thematic and sector/sub-sector level to include indicators for: gender, jobs, and environment and climate, in addition to financial intermediation and infrastructure services metrics.

In addition, other action items discussed included: HIPSO metrics alignment with the SDGs; and closer alignment between HIPSO and IRIS, and leverage the two complementary sets of metrics for the implementation of the impact measurement principles;

The discussions also focused on enhancing collaboration, learning and knowledge sharing opportunities amongst HIPSO members.

To take action on the aforementioned items, the 2019/2020 HIPSO Work Plan was put into effect, and over the past months the thematic and sector level HIPSO Work Streams have been used as platform to add and/or revise the indicators. Additionally, the SDG and IRIS/HIPSO Streams have served as conduits for the drafting of the HIPSO Alignment with the SDG Note, and the closer alignment between HIPSO and IRIS, respectively.

Objective of the meeting:  To update the Whole Group and Observer Group on the new/revised HIPSO metrics. Also, the note on HIPSO’s alignment with the SDGs would be discussed. In addition, other topics would be reflected upon including: the positioning of  HIPSO in the evolving development impact space; the revision/addition of metrics for other sectors/sub-sectors;  and common reporting templates.

April 14 th , 2020: ILX Fund becomes the 4 th member of the HIPSO Observer Group.

January 2 nd , 2020: International Islamic Trade Finance Corporation (ITFC) becomes the 27 th  DFI to be a party to the HIPSO MoU.

December 3 rd , 2019: The Donor Committee for Enterprise Development (DCED) becomes the 3 rd member of the HIPSO Observer Group.

30 th  September - October 1 st , 2019: HIPSO 2019 Annual Meeting, Madrid, Spain
Context for the meeting

Background
: The 2018 HIPSO Annual meeting provided a platform for rich discussions on wide ranging development impact issues, in addition to facilitating the revamping of the HIPSO initiative. During this meeting, one of the fundamental discussion points revolved around the usage of the current metrics by member institutions, and there was a general view from Development Finance Institutions (DFIs) to revisit/revise the HIPSO metrics given the shift in focus/priority areas for DFIs, in addition to the adjustment of their results measurement systems.

As a follow-up to these discussions, a survey for the Whole Group was launched earlier on
this year, and an analysis was done to assess the extent to which the metrics should be
revised. Based on the Whole Group’s feedback and discussions, DFIs widely expressed a
desire to broaden and enhance the scope of HIPSO by adding sector/cross-sector
indicators, and those that capture market-level effects, in addition to adding increasingly
significant thematic indicators for example climate mitigation/adaptation, and inclusiveness (underserved - women, youth, and rural populations etc.).

  • Objective of the meeting:  Using the survey recommendations as a basis, the main objective of the meeting is for DFIs to compare notes and to discuss the
    revised/additional indicators that they suggest being included in HIPSO based on their respective institution’s development impact assessment systems. Additionally, there will be updates provided on the progress of other related topics e.g. HIPSO metrics alignment with the Sustainable Development Goals (SDGs) which is critical given the amplified role of the private sector in achieving the SDGs, hence an increased emphasis for DFIs to report on their contributions towards the global SDG agenda; and how we can leverage the revised HIPSO indicators to provide a common understanding about what constitutes good practice in results measurement, to complement the Impact Principles with a more consistent approach in the implementation of the measurement aspects of the Principles. See Agenda here

October 11-12 th , 2018: HIPSO 2018 Annual Meeting, Thessaloniki, Greece

Based on the Whole Group’s feedback and discussions, we agreed that the use of HIPSO
indicators among participating DFIs has helped to reduce reporting costs for clients, who
previously endured an unintended burden from the DFIs’ different reporting requirements, and they have served as platform for knowledge sharing among DFIs and for the development of other linkages, for example to the IRIS catalog.

We now have an opportunity to build on the success of the HIPSO indicators to serve as a
foundation for a new agenda, given the new opportunities and challenges in the development landscape for HIPSO DFIs. See agenda here.

October 10 th , 2018: Council of European Development Bank (CEB) becomes the 26 th  DFI to be a party to the HIPSO MoU.

September 24 th , 2018: Global Impact Investing Network (GIIN) becomes the 2 nd member of the HIPSO Observer Group.

September 3 rd , 2018: Mastercard Foundation becomes the 1 st member of the HIPSO
Observer Group.

Photo Courtesy of NORFUND