136 Firms, 19 Countries, GIIRS Releases First Impact Investing Analytics Report
The Global Impact Investing Rating System (GIIRS, pronounced gears) Ratings & Analytics has published its first impact investing industry report to provide comprehensive and verified data on social and environmental impact across a broad range of investments on a global scale. We are thrilled to be releasing this report, as it signals the first step toward having transparent data on impact performance as an industry. Over time, this data will enable investors to understand how their investments are meeting both their social & environmental objectives and financial goals, facilitating a blended assessment of portfolio performance.
The inaugural GIIRS Quarterly Analytics Report provides a snapshot of key findings and trends in data collected from GIIRS-rated companies & funds, covering sector, size and geography. The report is intended to provide context and allow for comparison of GIIRS impact ratings, establish impact benchmarking data for the broader impact investing industry, and highlight the type of analysis, reporting and screening that is possible through GIIRS’ Analytics platform.
The report aggregates data from 136 GIIRS-rated companies (the GIIRS rated marketplace as of January 31, 2012) that:
span 19 countries;
range from sole proprietorships to 4,000 employee corporations, with a median size of 38 employees; and
have annual revenues ranging from less than $100,000 to more than $100 million, with median annual revenues of less than $5 million.
The companies in this first Quarterly Analytics Report include the portfolio companies of the original 25 GIIRS Pioneer Funds, Certified B Corporations that have become GIIRS rated, and companies that work with GIIRS Partners, including Investors Circle, Toniic, SVX and the Agora Accelerator.
The first report highlights the following early results:
1. Given that the range between low and high score is greater than 100 points for both developed market companies and emerging/frontier market companies (out of 200 possible points total), we see a full spectrum of impact performance in the early group of GIIRS rated companies. We also see that emerging market companies score higher than developed market companies (see Key Finding 3 for more detail). This supports the conclusion that GIIRS Impact Ratings successfully distinguishes impact across a range of business types.
2. The GIIRS Impact Assessment measures a company’s positive operational practices and their socially or environmentally focused core business activities (called SEMs). Ninety-five percent of GIIRS rated companies earn credit for having at least one socially or environmentally-focused business model. Eighty-three percent of all rated companies provide either a socially-beneficial product or service (such as access to basic services, healthcare, education, economic empowerment) or environmentally-beneficial product or service (such as renewable energy, products with recycled input materials). Thirty-eight percent of all rated companies provide those products and services to underserved communities.
3. The difference in scores between emerging/frontier and developed market companies can be attributed to stronger performance in the Community Impact Area by those companies. The Community Impact Area includes questions around a company’s operations regarding supply chain, local engagement and job creation, and civic engagement, as well as several socially focused core business models (SEMs). Emerging/Frontier market companies tend to earn significant points for building the following SEMs into their core business model: providing socially-beneficial products or services; targeting the underserved with socially-beneficial products & services; supporting job creation through workforce development programs; and supply chains that focus on upstream poverty alleviation.
When looking at the companies currently rated and what their business models are, the outperformance of emerging market companies is not a surprising trend – this sample pool includes exemplary high-impact companies, and many of the companies included in this sample have been showcased as examples for the industry by others. However, as more companies complete the rating process, it will be interesting to see if the trend persists. Future GIIRS Quarterly Analytics Reports will continue to address this finding.
With 53 Pioneer Funds and over 450 companies in the process of being rated, future quarterly reports will have a larger data universe, making deeper trending analysis possible over time, at the industry, country, and organizational maturity level. Trending will also be available at the Fund level in future reports.
Flory Wilson is the Director, International for GIIRS at B Lab. She joined B Lab in April 2010, working on the core team that has launched the Global Impact Investing Rating System (GIIRS) Ratings & Analytics. Her full profile is here.
- Impact Assessment