New Frontiers | Our WorkImpact Performance Reporting

STATE: Active
DATE: October 18, 2023
STATUS: Open for public comment

Impact Frontiers is facilitating a consensus-building initiative to establish Norms for investors in private markets about the content, structure, and format of impact performance reports. We invite feedback on the draft Impact Performance Reporting Norms through December 2023 and will publish version 1.0 in Q2 2024 for beta-testing by investors.

These draft Norms are best understood as a voluntary “social contract” among report preparers, report users, and independent reviewers that will benefit all. The goals are as follows:

  • To make impact performance reporting simultaneously less onerous for report preparers and more useful for report users;
  • To facilitate the flow of impact information within and across investment organizations so that it can inform decisions about investment and engagement;
  • To create open-access, non-proprietary criteria against which independent reviewers may assure, evaluate, or verify impact performance reports, enhancing appropriate consistency across independent reviewers; and
  • To offer a market-tested prototype for future impact performance disclosure standards by voluntary standard-setters and national regulators.

The draft Impact Performance Reporting Norms are designed to support investors in reducing the risk of “impact-washing” and “cherry-picking,” which are commonly expressed concerns.

Towards this end, the draft Norms combine elements of existing impact management practice with the “Qualitative Characteristics of Useful Information”  from the Conceptual Framework for Financial Reporting (Conceptual Framework) of the International Financial Reporting Standards (IFRS) Foundation.

Impact performance reports that follow the draft Norms would be more akin to annual financial disclosures provided privately to asset owners and allocators than to impact reports that are produced primarily for marketing, communications and fundraising purposes. Ideally they can replace and improve on, rather than add to, existing annual impact performance reporting, and exist alongside documents produced for marketing, communications, and fundraising.

Section 1 proposes a shared understanding of the primary users and objectives of impact performance reports and interprets the Conceptual Framework’s six qualitative characteristics of useful information in the context of impact performance reports. Section 2 proposes a shared expectation for the content and structure of impact performance reports. The visual summary below outlines this framework:

A separate document provides a set of suggested questions that independent reviewers can use to assess impact performance reports against the draft Impact Performance Reporting Norms.

Public Consultation

Impact Frontiers launched this effort in Q4 2022 with the support of the Rockefeller Foundation and has already received feedback on a pre-consultation draft from more than 70 asset managers, asset owners, and other partners. In-person convenings held in New York City and in Tokyo also informed the current public consultation draft. We are working to offer similar convenings in Africa, Asia, Europe, Latin America, and the United Kingdom in the coming months to ensure a global consultation.

We are inviting feedback on the discussion documents via public consultation through December 2023. We will incorporate feedback in Q1 2024, publish a revised draft in Q2 2024, and seek to transition the draft Reporting Norms to one or more standard-setters to carry forward thereafter. Responses are welcome via whichever medium listed below is most convenient for you. You may also choose to engage through all three options:

Consultation Questions

We invite your thoughts on any aspect of the discussion documents, including the following discussion questions:

  1. Do the Norms strike the right balance between uniformity and standardization on one hand, and flexibility for preparer discretion and customization on the other? What, if anything, would you change to improve that balance?
  2. Does the suggested content and structure—in particular the list of suggested topics in “3. Impact Performance”—include the right items with the appropriate level of emphasis? Is there anything you would recommend adding, removing, or changing?
  3. Should a principle of conservatism be added? This would encourage report preparers, when facing situations in which information is uncertain or may be framed or presented in various ways, to favor possible understatement over possible overstatement of positive impact (and vice versa for negative impact).
  4. How can field-building organizations (including but not limited to Impact Frontiers) best support collective action among report preparers and users to transition to impact performance reporting in alignment with the Norms?
  5. Impact Frontiers can steward the Norms as long as is needed. In the longer-term, however, incorporation into a larger body of standards may increase adoption and reduce proliferation of standards. What kind of entity would you see as the best long-term home of these norms?
    • Industry association or membership network (e.g., GIIN, ILPA, UN PRI)
    • Voluntary standard-setter with an independent standards board (e.g., ISO, ISSB, GRI)
    • Incorporation of norms into jurisdictional policy and regulation

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