Explanation of our FrameworkAfter looking extensively at all of the metrics and indicators for IRIS and the UN SDG goals, we concluded that the frameworks were too markedly different from one another to conduct a direct comparison of metrics. We realized that while the UN SDG goals are extremely important in measuring the overall sustainability of global practices when attempting to use these indicators to ascertain sustainability for a singular firm, they are far less useful. Therefore, to develop our interpretation key, we decided to mainly focus on the IRISmetrics and attempt to consolidate the 686 individual metrics into a more digestible and comprehensive database.
Currently, the IRIS metrics are broken down into 18 different impact categories. Our team went through each of IRIS’s impact categories and documented every metric within each category. We immediately noticed that certain metrics repeated in multiple impact categories, as IRIS impact categories are designed around sectors of impact, rather than the metrics themselves. For instance, there are 10 different individual metrics related to greenhouse gas emissions, and these metrics appeared in six different impact categories: pollution, energy, real estate, agriculture, air, and climate. This overlap of individual metrics makes it extremely difficult to determine where, and how much impact is made. Our methodology for creating subcategories eliminated all repetition of individual metrics, as we tailored our subcategories towards the preexisting IRIS metrics. We grouped metrics that correlated to each other and came up with an overarching name for the new subcategory. For instance, the10 metrics related to greenhouse gas emissions were placed into one subcategory, appropriately titled “Greenhouse Gas Emissions. ” Our team created a total of 28 subcategories, each containing one of the 686 IRIS metrics.
While our new subcategories were certainly more digestible than IRIS’s current impact categories, we decided to consolidate even further using the ESG investment lens. We organized 28 subcategories into either the E, S, or G investment categories. By incorporating the ESG investment lens, our framework is far more digestible and comprehensible than IRIS or UNSDG, particularly amongst the impact investing community. Furthermore, this type of two-level consolidation made it far easier to not only determine the size and scope of impact but far faster as well since we are only rating firms with metrics that directly correlate to their area of the desired impact.
However, while all individual metrics fit nicely into our newly created subcategories, there is still a small degree of overlap between these subcategories and the broader E, S, and G investment lens categories. Ultimately, we do not feel that this is a constraining factor since it is important to identify firms that create impact in multiple sectors. By indicating that some metrics can apply to both the social and governance aspect of ESG, it does not denote twice the impact.
Our framework rates firms across each lens individually, so while we may have some overlap in individual metrics, these metrics will only be applied to the investment lens we are rating the firm on. Additionally, while we found that all accounting metrics were essential in rating the sustainability of companies, they did not fit into the E, S, or G lens. As a result, we eliminated all accounting metrics on IRIS and instead will require all firms to submit an updated income
statement, balance sheet, and cash flow statement.
After we had organized all of the IRIS metrics and consolidated them into either the E, S, or G investment lens, we could then apply the indicators from UN SDG goals as a means of measuring large-scale, global impact. It became apparent to us that most firms and organizations could simply not make a significant dent in achieving any UN SDG goal by themselves, and attempting to rate any sustainable firm across these metrics would dilute their actual impact. Furthermore, many sustainable firms today cite that they are contributing towards a UN SDGgoal, without actually indicating how, or to what degree. Since the indicators for the UN SDG goals are broad enough to apply globally, they are also broad enough to use as greenwashing techniques. For instance, under goal 7, affordable and clean energy for all, target 7.2 is to substantially increase the share of renewable energy in the global energy mix. While this is certainly an important goal to accomplish, what exactly does “substantially” mean? There is no clear-cut definition on the SDG website, and the indicator for target 7.2 is only, “The renewable energy share in the total final energy consumption,” which is not a comprehensive metric to rate individual sustainable firms on. It becomes a slippery slope for a firm to claim they contribute toward a UN SDG goal; yet, by quantifying a firm’s impact through our newly consolidatedIRIS metrics, we can accurately determine if the firm is also contributing toward a UN SDG.
Test Case ApplicationsTo test our framework, we chose four different NGOs of varying sizes and scope of impact and ran them through the metrics, assessing which metrics would likely have an impact based on the information we could find in our due diligence process. The first NGO looked at is called the Environmental Working Group (“Who we are.”). This organization's mission is to provide consumers with better information on the foods they eat and products they buy so that they can make more “informed choices and live a healthy life in a healthy environment.” To do so, their teams of “scientists, policy experts, lawyers and communication and data experts work tirelessly to reform our nation’s broken chemical safety and agricultural laws” (“Who we are.”). While their mission is simple, when you look at all of the stakeholders affected by their work, the Environmental Working Group stretches across all three investment lenses of ESG, allowing us to show how our platform measures an organization's impact in terms of both breadth and depth.
For example, out of the 12subcategories in the Environmental lens, EWG is ranked by metrics in 9 of those subcategories, giving it a 75% score in terms of its breadth. Then the organization is evaluated based on which metrics it affects in each subcategory. Because we don't have the resources to evaluate each of these organizations in extreme depth, the scoring for these NGOs will simply tell whether an organization affects the metric based on the information we could find. If ImpactX were to adopt this framework and platform, it would be necessary to adjust the scoring system to account for how the collection of actual data for these metrics affects an organization’s impact, not just the fact that the organization is evaluated using the metric. But for our purposes, these scores again reflect the framework’s ability to evaluate an organization's breadth and depth. The subcategories used to rate this organization and their subsequent scores for a percentage of metrics used in the evaluation follow Land Protection: 74%, Product type: 67%, Wildlife conservation: 100%, Clean water: 57%, GHG emissions: 100%, Hazardous waste mitigation: 33%, Energy conservation: 85%, Water conservation: 53%, and agricultural yield: 40%. As you can see, in the Environmental lens, EWG has a large breadth of impact in terms of the subcategories that it targets, and it has a high depth of impact by hitting more than 50% of the metrics in seven of those nine subcategories.
While EWG has breadth in terms of its lens by reaching into both the Social and governmental lenses, it lacks depth in both of these lenses, hitting only one subcategory in each of them. Additionally, in the only Social subcategory that it hits, Health and Wellbeing, it is only evaluated by one of eleven metrics, giving it a score of 9%. Similarly, in the only Governmentalsubcategory that it hits, Employee Care and Considerations, it is only evaluated by five of thirty-seven metrics, giving it a score of 14%. As you can see through this firm has a large breadth in its impact lens, the depth of impact is not consistent in all three and heavily focuses on the Environmental lens.
The second NGO that we evaluated is Operation Smile. This organization specializes in a much more narrow area of focus by connecting with volunteer doctors, surgeons, and other health care professionals to provide free surgeries to patients with cleft palates. They also volunteer around the world, conducting programs, partnering with hospitals, and operating care centers to deliver the ongoing care that patients need and deserve. The breadth of this organization’s lenses for measurement represents their more streamlined focus. For example, out of the three main lenses of ESG, this organization is only evaluated based on metrics in the social and Governmental lenses. Within the Social lens, Operation Smile is evaluated based on three of the eleven subcategories, only 27%. These categories were Health and Wellbeing,
Poverty Mitigation, and Microfinance. Though Operation Smile lacks some breadth at the lens and subcategory level, it covers 55% of the metrics in Health and Wellbeing, 75% of the metrics in Poverty Mitigation, and 37% of the metrics in Microfinance. Giving it a substantial amount of depth in these areas. Similarly, Operation Smile only hits two of the subcategories for the governmental lens: Child Care and Employee Care Considerations. However, in using four out of the five metrics in Child Care, and twenty-two out of the thirty-seven metrics in EmployeeCare and Considerations, it has considerable depth in both of these subcategories.
Ducks Unlimited was our third chosen NGO. It identifies as a world leader in wetlands conservation with the clear and direct mission to conserve, restore, and manage wetlands and associated habitats for North America’s waterfowl. As mentioned on their website, this wetlands conservation work not only benefits waterfowl but also provides benefits for society, hunters, wildlife viewers, anglers, and many other outdoor recreationists. Their work helps to mitigate flooding and improve the quantity and quality of water for wildlife and people alike. DucksUnlimited manages to touch upon all 3 of the ESG lenses. Within the Environmental lens, DucksUnlimited is evaluated based on 7 out of 12 subcategories, covering 58%– a significant amount. These categories were land protection, climate change mitigation, wildlife conservation, GHG emissions, hazardous waste mitigation, and water conservation. In addition, Ducks Unlimited also touches on the Social lens, having done work related to 5 subcategories out of 11, giving it a total Social contribution of 45%. These subcategories were impacted individuals, health and well-being, poverty mitigation, microfinance, and impact offerings. It’s important to note that although most people would believe that Ducks Unlimited is solely focused on environmental aspects, they do manage to contribute a lot to society, making it an attractive option for donors
and investors.
Furthermore, Ducks Unlimited only touches on two out of the twelve subcategories within the Governmental lens, giving it an overall contribution of 17%, however, it’s important to note that it hits 9 total metrics under the subcategory Employee Care and considerations, showing that it puts a lot of effort into the internal environment of the organization. The other subcategory it hits is Diversity and Inclusion, which shows their consideration for their employees and their opportunities.
Last but not least, our fourth chosen NGO is Poverty Alleviation Charities, which focuses on using Art as a tool to transform passive compassion into immediate assistance through the distribution of money given, without expectation or judgment, directly to families suffering from poverty. Their core activities include gift contribution, free goods contribution, food aid, and youth services– all of which are included within their unique programs which help alleviate
the physical and emotional sufferings of families due to the inequities they have endured. Out of the3 ESG lenses, Poverty Alleviation hits the Social Lens, given that its mission and vision are only focused on the alleviation of community members in need of both emotional and financial help.
The NGO hits five of the eleven social subcategories including connectivity, impacted individuals, poverty mitigation, impact offerings, and student protection. It’s important to note that within each subcategory, Poverty Alleviation hits a lot of metrics, including the student Protection subcategory which hits 11 metrics. This shows that though PovertyAlleviation does not necessarily address a wide range of ESG issues, they don’t just stop at feeding and caring for children, rather they invest in their future so that they are given a better chance through a funded education. This framework will allow ImpactX to holistically evaluate organizations of different scope and focus, offering one framework that can be used for any socially conscious organization. Instead of assessing the organization and giving it one single sustainability score, this framework is designed based on the careful categorization of metrics, giving people looking for impactful NGOs an understanding of how each organization satisfies the metrics in each category. The idea behind the percentages is not necessarily to score the organizations, but rather to give an investor the information they need to understand what the organization does and how much impact it has in those areas. By measuring the breadth and depth of impact, investors can decide whether they want to give their money or resources to an organization that has a broader scope of impact or a more narrow and focused one.
From there, ImpactX can go through their due diligence process, collaborating with each organization to get accurate measures of each metric that applies, and if they want, creating a scoring system of their own that accurately reflects the strengths and weaknesses of each organization.
Description of Platform (UI/UX)Our recommendation for the user experience and interface of the ImpactX platform is essentially a combination of Linkedin and Guidestar, with a sprinkle of change.org. The site should be tailored for each of the three primary stakeholders and users of the platform: nonprofits and organizations, donors and investors, as well as employees and volunteers. Each of these stakeholders must have a slightly unique user interface to match their
identities and roles within ImpactX’s platform in a way that makes sense. In terms of setting up a user profile as a donor (or general “impact person”), we recommend mirroring the process that IRIS+ utilizes in which users select the UN SDGs or impact categories that they are passionate about. Although we support this aspect of the IRIS+ sign-up process, we believe it should be more in-depth, allowing users to narrow their impact interests to include specific targeted outcomes, as opposed to broad impact categories. Not only would this provide outputs that are more unique to the user’s interests but it would also provide the platform with a better understanding of the user, which would open up more doors for
ImpactX as a platform and service in terms of increasing the effectiveness of the site personalization features. One element that we believe could stem from this would be the recommendations For You aspect.
Our vision is something similar to what Spotify does with its music recommendations: once the algorithm understands the user well enough, it would display potential projects and organizations that they may be interested in on their profile. We believe it would stimulate growth in the impact investing world by introducing new opportunities to investors that they likely wouldn’t be able to find elsewhere. On top of personalized recommendations, we suggest allowing users to earn certain “badges” based on the causes they have donated to, as well as the amount donated. When a “badge” is earned, it would show up on the individual user’s profile. We believe this would encourage competition amongst those
interested in impact. Once a certain amount of badges are collected, the user shall reap rewards such as a ‘verified’ checkmark on their profile to incentivize user activity and donation even further.
For nonprofit and organization accounts, we recommend constructing a user interface similar to company profiles on Linkedin. The platform would include the number of employees, recently uploaded media (posts, articles, and newsletters), their financial status, as well as an ‘Impact’ tab that includes relevant graphics and statistics that are crucial to displaying a cohesive understanding of the firm’s overall impact performance. One idea of what data could be shown
on the impact tab is the specific nonprofit or organization's impact in each of the environmental, social, and governance fields as this would work hand-in-hand with our proposed framework. Our interface would further include a Projects tab where users can learn about the specific impact projects a non-profit or organization is involved in, both currently and in the past. This tab would also showcase the total number of people or “Endorsers” that have invested in each project as well as the names of any mutual friends or followers of the users that have previously donated or volunteered. This aspect would be similar to change.org’s user interface (i.e. “Jack S. Invested $30 to this Project”) and would further stimulate growth in impact investing from a psychological standpoint in that you can essentially show off your investments and donations.
The combination of these tabs should be sufficient when it comes to what a user is determined to learn about a specific firm on ImpactX’s website, as it describes the nonprofit or organization, highlights the projects it’s involved in and who has donated, and the measured outcomes associated with them. Employees and volunteers also can create
individual user profiles on ImpactX. Here, users can showcase their impact skill sets by sharing what projects and organizations they’re involved with, what they are specifically passionate about, as well as the individual causes they’ve donated to. This is where the social media and user connection aspect comes into play, incentivizing users to exhibit their passions by sharing their impact on the world with the rest of the ImpactX community. Our vision is essentially a LinkedIn profile but with an extreme focus on impact, that will provide a one-stop-shop for the impact community to share, connect, contribute, and much more.
Another very important aspect of the ImpactX platform is the search process. When any site visitor wants to search for an organization or impact project, we recommend there should be two search options (regardless of which type of user they are). First, a search-it-yourself option similar to that of Guidestar, in which visitors can locate organizations based on characteristics such as geography, financials (specifics on revenue, expenses, assets), and other attributes of the organization like core activities and services, populations served, and several employees (among others). In addition to including these search filters, we recommend offering other filters specific to the overall reach of the organization or impact project as we believe that Guidestar’s search methods could be improved. Organizations and projects would be tiered (within their profile/bio) in categories such as fully locally-oriented, established (semi-local) aiming to scale,
and large (national or global) targeting significant outputs and outcomes. We believe this would heighten the customer’s experience with the website by allowing them to find the organization or project of their choice at a faster rate.
This search-it-yourself option should be complimented by a more interactive and personalized search option, that is comparable to filling out an IRIS+ profile. A two-prong approach to the search experience will result in a unique user experience for site visitors, primarily driven by leveraging personalization as a key differentiating factor.
Next StepsThroughout this report, we have compared the UN SDG and IRIS frameworks for evaluating and measuring the impact of NGOs, we have presented to you a framework of our design, provided examples of how this framework applies to four genuine NGOs, and given you an example of how we see this framework being implemented into the entire ImpactX platform. The next steps are in your hands. With this report, the slide presentation, and the resources we
have linked to each, you have everything you need to evaluate our platform and ESG framework. If you decide to implement some of the recommendations we have provided, do note that some steps will be taken along the way. For example, though we have provided you with a framework that measures NGOs based on the metrics that apply to them, you will need to build off of our framework, adapting the ranking system to represent the impact of an organization
based on the actual concrete data that you work with them to collect.
Additionally, while it would certainly have been fruitful to include our evaluations of firms along the UN SDGs, since they
were not a part of our interpretation key, they are not included in our test cases and platform at the moment. We have cited a plethora of issues related to the UN SDGs, however since many firm owners and prospective investors may be curious about global impact, it would be useful to implement relevant UN SDG goals and indicators into our framework. Furthermore, you may find that you want to take away or add metrics in each category, luckily, this framework is very
easily adaptable and though we believe it is the best way of measuring the broad and narrow scopes of impact, we recognize that over time new metrics will arise and others will become obsolete. The final step is to implement and share this framework and platform with the world. We truly believe that the ranking system of the framework and the emphasis on building a platform designed to connect investors to organizations is a combination that will help drive the industry of impact investing.
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