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January 23, 2018
Choices in Impact Measurement &
Management
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Thank you for joining us today!
Please note:
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broadcast.
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Agenda
• Key findings on impact measurement and management:
• What should I measure?
• How do I measure?
• Then what?
• Discussion among impact investors:
• Sarah Wilson, Nuveen, A TIAA Company
• Michael Eddy, Global Innovation Fund
• Grace Horwitz, Blue Haven Initiative
• Questions
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Abhilash Mudaliar
Research Director
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The State of Impact Measurement & Management Practice
169impact investor
respondents
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A variety of motivations inform IMM practice
83%78% 75%
63%
50%45%
21%16%
43%
To betterunderstandour impact.
To proactivelyreport our
impact to keystakeholders.
To manage orimprove our
impact.
We believethat impactdata havebusiness
value.
We need tocommunicateour impact for
marketingand/or
fundraisingpurposes.
We arerequired by
our investorsor donors tomeasure and
report ourimpact.
There is clientdemand or
pressure fromchanging
cultural normsto measure
and report ourimpact.
We arerequired bygovernment
regulations tomeasure and
report ourimpact.
Other
Source: GIIN
n = 168 167 169 168 158 150 145 113 44
Motivations for measuring and managing impact
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Key decision points:
1. What should I measure?
2. How do I measure?
3. Then what?
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What should I measure?
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Investors seek social & environmental impactSDG-aligned impact themes targeted, by number of respondents
Source: GIIN27
5
9
10
14
16
24
27
28
29
32
34
38
39
48
48
54
74
Other
Life below water
Peace, justice, and strong institutions
Partnerships for sustainable development
Life on land
Zero hunger
Gender equality
Climate action
Clean water and sanitation
Reduced inequalities
Responsible consumption and production
Industry, innovation, and infrastructure
Sustainable cities and communities
No poverty
Affordable and clean energy
Quality education
Good health and well-being
Decent work and economic growth
n = 124
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Investors measure different types of impact
153
130
72
64
62
58
51
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Measure social/environmental outputs
Measure social/environmental outcomes
Measure the breadth of our impact
Measure whether our impact is additional
Measure the depth of our impact
Benchmark our social/environmental performance
Measure whether our impact is attributable
Measure the longevity of our impact
Source: GIIN
Types of impact measuredn = 169
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…using a wide variety of tools
Source: GIIN
Tools, indicator sets, and standards used in IMMn = 137
28
3
3
7
8
14
16
18
18
19
30
56
57
85
0 20 40 60 80 100
Other
Total Impact Measurement and Management (TIMM)
PRISM
Social Return on Investment (SROI)
Global Alliance for Banking on Values (GABV)
Sustainability Accounting Standards Board (SASB)
Leadership in Energy and Environmental Design (LEED) ratings…
Global Reporting Initiative (GRI)
Aeris CDFI ratings system
SPI4 / Social Performance Task Force (SPTF)
Principles for Responsible Investment (UNPRI)
B Analytics / GIIRS
United Nations Sustainable Development Goals (SDGs)
IRIS
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How do I measure?
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Most impact investors set impact targets
41%
59%
No
Yes
No, we do not set impact targets.
Yes, we set impact targets.
Percentage of investors that set measurable impact targetsn = 169
Source: GIIN
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Investors balance standardization and customization
37%
24%
20% 19%
We use a set of standardizedmetrics across all investments
within our portfolio.
We select a set of metrics for eachsector and/or impact objective
within our portfolio.
We customize some metrics foreach investment and use some
metrics across our entire portfolio.
We select a specific set of metricsfor each investment.
Level of customization/standardization of impact metricsn = 169
We use a set of standardizedmetrics across all investments
within our portfolio.
We select a set of metrics for each sector and/or impact
objective within our portfolio.
We customize some metrics for each investment and use some
metrics across our entire portfolio.
We select a specific set of metrics for each investment.
Source: GIIN
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IMM is a core responsibility across teams
7871
25
15 16
IMM is a responsibility onlyof our investment team.
IMM is a responsibility ofboth dedicated staff and
our investment team.
We contract out our IMMwork to external
consultant(s).
IMM is a responsibility onlyof one or more staff
dedicated to that purpose.
Other
Human resources allocated to IMMn = 169
Source: GIIN
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Investors rely on implicit and explicit incentives
Incentives for investor staff & investeesn = 100
82%
18%
Yes, we incentivize the achievement of impact targets
No, we have no incentives for impact
For staff:
• Intrinsic motivations
• Performance evaluations
• Compensation
For investees:
• Intrinsic motivations
• Requirements for
investment/follow-on capital
• Investment terms
• Governance/management changes
• Management compensation
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Then what?
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Impact data inform key investment decisions
112 110
7166
5546
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For pre-screeningor due diligence
Informinvestmentselection /portfolioallocationdecisions
Identifyopportunities forcapacity-building
support ortechnical
assistance
Inform portfoliomodeling and
strategy
Improveinvestees'
operationalefficiency
Help design orrefine
products/servicesof our investees
Inform exitdecisions and/or
exit timing
Other
Source: GIIN
Uses of impact data in investment managementn = 148
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…and improve impact achieved
123
10396 92 89
8375
2
Communicateresults to
stakeholders
Identify orrefine
appropriatemetrics
Improve ourprocess for
analyzing andinterpretingimpact data
Assess impactand ESG risk
factors
Set or reviseimpact
expectationsand/or impact
targets
Refine our datacollectionprocess
Identify whichstakeholders
are affected byour investments
Other
Source: GIIN
Uses of impact data in impact managementn = 144
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Speakers
Sarah WilsonDirector, Responsible Investing
Nuveen, A TIAA Company
Michael EddyVice President
Global Innovation Fund
Grace HorwitzAssociate
Blue Haven Initiative
@theGIIN
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Impact Measurement & Management at TIAA/NuveenSarah Wilson
Director, Responsible Investing
FOR INSTITUTIONAL USE ONLY. NOT FOR PUBLIC DISTRIBUTION
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Responsible Investment at TIAA/Nuveen: Our Scale
$1.02 Billion**invested in our Social Impact Portfolio along three themes:▪ Financial Inclusion▪ Affordable Housing▪ Community & Economic
Development
Based on assets under management as of March 31, 2017.* As a PRI signatory, all of TIAA’s assets are committed to RI principles. A requirement of being a signatory is adhering to the PRI reporting framework which has been designed to achieve three main sets of objectives: 1) Accountability of the PRI: To ensure accountability of the PRI initiative and its signatories, 2) Signatory transparency: to encourage signatory transparency on responsible investment activities. 3) Signatory assessment: to provide tools to allow signatories to measure their own performance with objective indicators**Represents investment commitments. Adjusted valuation of AUM is $611 million.
$600+ Billion committed to RI principles under the UN Principles for Responsible Investment
$77 Billion in sustainability initiatives within real assets
>$18 Billion in ESG-focused products
FOR INSTITUTIONAL USE ONLY. NOT FOR PUBLIC DISTRIBUTION
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Impact Investing Portfolio
Team
Responsible Investment
Team
Impact Measurement & Management Roles
• Manages $1 billion impact investing portfolio for the TIAA General Account
• Defines impact themes and underwrites/selects investments within each theme
• Communicates investment & impact outcomes to internal stakeholders
• Provides impact measurement/ESG integration expertise
• Designs harmonized impact metrics across multiple GPs within a theme
• Participates in external initiatives to advance the practice of impact measurement
+ many other broad ESG responsibilities
• Engages with GPs on impact measurement approaches
• Gathers/harmonizes impact data from GPs
The TIAA General Account is an insurance company account and does not present an investment return, and is not available to investors. FOR INSTITUTIONAL USE ONLY. NOT FOR PUBLIC DISTRIBUTION
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• Demonstrating strength of alignment with TIAA/Nuveen impact
themes during initial due diligence and on an ongoing basis
• Measuring GP progress toward both their business and impact
targets over time
• Shedding light on strategic differences between GPs within the
same theme (Example: Social vs. environmental metrics in
affordable housing)
Use Cases for Impact Data
FOR INSTITUTIONAL USE ONLY. NOT FOR PUBLIC DISTRIBUTION
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This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not
provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular
investor, or suggest any specific course of action. Financial professionals should independently evaluate the risks associated with products or services
and exercise independent judgment with respect to their clients.
Please note socially responsible investments are subject to Social Criteria Risk, namely the risk that because social criteria excludes securities of certain
issuers for non-financial reasons, investors may forgo some market opportunities available to those that don’t use these criteria.
The investment advisory services, strategies and expertise of TIAA Investments, a division of Nuveen, are provided by Teachers Advisors, LLC and TIAA-
CREF Investment Management, LLC. Securities offered through Nuveen Securities, LLC.
374975-INST-AN-1/19
Disclosures
FOR INSTITUTIONAL USE ONLY. NOT FOR PUBLIC DISTRIBUTION
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Global Innovation FundMichael Eddy
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• GIF is a $200 million non-profit fund
• It invests in innovations that help people in the developing world living on less than $5/day
• It’s like a venture capitalist, willing to take smart risks – but with the goal of maximizing social returns
GIF aims to make a big difference in the lives of millions of people
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Practical Impact Assessment
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• A convenient, updateable forecast of impact, used before, during and after investment
• Allows you to start with good-enough order of magnitude estimates; refine as information improves
• Used alongside investment-specific indicators that track performance of each investment
• Promotes a portfolio-level view of effectiveness enabling us to track portfolio performance
• Complements more data-intensive, Social Return on Investment (SROI) analysis
Practical Impact Assessment
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Blue Haven Initiative
Privileged & Confidential
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Confidential
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Confidential
BHI Impact Objectives
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Invest in sustainable and
scalable businesses
Target companies providing goods
and services to underserved
consumers and markets
Develop the impact
investing ecosystem
Support business enabling
environments
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Confidential
Step 1: Estimating & Planning Impact
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Challenge• Skills mismatch and lack of appropriate education /
training lead to a lack of job readiness and high rates of unemployment among youth in Kenya
• Employers have difficulty finding and training new talent due to lack of in-house human capital resources
Value PropositionSpire provides career development and training services to help growing companies instill a baseline level of skills in entry and mid-level hires.
Metrics & Measurement
1. Companies served2. # of students 3. # of classes (existing + new)4. Customer NPS score5. FTEs
Desired Outcomes• Reduced unemployment • Fewer job vacancies• More effective professional development• Reduced employee churn• Improved business performance
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Confidential
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Impact Thesis:
• PEG makes healthy, safe off-grid power solutions affordable to the Ghanaian consumer through a PAYG model with long term plans and asset-financing emulating that of M-KOPA.
Impact Update:
• PEG has emerged as a leading distributor of solar home systems in Ghana, focused on adapting the PAYG model in the West African context.
• PEG has taken a number of steps to accelerate sales and improve repayment rates, including a revised sales strategy and innovative alternative payment methods (e.g. USSD shortcodes).
• PEG has partnered with BIMA to reward loyal customers in Ghana with free medical insurance covers
KPI 2017
1 Number of systems sold (K) xx
2 Customer savings ($, M)1 $14M
3 Hours of clean lighting (M / month)2 3.7M
4 Carbon reduced - cumulative (tons)2 31k
5 Jobs created (FTEs) 130
Pending finalized 2017
reporting
Sector 2016Investment
DateGhana, Ivory
CoastGeography
Step 2: Monitoring at the company level
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Confidential
Annual Revenue Generated $80M People Employed
(FTEs) 1,000
New Customers Acquired (Annual)
400kCumulative Customers
Served1.5M
TOTAL PORTFOLIO KPIs
Step 3: Evaluating at the portfolio level
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Confidential
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CompanySustainable
Development GoalsSample Metrics
• Industry-related GHG emissions• Share of energy from renewables
• Share of population with reliable energy• Share of population with access to
renewable energy
• Access to financial services• Gini coefficient
• Youth employment rate• Average income• Human mobility governance index
• Share of population with reliable energy• Share of population with access to
renewable energy
Step 4: Communicating to peers
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Questions?
Sarah WilsonDirector, Responsible Investing
Nuveen, A TIAA Company
Michael EddyVice President
Global Innovation Fund
Grace HorwitzAssociate
Blue Haven Initiative
@theGIIN
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Investors use evidence and tools to set strategy
73%
51%
25%
10%
18%
74%
20%16%
7%
20%
We select them based onthe existing evidence we
used to develop ourstrategy (e.g., theory ofchange or logic model).
We select them based on arating system, index,
analytics tool, or othersystem (e.g., IRIS).
We select them based onthe Sustainable
Development Goals.
We select them based onregulatory and/or taxcredit requirements.
Other
Perc
ent
of
resp
on
den
ts
Impact metrics Impact targets
Ways to select impact metrics and targets
n = 146 n = 106Source: GIIN