Designing and Measuring Impact Investing Portfolios

Key Takeaways

hey good morning or good afternoon everyone depending where you are in the world uh i'm kareem harji welcome to our webinar on designing and measuring impact investing portfolios so it's great to see so much interest i know we have a few people still joining and so thank you for being here today we're going to discuss how investors can move from intention to design to implementation of impact investing portfolios regardless of where you are in your journey we're going to talk about the steps in that journey that an investor can take based on this new publication from rockefeller philanthropy advisors that compiles over a decade worth of experience in a comprehensive and yet accessible manner so we're going to also discuss issues around impact portfolios impact measurement and much more so by way of introduction many of you know that the impact measurement programs one of the only ones of its kind focused on impact measurement across the public-private and non-profit sectors we also have a particular focus on impact investing and social finance drawing on our long-standing research and teaching experiencing the areas as well as our two other executive programs that we teach so for today's webinar i'm joined by patrick brio who is the head of impact investing for rockefeller philanthropy advisors he's the co-author of this handbook alongside steve godecki and many of you uh you know maybe don't know someone who's played at wimbledon but now you do he was a former professional tennis player i haven't played wimbledon in 2008 and if you'd like to learn more about that you can ask him in the q a so what we're going to do today um is provide a bit of an overview of some of the selected handbook chapters it's 180 pages so we're going to try and give you a good value for money with key messages from each chapter alongside some practical examples of how you can use the handbook as well as apply to your own work and practical explain a little bit more about that shortly as we talk about how we've made this very action oriented we'll also dive deeper into a couple of areas including impact measurement and management i had the pleasure of co-authoring two chapters with steve and patrick and so we'll talk a little bit about theory of change impact measurement and management and share some insights from our teaching in these areas and then we'll talk a little bit about your questions i know several of you have had a chance to read the handbook and we'd love to hear what you think how you might be able to use it what kinds of questions you still have so we'll spend the last third of the webinar responding to your questions please use the q a function on the zoom toolbar to submit your questions as we go and then we'll pick those up in the last third of our webinar so hand it over to patrick um in a minute to introduce the handbook provide a little bit of context around how it came together why it's really important for this time in particular but before diving into that just wanted to acknowledge um patrick's co-author steve goodecki who authored the first version of this 10 years ago which is really at the time when impact investing was just getting going so i was a frequent user of this initial version as i built out an impact investment advisory service um in canada at purpose capital and i would say like confidently these were the best resources around so it was really a pleasure um to support this update and be involved in it and just wanted to give special thanks to steve for his leadership over the last decade and also in producing i think this really comprehensive and timely resource so patrick thank you for joining us you know it's a pleasure to have worked with you and steve over the last year or so um and maybe i'll hand it over to you to provide a bit of context for the handbook why it's important at this moment just talk a little bit about the the handbook and and the roadmap and how we might use some of the practical tools and examples that we're going to run through over the next few slides happy too thanks karen thanks for that glowing introduction um from a lot of different standpoints i would echo the uh words about steve and and yourself karim both of you for your wisdom and friendship over the last two years uh many hours in small conference rooms in uh in new york city so the handbook first is briefly what is it a two-year journey uh open source book length guide on not just theory or one particular angle at impact investing but hopefully the full journey so it takes in lessons from the first version of this 10 years ago and makes it appropriate for today one way of thinking about it is a framework of frameworks that's a kind of a wonky way to say we try to take the best practice in theory and in action and place it along this journey that you see in front of you we don't want to recreate anything that's out there but put it in its place and really help asset owners mission driven asset owners as the audience here to shift their portfolio to create their portfolio or at least get started with impact investing and while the the audience is asset owners themselves to shift portfolios obviously very relevant to advisors intermediaries asset managers and and even enterprises themselves so the way that we're going to approach this today is there are three components to each of these nodes that you see in front of you and they each have best practices and theory in each of them and then it moves quickly to be practical and the idea is that this should not just sit on the shelf somewhere but if it doesn't actually inspire action then we've actually missed the mark and so what we've done is developed a an avatar her name is sophia apparently the most widely used name in the world and we weren't confident in finding one asset owner who's actually built this full journey out and so we developed his avatar who has taken her hypothetical story and applied each of these things to herself and so with not only her but also case studies we've gone through and and added some some meat to how this might play out along with that there are there's an invitation for you as the reader to apply what sophia has as well to yourself so again in a workbook style how do you actually do this uh so uh to introduce sophia here she is she is uh she sells her fashion business for 450 million dollars well done her right uh establishes a foundation and as she realized she looks back on her her fashion industry experience she's really bothered by the heavy water usage so she really wants to hone in on water issues she starts to grant grant making but then really gets frustrated by the lack of scale of the grants as the only tool she reads about impact investing she attends a conference and says okay i really want to get started with this uh one tricky element is that her husband has a more traditional view on this topic so she's got separate buckets of uh investments in philanthropy earn money over here and give it away over here and we'll see how she tries to build consensus as one of the under-appreciated elements of developing an impact investing strategy so how does this look in practice for the reader and each of these chapters as you saw will have a an exercise so when you when you read through the what chapter you've got a resource inventory to fill out so on the top left here what are your resources that you're dealing with and then across the top of this diagram you have what are the activities that you are pursuing with your resources and what is the impact that you hope to to achieve and that will really focus on those areas for the the imm section impact measurement and management so as you go through the chapters the who chapter will focus on a stakeholder map and power analysis the why is the theory of change the how is the investment policy statement and actually adding products and specifics to your strategy and chapter five is again the more the evaluation framework and six is how do you actually do this once you've got a strategy in place so we'll follow along sofia's journey and how she's filled out each of these elements along the way so to start with the what um many of you have your own definitions you've wrestled with the question of what is impact investing one thing we want to mention here is that all investments have impact this is probably the most important concept of the what um and the idea is that no matter what you what investments you're making you are owning companies that have influence on the world and they have supply chains and products and services and boards and employees and they're doing things in the world so it's not a matter of choosing whether or not to do impact investing if you are if you have investments if you have assets even they are doing things in the world and so the idea is to take ownership of that and shift that towards the net positive the other element here is this uh this weaving intersection which is essentially taking the three existing sectors uh public private and social sectors and showing how impact investing can play a role in weaving these three three things together certainly there are tools that are more specific to each of these three but um the opportunity that is quite significant given this interplay so how sophia actually landed the the what section she has uh taken on her resource inventory and has developed three different categories we typically think of resources as financial assets when we're thinking about impact investing but she's wanting to think about it much more broadly so the first row is the assets that she has a lot of her different financial accounts as well as property the second row is the human capital or if you're an organization the organizational capital that you have so think about your personal background the values or the mission of your organization and then the relational capital the networks that you have the professional relationships what kind of influence do you have and sophia has taken this on and said okay i understand these categories here are the ways that i want to focus initially particularly with my financial assets and then later on really develop out how can i play a role in building the field and using my relationships to that end so for her financial assets she's got roughly with her husband 500 million dollar investment portfolio she's got a 40 million dollar foundation with a two million dollar annual payout and she also has a donor advised fund so we'll be focusing on that row for the rest of this discussion because we want to focus on the the investment portion but uh the second two are also critical so things like human capital her fashion industry experience for example or relational capital she really has a deep relationship with water-related charities and so she's really going to leverage that when it comes to her more catalytic investments so now is the who the next node this is the capital chain and the idea here is not simply to look at just the customers and beneficiaries the far right of how you create impact but the whole chain in terms of developing and having impact so you've got your asset owner which is the target audience for this you've got the intermediaries as the second two so advisors are providing services asset managers are providing products like fund managers you have the enterprises that are the portfolio companies of these asset managers and then their customers and beneficiaries and this is a the key message here is it's important to look at the whole chain when you're thinking about impact if i could pause and just tie this into the current moment we think about the conversation that's really come to the forefront related to racial equity for example and the who is critical to this discussion uh so one just simple outworking of this would be um historically there's been a focus on the um the entrepreneurs for example that have not traditionally accessed capital so the focus is on the enterprises as well as who and where are are these enterprises uh serving underserved customers or beneficiaries so the focus is on the two nodes on the right but interestingly if you move the the dial back to intermediaries there's a big movement now to focus on how can you think about diversity equity and inclusion with the intermediaries that you choose certainly who is involved in those intermediaries but how are they interacting with those that you care to impact so sophia has taken this on and thought about her own stakeholder map which is the resource activity for the end of this chapter and on the bottom you've got the capital chain so she's thinking in particular she's got to focus on gender equity so she's going to be putting on a gender lens focus on her on her capital chain choices the other elements mentioned her husband who has this more traditional view she is starting to become involved in a few affinity groups and has developed relationships with some peers that she hopes to be inspired by and even bounce ideas off she's a little bit concerned and she's started to develop a bit of a misconception and even wants to engage her her husband related to regulation and fiduciary duty particularly related to her foundation how much can her foundation consider mission and how does it balance with the consideration for financial returns and she's got a family attorney who is really a close relationship to both her and her husband that she's hoping will be able to help her on the regulatory front so when we move from the the what and the who um it's important to then think about the why questions um and so many of you who've been on our previous webinars have heard about theory of change theory of change would be familiar to a lot of you who've already begun work either in impact investing or impact measurement and so in this chapter we really talk about how a theory of change anchors your impact investing strategy and by identifying your impact goals you can focus then on the type of approach that you'd like to see or pursue and think about what that really looks like in practice so theories of change can be fairly broad or fairly amorphous and what we do in the chapter is talk about how you translate that into a set um of you know really specific things that you can act on and as well we'll see with sophia's example how you take some of her intentions her context translate that into a set of goals that guide their selection of strategies and and products so in the handbook we describe a couple of different examples of these impact as well as investing goals that inform the theory of change i'll just highlight a couple the first is that many asset owners are particularly now thinking about what it means to align their assets and their values and as patrick mentioned earlier all investments have impact we're choosing deliberately to value some of those impacts or not and part of what asset owners are keen to do is align those more in terms of their their values in terms of positive behaviors as well as how they act in terms of their philanthropy their decisions as consumers as well as as investors there's other investors that are really concerned about systems change that are thinking more broadly about how to get at some of the root causes of the inequities and qualities that exist in society and so they may have a very different approach than values values-based alignment approach we've identified a couple of different framing tools that investors could use we talk about impact themes and impact lenses and so just to highlight a couple of examples themes tend to look like specific sectors um such as energy health climate change education um can also focus on you know specific issue areas um or even sub-themes and so those tend to be particularly related to specific types of sectors which are a little different from lenses which tend to be cross-cutting across the portfolio and so as patrick mentioned earlier a lot of investors right now are concerned around issues of racial equity or gender or inequality that would be a lens that you apply across all of your assets and so in the chapter you know without spending too much more time on this because we've done a couple of other webinars previously on theory of change we also elaborate on how theory of change can be helpful to guide your impact investing strategy it helps describe and interpret for both yourself as well as your stakeholders you know that the map that patrick just showed earlier what you're trying to achieve how you might do that it also helps to manage expectations of your stakeholders and help you provide a kind of basis for how you might engage them and work with them moving forward theories of change can also be particularly helpful at the portfolio level to guide your portfolio construction as we'll see in a minute and also help you understand where you might require further learning or research and as we'll see in a few slides help inform what kinds of approaches you use to measure and manage for impact so what does this mean for sophia we see that she's divided up her portfolio into these three buckets both the entire portfolio where her goal is to do no harm and she achieves that through uh understanding what she's holding um there obviously there's a much lower intensity around impact um when it comes to negative or positive screening but she wants to understand at the very least um how she's doing no harm across the entire 500 million portfolio particularly for the foundation endowment and then for her program-related investments she wants to focus specifically on areas such as water climate and the arts and as we'll see later there's more specific um areas of focus both sectorally as well as the lens that she's applying around gender commensurate with that there are different expectations financially as you can see on the right hand column and we're going to see shortly how that actually translates into her choices when she thinks about portfolio construction and how it relates to our overall impact goals so part of what we talk about in the handbook all the way through is how you make these choices of finding the best balance between your financial and impact goals and also how that may evolve over your journey as you deploy different kinds of assets and the mix of your assets so hand it over to patrick to talk us through the how section great so this is the the meat on the bones and if we had to pick one chapter that really adds unique value uh this would be at the top of the list the idea here is to take your theory of change and add in your impact tools and your impact structures which will then lead you to your investment policy statement which may be one statement or it may be two statements integrating uh your traditional financial investment policy statement with an impact investing statement so the question is what are tools and structures uh tools can look look like things like screening or shareholder engagement think about esg integration or going deep on one theme you can also think about catalytic concessionary capital which you'll see sophia approaches with her the payout of her foundation and setting the time horizon of the impact that you're trying to see as well as the financial returns when we talk about impact structures we think about three main categories one is the investor structure so you as the asset owner what structure are you choosing and that would be inclusive of the donor advised fund that may you want to focus on anonymity it could be the llc model which is gained in popularity and that would be a focus more on flexibility and then the more traditional private foundation the intermediary structure is how do you actually make the investment what's the structure of the investment itself so thinking about equity debt where does it play on the capital stack to to achieve the impact goals that you want to see and then third is the enterprise structure so the investee what is their structure and a lot of conversation related to benefit corporations and these more hybrid structures but also the traditional for-profit and non-profit models are very applicable so one key element here is the products once you've got your tools and structures how do you actually layer in specific products and this particular chart was the most used in the version 10 year 10 years ago this is cut off because it's quite large and it's uh it's long so you can think about the left side as the impact theme and across the top as the asset class and the rows on the actual version in the handbook go down roughly 10 rows of different themes and the idea here is that given whatever impact theme you care about where can you actually participate with each asset class and certain themes like climate have a lot more depth and the ability to have a diversified portfolio and some like water maybe have a little bit less of an ability to do so so the idea here is that 10 years ago this was relatively sparsely filled out and now with the advancement of a lot of elements of the field this is completely filled out still there are more opportunities more products in certain areas than others but a lot of growth in this to this particular concept so how do you take these products and actually build a portfolio this may be relatively basic but i think it's important to mention the first step know what you own so all investments have impact know what's going on in your portfolio right now the second thing is how do you actually want to take the step so the first idea would be to construct your impact portfolio let's say you had a recent financial event and you've got quite a liquid portfolio you can start constructing your portfolio from scratch the second is more portfolio driven so you're taking an existing portfolio and you're transitioning it slowly over time and then the third is a carve out this is quite common with foundations to take a little slice of the endowment and to begin thinking about mission related investing you can also use a very specific tool in this case so how has sophia taken this on and realized this is a little bit small text but to focus on this we've taken the theory of change which is essentially the first four columns and we've added on both tools and structures and then specific products that she's working with so across her whole portfolio her main goal being do no harm she really is going to focus on working with her advisor to help screen for esg integration and she's going to discover how she might do that what are the possibilities uh to keep that maximized financial risk in return as the key consideration and then layer in her impact goals for the foundation she's really focused on water and climate and gender a key point here is that she started with water and said gosh wouldn't it be nice to have a diversified portfolio focused on water but she hit a few barriers so the idea is she's got concentric circles outwards to say actually if climate is uh the category that can be more diversified and can have more of a full opportunity set let me expand that out where it's not possible so if you go all the way over to the right side for the products with water for venture capital is going to be focused on water technology for example uh but yet her public equities and her endowment will be focused a little bit more on the climate space and then we'll have the gender lens layered into it for the foundation payout it's going to be very catalytic concessionary she's going to start with loans to the charities she really knows best and then she wants to start thinking about this creative economy or the arts and getting more more attention given there's less than one percent of impact investing to the arts by some measures so now over to karim to take on the the measuring success element thanks patrick and so as you're beginning to see you know there's a lot more sophistication as we go from the high level what is sophia trying to achieve what matters to her what does she have to work with how is that manifesting himself across different parts of the portfolio and then when we get to the measurement questions what we've suggested is again a lot of this is anchored in in your theory of change but there's also a sequence of questions that you can ask yourself through how you describe what impact means um in in a somewhat logical way impact measurement can feel somewhat daunting to folks it as we've talked about for example in our last webinar um on the state of imm impact measurement and management in impact investing practices are still somewhat new somewhat fragmented but encouragingly you know growing in sophistication and adoption and so when we think about the process by which impact investors can understand the effects of their investments on people and planet you know both the measurement piece as well as the active management piece how do you adapt your processes and how you improve outcomes moving forward in this chapter what we've tried to do is provide some initial starting points and tools with the expectation that these will be improved as the field matures so we've tried to provide the best guidance that we have so far and then the kinds of questions you could ask yourself in the right order and this really mirrors how we teach this content in the oxford impact investing and impact measurement programs so we think three core components are critical having a consistent and disciplined approach transparency in your processes of impact due diligence and reporting and the use of appropriate approaches and tools so not one single approach or framework or standard is going to get you everything you need but the idea is to have the right combination of them that are appropriate to your circumstances and so we asked these three questions um that mirrored the broader guidebook around why are you measuring what are you measuring and and how are you measuring when we talk about the y we get into the questions around what you want to prove in terms of your impact what you may want to improve in terms of your outcomes and some things that you might still want to learn and many asset owners that are going on this journey for the first time probably have a set of defined learning goals beyond just thinking about reporting on their impact and so we think that that's important to get the balance right depending on your sophistication it makes it much easier to identify what you should be measuring and then how you should be measuring on the what we've described at least these three organizing categories of principles frameworks and standards when we talk about principles you could think about them as overall rules and best practices to ensure the integrity of your processes and behaviors we highlight a couple including the recent ifc principles when we talk about frameworks there's a range of them we highlight the sdgs and the imp impact management project as well as others and then we talk about standards as well including things like iris and sasby and what's important here is that what is this combination that's right for you what we've done in the handbook um and we won't spend too much time on this but we've talked about this in previous webinars is that there are lots of places to get started you don't have to reinvent the wheel a lot of the frameworks and tools that we now see are actually interoperable so they engage with each other with each other quite nicely and it's important to just understand that this is an iterative process so start somewhere and then think about how you might get better over time many investors have questions around for example how do we think about collecting data analyzing it and then reporting it we've highlighted the first graphic here which comes from the impact measurement working group of the g8 whereas the second graphic here is looking at this question of how do you think about a portfolio approach to thinking about different kinds of impacts and how you might in a sense aggregate all these up there's also other examples that we've included around impact due diligence around lean data impact management project and others so what we've tried to do here is to say here are some starting points here's ways to signpost and that you don't have to reinvent the wheel but find the right combination for you we'll talk a little bit about this in a couple of slides as well but let's make it practical what does this mean for sophia as we talk about across our entire portfolio you know sophia wants to understand and feel confident that she's doing no harm and so her strategies here are to think about positive and negative screening criteria and the percentage of assets that can be screened against that and obviously over time you want to get to 100 percent and so we've said that by year three she wants to be confident that she can do that but initially even in year one to establish a bit of a baseline against her esg criteria the i am pre five dimensions and the abc framework as well as the ifc principles so really at start to just say how do i map onto these where are my areas of strength and weakness and what do i need to work on to be able to feel confident that by year three i understand what i hold and that it's in alignment with at least these three high-level um frameworks and principles for her endowment and her pri's she has more specific goals so for example for a foundation endowment where she wants to apply a gender lens she's still trying to figure out what it means to apply a gender lens there's a lot more gender lens research that is coming out including tools etc so one commitment that she's making is that understanding how can all the data that she gets from her asset managers be disaggregated by gender and help her understand perhaps how to create a scorecard with some custom metrics to understand the gender implications across her or holdings in the endowment so here it's both a high level understanding of the research insisting on getting gender disaggregated data as much as she can and then being able to create some custom reporting for herself that again over three years will improve and as we go down to the pris she's got a specific focus on water-related enterprises there she wants to really understand how to improve community level outcomes and the investees that she's deliberately targeting through canada capital how are they targeting and serving underserved populations there she might choose to apply for example lean data and help her investees understand what baseline and follow-up survey data looks like both quantitatively and qualitatively so as you can see this is just one set of examples that go from high-level portfolio to specific pools of capital using the lens to then thinking about outcomes for specific populations so that was a bit of an overview i'll pass it over to patrick to take us quickly through the last chapter and then we'll get into a bit of discussion for some of the themes and issues that have come up across the handbook an invitation to to keep uh posted your questions in the chat function uh there's some really good ones that have come in so far so the question here is how do i actually do this uh we've set up the the understanding who you are as an asset owner how you define impact investing why you're doing it how you're thinking about moving your portfolio and how you're thinking about measuring success what are the elements to actually take the first steps or take the important steps to building consensus for example and how ready are you to make these moves and so this chapter is really about moving forward and building towards an implementation plan so thinking about for example building a team and there was a question from rick fernandez really good who assists impact investors in developing theories of change great question can be internal or external could be a very low-hanging fruit start with the basics of what you know and test it out or it could be as sophisticated as bringing in an expert consultant or advisor or another aligned investment manager to help you develop that out but what are the considerations on the type of team you might need if you're an institution or what kind of roles and responsibilities or processes and systems might be necessary to shift from a traditional investment portfolio to layer and impact there's also a really important discussion on legal considerations in this chapter so how do you think about fiduciary duty and the misconception there that you cannot actually achieve both financial returns and impact investing uh so i'll leave it to you to dive into this chapter and to think about this but the idea is getting really specific best practices on moving forward and developing the first steps to to take action uh for example sophia is really going to focus her consensus building on um her husband because he's really the key bottleneck if you will for the next steps for her portfolio and so she's going to have conversations with him and really engage her family attorney to help understand the fiduciary duty angles so that's the the implementation plan and over to karim to really um start the discussion and maybe we'll start with the the imm piece yeah thanks patrick and so what we've tried to do again is give you good value for money and compress 180 pages into 30 minutes that was a very quick um overview of each of the the chapters and and some highlights um what we'll do now is maybe have a bit of a broader discussion um around some of the themes and and questions um that have come up and let me start um a little bit by just also you know describing some of the things that uh i think are important to consider when we're looking at the imm strategies and then we'll come back to how this handbook could be helpful depending on where you are in your journey and so one of the the important messages and for those of you that have joined a previous measurement webinars with us you'll know that we've talked about some of these that imm is really about making choices and it's about making choices appropriate to what your goals are to what you have to work with and we've also seen this is is true with sofia you know as she's embarking on this journey she's making a set of choices based on what it is that she's trying to do what she defines success as what she wants to learn and then the kinds of tools and assets that she has to work with and when we think about what it means to make choices in in imm we highlighted a few different aspects so the first is coherence and it's so it's really important to understand how impact considerations work across your investment processes so everything from your theory of change to how you set up your due diligence to how you think about decision making and governance to how you think about post-investment reporting the processes really matter and so sometimes we see that impact investors spend a lot of time at the front end you know defining a theory of change for example but that doesn't really make its way into all parts of the impact due diligence or investment selection processes and so coherence really is really important triangulation is another concept that we've talked about in the past it's really trying to understand what is this balance of numbers and narrative of different kinds of evidence to understand not only what is happening but also why it matters and how it matters and to whom it matters and so when you bring different kinds of data points you're really trying to construct a story and give you more confidence that the impact that you think is occurring or that you hope is is occurring can be somewhat verified by the ability to look at different data points that back up that claim and that can be sometimes difficult depending on the kinds of investments you're making but it's an important principle to think about and also a lot of questions we get is is do i lean on metrics do i think about stories or narratives and obviously the answer is you have to find a balance between between those two it's also important to think about decision utility so a lot of the time when we think about impact measurement we tend to frame it as as reporting so that an investor or an asset manager is reporting back to the asset owner but it's also useful to think about this as how you might use impact data to be able to make decisions moving forward you know as we've explained you know with sophia's example this is a management process it's a portfolio construction and portfolio evolution process and so regularly review the kinds of data that you're getting think about how that will inform your forward-looking decisions both in terms of where you invest as well as how you invest another important consideration when making choices is proportionality all of us would love more information around impact sometimes it's just not available or it may not be available based on the kind of investment or investee whether it's their capacity how much investment you're allocating and also importantly how much information is enough you know in the course we talk about getting enough precision for the decision how much information would you need on impact reporting to think about whether or not you should invest whether or not you should invest more or whether you're convinced that there's actually impact occurring or maybe even negative impacts that you're not aware of how much would you need to know in order to make a decision of course more is better but sometimes we just have to be realistic about that and so proportionality is an important consideration when we think about measurement and then finally many of us are on this journey of thinking about imm in terms of what are these choices that we're making what are we kind of trading off in the short term how are we still being consistent and truthful to our long-term goals and how do we ensure that we're field building and so sharing your approach your performance and some of your learning is an equally important component of what we try and stress as we think about what good imm practice looks like so those were just some highlights and maybe some general guidance as we think about how we make choices and as i said in the specific chapters we provide a lot of the the approaches um and signposting to them patrick maybe a couple of questions for you as we step back now and think about the overall handbook and and how it can be useful can you talk a little bit about what the handbook would mean for example for newer or more aspiring impact investors let's say versus those that are established and how they might use some of the chapters um or lessons differently sure thanks sophia is kind of an interesting example because she's a little bit in between and so i think taking some of from her example is going to be important when you're newer frankly it's starting with the low-hanging fruit so what do you know really well and how do you add a layer to that so if you're coming from an investment perspective and you know public equities really well you know research really well then think about um making a decision related to esg integration add that additional consideration to your public equities and start there there's no no reason to switch over to catalytic concessionary loans to grantees if that's not your focus and on the flip side of that if you are really a programmatic focused person if you really are excited about the the direct impact of particular companies or social enterprises then start there and get really involved and talk to founders and understand what makes them different from others and then if you are really like sophia understand your grantees really well start there the the key is to start and iterate there was a great point on on the q a from uh from tunisia which is should this not be iterative absolutely so start somewhere and iterate uh don't let the the perfect be the enemy of the good um perfect is not even possible in this world so start with the things that you know well and iterate on it um finding good sources of inspiration and peers is also critical so that you can bounce ideas off of frankly we hear it time and again that having one or two close allies that are maybe a few steps ahead of you are more important than um even webinars like this frankly or conferences is to be able to call someone and say look i'm looking at this particular deal i'm thinking about the strategy how can you help me think about it for more advanced uh you know impact investors i think it's not dissimilar but uh make sure you're you're applying the lessons learned uh to to what you're doing we often see with those that are a little more experienced we we don't see the connection between the theory of change and the imm framework as closely as um as it ought to be so to all these points that karim is making how are you looking at what you're measuring and making sure that that is exactly tied one-to-one with the goals that you set out with your portfolio and tightening those connections uh when when possible thanks patrick and i see we've got a lot of questions coming in so let's let's try and get as many as we can in and so i'll try and add a few responses and then patrick you can jump in as well so we've got this question how does this apply for example to the world of increasing passive investing i guess the short answer here i would say is that impact investing almost by the nature of what it's trying to do um is much more active but you know we've identified within that the handbook that you know at the very least as you think about esg strategies and doing no harm as we've talked about with sophia's example you should be able to understand what you own and to be able to ensure that it's at least not inconsistent with your values and that you think about how you move some of those strategies to be perhaps more consistent um and and i found for example the imps framework the abc framework you know and thinking about the contribution of of your portfolio that's for example in the a's you know which might be more passive for example how can some of that be allocated in the kind of b's and c's to be more actively engaged in building better solutions for for people and planets so i think that you know that's probably a short answer and that's a much longer discussion let's maybe a couple of other questions rick this was a really good good one around harmonizing reporting and impact time horizons and i think this is one of the questions for impact investors as a whole you know we often describe ourselves as patient capital or patient investors and as you've noted sometimes that the kind of financial return aspect you know if it's a one two three year time horizon versus where impact might be accrued which might be five or ten years perhaps especially if you're looking at systems change i think one of the questions for impact investors is is how do we think about longer term outcome measurement and longer term holding periods for certain kinds of vehicles and then thinking also about how we can get better at triangulating different types of data and so not only looking for example at um kind of higher level metrics but also thinking about getting more insight into beneficiary level perspectives earlier in the process rather than waiting you know three four five years out so we can actually get some initial insights around whether there's a higher probability that outcomes will be achieved so i think that's a kind of broader set of issues that hopefully impact measurement sophistication will be able to to address but i think i would agree with you that right now there's a bit of a gap between that and i would hope on on some future webinars we're going to pick this up in terms of some specific um examples and maybe i'll answer one more um and then patrick turn it over to you to to kind of pick up on a couple there were some questions around theory of change how it's more iterative and kenuja had this question as well as talking about a theory of change for a specific impact theme so yes theories of change should be iterative you should bring what you're learning for example and feed that back into updates onto your theory of change and certainly you can build theories of change for specific impact themes and as well many impact investors particularly when they're making deeper more substantive commitments your theories have changed for individual investments as well so it can vary depending on the kind of investor you are and how hands-on you want to be in the process patrick maybe over to you to answer a couple sure i'll try to consolidate some of these into into my comments one just to make sure that we're we're saying something related to passive investing and even even how does this apply to esg this is not new so this concept of impact investing has been going on for you know centuries if not millennia with with religious and values based investing particularly with negative screens so uh the field is it continues to evolve one comment related to esg and how does this apply here one big misconception related to esg is that there is a defined definition of the e the s and the g it but it's actually no different in one sense from grant making and how you define impact in that case it's a worldview decision that's based on what you prioritize and so either developing your own or really picking what's out there from the mscis sustain analytics morning stars etc to to see where you align the best and where you want to focus um we see with esg it's really the easiest way to feel confident in the quote do no harm if there are areas of your portfolio where you're not as focused or not as well-versed but there's a full range of tools there so you can screen out related to the e the s and the g you can tilt the portfolio to the positive in certain areas you can go deep on one theme or you can go even deeper and and use your ownership stake and and engage as a shareholder um and be really a lot more involved one of the questions was related to sovereign sovereign debt and while i'm not a sovereign debt expert um i'll actually post one of the really good resources here from the unpri but traditionally sovereign debt is has been considered a risk-free asset class so it's interesting to think about especially in these times how do we layer in something like esg integration considerations to sovereign debt there is less data availability um in this particular focus area but it's not again not dissimilar from taking esg what do you care about and applying it uh to to sovereigns and i think there's more information there i'll post that in the in the chat to make sure there's this follow-up the final one that i'll take on is this idea of consensus building from jennifer and um you know this is this the art of the science with impact investing and we see as we're working with asset owners this can be the hardest part maybe a next-gen family member comes in and says we want to we want to talk about impact investing for the first time um how do you actually build consensus so we've got a section in that last chapter of how do you do that with a few case studies a couple high points really tailor your approach and language to who you're talking to and meet them where they are really leverage advocates so for sophia it was the family attorney but who are the partners and the stories and the data in particular that really support your case try to really focus on merging these often separated finance and impact considerations in a really compelling whimsical way if you can um and then use your existing investments to to trigger the conversation so if you point to maybe something that's already in the portfolio and say look this is already having an impact based on some news story etc maybe we do or don't like that how can we shift that towards what we do care about great thanks patrick um so we'll try and get through maybe a few uh measurement questions um and then we'll do one final go-around so um ruby had a question around uh quantitative assessment of impact um we're seeing that there's there's a lot more interest um in these areas we talk a little bit about it in in the handbook i would say um you know i'm a little cautious i think around assigning um almost like quantitative aspects or monetization in some ways we're seeing we're seeing this because investors are hoping perhaps for comparable uh data that they could make decisions on you know based on on things that maybe have comparable units and in this case monetary because we don't have a standard kind of unit of impact as it were i think we have to be cautious because impact means many things to many people and when we make some of these judgments around let's say how we convert um maybe a broad set of impacts into one single measure for the basis of standardization and comparability we risk losing out a lot of the richness and the distinctiveness of all the things that went into that decision so as we've talked about you know sophia cares about water issues gender lens a racial equity lens trying to boil some of that down into single unitary metrics as a comparison tool maybe um strips out a lot of that rich thinking and the ability to understand how to engage with an investment over time in a variety of different ways and and though that hasn't i think stopped the kind of enthusiasm for looking at some of these issues we have to just approach them with a degree of caution we're seeing many more approaches um try and use these um it's not new again you know we've got social return on investment that's been around for a long time but that would be i think one one caution maybe one more question just around measuremen