Episode 34 – New GIIRS Rating System for Impact Investors

October 7, 2011

In Episode 34 of The Wendel Forum(originally aired on October 1, 2011 on Green 960 AM radio), show host Dick Lyons speaks with Flory Wilson, Director of International Standards at B Lab.  Flory has been instrumental in helping to develop a new rating system for impact investing in North America and around the world – GIIRS.

In their discussion, Flory and Dick discuss the origin of “impact investing,” a term that really only came into popularity about three years ago. Impact investing refers to investors placing capital in companies and funds that deliver positive financial returns while delivering positive social and environmental impacts on their communities.  The concept is relatively simple, but achieving a reliable way to measure, verify and report on a company or fund’s impact has been a challenge, leaving investors with no real way to gauge their impact investments.

Investors knew how to judge returns on their money – profits (just look at the bottom line).  But what has been lacking is a way to analyze and report the other two contributors to the triple bottom line (referring to people, planet and profits). 

The GIIRS crew has spent the last couple of years setting up a framework for reporting and verifying the results of entities that might be desirable vehicles for impact investors.  The audit process takes into account such aspects of a company as governance structure, entity ownership structure, workforce engagement, community support, and environmental footprint.  They look at how the company manages the supply chain and distribution structure and the actual environmental impact of the company’s products and services. 

When assessing a fund, the rating system takes into account the fund manager’s track record, how they screen investors and portfolio companies, how rigorous their standards are, how they manage the investment over time, and their investment exit strategies.

Flory explains some of the reporting features and the review process, as well as the types of businesses and funds that are currently participating in the program.

GIIRS recently had a “coming out” party of sorts at the Clinton Global Initiative Annual Meeting in New York.  During this event held September 20-22, 2011, fifteen pioneer investors with $1.50 billion in impact assets, declared their preference for GIIRS-rated funds and companies. They included JP Morgan, Prudential, the Rockefeller Foundation, private equity funds, family foundations and philanthropic organizations, as well as international public sector financial institutions.

Listen in to the episode and let us know your thoughts.  Will these types of metrics have a significant impact on the future of investing?  What might be the next steps in this evolution?

SHOW NOTE:
Tune in on Saturday, October 8, 2011, to get a sneak peak preview of Sustainable Industries Economic Forum featured speakers Bonnie Nixon, executive director of  The Sustainability Consortium, and Alex Bogusky, founder of the FearLess Revolution.  The Forum will be held on October 20 in San Francisco and there is still time to get your ticket by visiting the Sustainable Industries website.

Post Links:

Listen to the interview with Flory Wilson: Episode 34 of The Wendel Forum(27:45 min, mp3)

GIIRS website:  www.giirs.org

Clinton Global Initiative Annual Meeting website info: http://www.clintonglobalinitiative.org/ourmeetings/2011/default.asp?Section=OurMeetings&PageTitle=CGI

Sustainable Industries Economic Forum website: http://sustainableindustries.com/events/economic-forums/sustainable-industries-economic-forum

Dick Lyons website bio: www.wendel.com/rlyons

Green 960 AM radio website: www.green960.com

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