Field Notes: Investing Full Tilt

Heron’s Clara Miller and SASB’s Jean Rogers discuss the new impact data that is improving the ability to invest for both financial and mission returns.

In the Stanford Social Innovation Review, Miller and Rogers write that foundations are “running out of excuses” to not to deploy “a full range of financial investment vehicles to yield maximum positive social and financial performance,” given the rise data necessary to make it possible:

For any foundation looking to—at the very least—eliminate mission-undermining positions from its portfolio, measuring mission performance with reliability and integrity, across the range of exposures in a portfolio, is paramount. One challenge has been a lack of comparable data on the sustainability (meaning environmental, social, and governance, or ESG) performance of public companies. But data providers, standard setters, and ratings providers are emerging. For example, the Global Reporting Initiative, the International Integrated Reporting Council, and the Carbon Disclosure Project have advanced standalone sustainability reports, integrated reports, and the disclosure of climate-related data (respectively). More and more organizations are contributing profile and attracting supporters to the emerging systems of performance measurement. Recently, the Sustainability Accounting Standards Board (SASB) has focused on developing data standards for public companies to disclose material sustainability information in mandatory filings to the Securities and Exchange Commission, using a process of stakeholder involvement similar to that employed by the Financial Accounting Standards Board (FASB) for financial data and reporting. With SASB standards in place, investors will be able to type in a company ticker and pull up ESG data points—sustainability fundamentals alongside financial fundamentals—and benchmark the relative performance of companies on mission-related dimensions. SASB’s Sustainability Industry Classification System (SICS) surfaces industries with the greatest potential for solving global sustainability challenges, allowing investors to allocate their portfolios accordingly. Heron is far from alone in the quest for data. Other investors and data providers—including Bloomberg Philanthropies, The Generation Foundation, The Rockefeller Foundation, The Gordon and Betty Moore Foundation, and The Doris Duke Charitable Foundation—are funders of SASB and other data-oriented organizations. KL Felicitas, US Social Investment Foundation, and the G8 Social Impact Investment Task Force, to name just a few—are working to embed the principles of impact investing into the mainstream investment process by building a robust and independent data infrastructure. Impact investing principles are entering the DNA of the economy, and they will change the game for all.

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