How do impact ratings combine information about each dimension into an overall rating? How can investors ensure their impact rating prioritizes the right kinds of investments?
Once you have set up scoring criteria for each dimension of impact, you will need to decide how to calculate an overall rating for each investment based on its scores on each dimension. This module explores some of the different approaches investors can take to calculate an impact rating, and the implications of each approach for the investments the impact rating will prioritize.
Don’t overlook impact ratings math! How you combine the scores in your impact rating will have a substantial effect on which investments your impact rating prioritizes
Weights and aggregation formulas are just two of the tools in your impact ratings math toolkit
Impact ratings math can also help you incorporate multiple outcomes for multiple stakeholders into your impact rating
Getting the math ‘right’ will require you to roll up your sleeves and embrace complexity. To calibrate your impact rating to your impact goals, you must be prepared to experiment, refine, and repeat!
Impact Ratings Math
In order to build integrated scatterplots, we need to turn our dimension scores into an overall rating. How you do so can have a substantial influence on your portfolio.
Investors may attach different levels of importance to different dimensions of impact based on their impact goals. For some, Who may be the most important consideration; for others, it might be Investor Contribution. Investors can use weights to translate the relative importance of each dimension to their organization into their impact rating.
There are a number of different ways to combine an investment’s score on each dimension into an overall rating. The approach you take can have a substantial effect on which kinds of investments your impact rating prioritizes.
Multiple Outcomes, Multiple Stakeholders
In Modules 6 through 11, we built an impact rating that evaluated each dimension of an investment’s impact based on one outcome for one stakeholder group. Some investors may want their impact rating to consider multiple outcomes for multiple stakeholder groups. Not to fear: you’ve already done the bulk of the necessary work.