Anybody working in sustainability is only too aware how crucial impact
measurement is to maintaining performance. Measuring and reporting progress
boosts transparency, helps in setting goals and allocating resources, enhances
risk management and improves stakeholder engagement. All of this can seriously
improve brand reputation and build long-term resilience.
Historically, companies have struggled to get their hands on good data that
could help them work out where to focus efforts, make investments and report on
the things that matter most.
Now, most firms are swimming in information, facts, figures and data on all
manner of non-financial issues — from carbon emissions and electricity use to
philanthropic ventures and modern slavery risks. The key task for corporates is
to distill the data, prioritize it, translate it and work out how best to use
it.
As Better Cotton Initiative CEO Alan
McClay recently wrote for
Reuters:
“Every protocol for reporting performance data carries with it the priorities
and proclivities of its creators.” Some approaches are geared to avoiding risks,
others to find opportunities. “The overall picture is complex,” he added. “Yet,
one crucial dividing line runs through almost every reporting methodology —
namely, the emphasis (or not) placed on the higher-level effects of a given
intervention; its impact, in other words.”
One company with a laser-sharp focus on impact measurement is
Astanor Ventures — a global investor in agrifood
technology startups. Motivated by the series of economic and environmental
shocks
that rocked the economy in 2022, Astanor has worked hard to develop a stronger,
smarter way of measuring, managing and communicating impacts to its investors.
As co-founder Eric Archambeau
recently said in a LinkedIn
post,
measuring impact is at the heart of achieving Astanor’s vision of “transitioning
the agrifood system and achieving wide-scale transformation of the global
economy, away from an extractive and destructive system towards a regenerative,
bio-based economy.”
Since the firm was launched in 2017, Astanor has invested in over 40 agrifood
tech startups — including Modern
Meadow,
Notpla
and
Ÿinsect.
Overall, its portfolio companies have avoided 25,000 metric tons of CO2e in
greenhouse gas emissions, one million hectares of land-use change and 1.8
million m3 of water use.
These figures and more are highlighted in the firm’s latest Impact Creation Report, in which it takes its approach to impact
valuation one step further through an Impact Multiple on Investment
(IMOI) methodology: a proprietary impact-calculation methodology that takes
impact metrics and translates them into impact return on investment — perfect
for demonstrating the value of impact creation that can be attributed back to
investors. Inspired by the True Cost Accounting and
Social Return on
Investment
approaches, the model translates the expected and realized benefits of its
invested-in products or services into monetary terms.
Leslie Kapin, Astanor’s
Director of Impact and Sustainability, admits that it’s still early days in
terms of deploying the model but that the approach shows the deep potential for
creating long-term value for investors and portfolio companies alike by
translating impact into monetary value. As she told Sustainable Brands®,
she predicts the approach “will be a game-changer in the impact investment
industry.”
She says the company focuses on early-stage impact investments “from the soil
and sea to the guts — right along the entire value chain,” including everything
from bio-input specialists to autonomous, electric tractors and sustainable
packaging. For Kapin, the alignment intentionality is key in impact investing;
it is something she and her team assess carefully before deciding what companies
to support.
Astanor’s impact-measurement work started four years ago.
“We had just five deals and we started with six KPIs — including greenhouse gas
emissions
(GHGs),
biodiversity
and water. These haven’t changed as they are still relevant; a third of carbon
emissions come from the food sector,” Kapin says.
Alongside these three planetary KPIs are two people-centered ones: health —
looking at nutritional value and access to nourishing
food;
and social — focused on livelihoods and
income.
The sixth KPI is known as ‘impact intelligence:’ “This is the KPI for the
enablers. We have companies that do not have a direct impact on the first five
KPIs but they’re enabling the system.”
One such enabler Kapin’s team is supporting is US-based
HowGood — a platform providing lifecycle
environmental footprint assessments of
products.
The firm might struggle to quantify how many million tons of carbon it has
helped its clients save. But it is having a positive impact — an impact that
Astanor wants to capture.
“When we look at any deal, we carefully assess any negative externalities,”
Kapin explains. “We have a philosophy that we will never contribute or enable
one of the KPIs if it means harming any of the others. So, we won’t invest in a
deal that’s going to save millions of fishes and generate millions of jobs for
people if it’s going to have a negative impact on GHGs.”
However, reporting impact creation only goes so far; it is only in comparing the
impact different companies or investments are having that genuine positive
change can be realized:
“At some point, we knew we’d have to think about: ‘How we are going to compare
deals?’ ‘How can we really translate easily to our investors that we’ve created
impact?’ ‘Did we deploy the capital carefully enough?’ ‘Did we really create any
impact for them?’
“We needed to find something that focused on monetary value, because that’s what
the world understands; tons of carbon still doesn’t mean much.”
Astanor’s IMOI methodology is an attempt to do just that. The proprietary model
combines so-called ‘impact pathways’ of an investment into a single, aggregated
metric. It considers both positive aspects — such as cost savings from
healthcare or the prevention of overfishing — and negative aspects, such as
water pollution.
As the company explains in its 2022 Impact Creation Report, impact valuation aims to
provide an integrated perspective across these dimensions by converting
heterogeneous indicators — usually available in multiple physical units (e.g.,
tons of CO2e or number of jobs created) — into a single indicator expressed in a
monetary value. With a better understanding of the impact generated by a product
or service — and a more granular view of that impact across different regions —
investors can make more informed, strategic decisions and create positive impact
on a bigger scale.
You can read more about the specific impacts that Astanor’s portfolio companies
are creating in its latest report. The highlight is that, based on seven
portfolio companies across a number of subsectors in agrifood tech, the
company’s €97 million invested translates into an estimated €250 million annual,
cumulated, potential impact creation.
Luckily, Astanor has no plans to keep its IMOI methodology all to itself.
“Our goal is not to keep it in-house; the whole point is to have a common
language for everyone around the table,” Kapin says. “We want all investors to
be able to say, ‘okay, Astanor had a 4x return here; and this other VC fund did
a 2x; or another fund achieved a 5x return.’ Impact measurement will never be
perfect; but this approach is helpful to any impact investor — and it’s
applicable across all industries.”
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Content creator extraordinaire.
Tom is founder of storytelling strategy firm Narrative Matters — which helps organizations develop content that truly engages audiences around issues of global social, environmental and economic importance. He also provides strategic editorial insight and support to help organisations – from large corporates, to NGOs – build content strategies that focus on editorial that is accessible, shareable, intelligent and conversation-driving.
Published Aug 9, 2023 8am EDT / 5am PDT / 1pm BST / 2pm CEST