New Support for Global Impact Investing Rating System (GIIRS)
New support was recently announced for the Global Impact Investing Rating System (GIIRS), a ratings agency that provides comparable and transparent ratings about the social and environmental performance of enterprises seeking investment capital, as well as investment funds that invest in these businesses. At a summit on entrepreneurship hosted by the Obama adminstration earlier this week, the Rockefeller Foundation, USAID and other partners have contributed $6.5 million to support the development and use of GIIRS to catalyze the flow of private sector investment into businesses that seek blended value (economic, social and environmental) returns in developing countries.
Highlights from the press release:
- GIIRS builds on B Lab's success with its existing B Impact Rating System that has been used to assess over 1,000 companies on their social and environmental impact and to certify nearly 300 B Corporations.
- GIIRS will be launched as a publicly available investment product in early 2011.
- Already, twelve Pioneer GIIRS Fund Managers have raised approximately $1 billion that will be invested in high impact GIIRS-rated social entrepreneurs, with a particular emphasis on enterprises in Muslim majority countries and women-owned enterprises. These GIIRS Pioneer Funds will be pilot testing GIIRS with their portfolio companies throughout the developing world during 2010.
- The Pioneer Fund Managers include:
Other notable points from the GIIRS website:
- GIIRS, a project of the independent non-profit B Lab, will assess the social and environmental impact (but not the financial performance) of companies and funds using a ratings approach analogous to Morningstar investment rankings or S&P credit risk ratings. GIIRS will include the following features:
- Company Ratings and Fund Ratings;
- Ratings in developed and emerging markets globally;
- Aggregate ratings, as well as ratings within numerous impact areas and industry sectors;
- Social and environmental performance metrics and key performance indicators specific to different industries, impact areas, and investor preferences; and
- Benchmarking and analytics for longitudinal comparability.
- GIIRS will provide both company and fund impact ratings, each with current and historical analyses of impact performance for comparative use.
- Company Impact Ratings — a rating of the social and environmental impact of an individual company, including an overall rating, ratings in 15 sub-categories, and key performance indicators (KPI's) relevant to the company's industry, geography, size, and social mission.
- Fund Impact Ratings — a rating of a fund's impact based on the aggregated and weighted impact ratings of its underlying portfolio companies, including the aggregated Company sub-category ratings and relevant KPI's for the fund. GIIRS will also offer a Fund Target Rating product to assist fund managers in their fundraising process and a Track Record Report at the end of their fund cycle to assist in raising a follow-on fund.
Visit the GIIRS website for more information on why this matters for investors, funds and companies that are interested in impact investing. And if you're looking for a sneak peak of what the future looks like, check out the sample GIIRS Company Rating and sample GIIRS Fund Rating.
Finally, here's a good article that puts this development into context as part of a broader effort spearheaded by the Global Impact Investing Network (GIIN):
The heart of the strategy [to professionalize the process of collecting and comparing data about the socially beneficial aspects of investments] is in four core tools – the Impact Reporting and Investment Standards (IRIS), a set of definitions for measuring social investing characteristics; Pulse, a tailored portfolio management tool; the “Data Aggregator” repository, which compiles industry-wide social investing data to support benchmarking and analysis; and, perhaps most influential, the Global Impact Investing Ratings System, which will grade investments by how much social good they generate. All four tools are in development and running in pilot form.
