Driving Capital to Impact
The impact investing industry is driving capital to investments that actively create positive social and environmental impact. Researchers estimate that between $500 billion to $1 trillion in assets-under-management will be directed toward impact investing within the next ten years.(1) In order for the impact investing space to reach this scale, the sector requires improved infrastructure. This includes a third-party standard for defining, measuring and comparing positive social and environmental impact. Without standards, there are significant barriers-to-scale including: a fragmented market where each investor defines impact differently, high due diligence and transaction costs, limited understanding by investors of how to manage for impact, and a weak policy environment due to a dearth of information. GIIRS standards will help remove these barriers to growth and attract mainstream capital.(2)
The Global Impact Investing Rating System ("GIIRS") Ratings & Analytics provides the impact standards and rating system necessary to facilitate a scalable and transparent marketplace for institutional investors, financial services intermediaries, and companies seeking mission-aligned growth capital. GIIRS, a project of the non-profit B Lab, assesses the social and environmental impact and practices (but not the financial performance) of companies and funds using a ratings methodology that has now been used by more than 6,000 companies. GIIRS Impact Ratings are analogous to Morningstar investment ratings or S&P credit risk ratings and provide third-party ratings of social and environmental performance for impact investment in the private markets, particularly private equity and debt investments in companies and funds. GIIRS sets itself apart from other ratings approaches by recognizing the positive impact generated by a company or fund.
What is a GIIRS Impact Rating?
GIIRS provides both company and fund impact ratings, each with current and historical analyses of impact performance and data that can be benchmarked for comparative use. GIIRS, which is powered by the B Impact Ratings System, is an online self-assessment tool that measures companies' and funds' social and environmental performance. GIIRS has an exclusive license for use of the B Impact Ratings System with the investment community.
GIIRS Impact Ratings are:
• Comprehensive – recognizing over 13 Social Enterprise models as well as over 100 multi-stakeholder practices and policies of a sustainable enterprise and fund manager;
• Easy to use – designed for small and medium-sized enterprises and funds;
• Transparent – criteria and weightings for each impact area, subcategory and individual question within the GIIRS assessment are fully transparent;
• Dynamic – improved versions of the GIIRS assessment are developed every two years;
• Independently governed – by Standards Advisory Councils (SAC), which govern the Developed Market and Emerging Market assessments and are made up of thought leaders, experts, practitioners and users of the ratings system;
• Comparable – allowing investors to compare and aggregate ratings of various companies and funds, regardless of geography, sector, and size, with specifically tailored questions and weightings applied in a consistent framework to ensure both relevancy and comparability; and
• Adaptable – offering industry addenda focused on products and services of companies within specific high-demand industries.