A recent report by the Global Impact Investing Network (GIIN) highlights the booming impact investing scene in Southeast Asia (1). The global market has reached a staggering US$1.164 trillion as of 2022, and Southeast Asia is experiencing its own surge, with US$915.2 billion invested from 2017 to 2022. Some of the most recent initiatives in the region include:
Wavemaker Impact, also known as the Southeast Asia first Climatech Venture Builder, raised a US$60 million fund to build ventures that contribute towards reducing global carbon emissions by 10% by 2025.
Heritas Capital and DBS anchored the Asia Impact First Fund (AIFF), a US$20 million fund that provides growth capital to innovative and high-growth impact-driven enterprises across Asia.
The Monetary Authority of Singapore (MAS) launched a US$5M Climate Solutions Design Grant Window to design and catalyze innovative blended finance solutions in Asia.
These examples demonstrate a strong commitment to address some of the social and environmental challenges in the region, while also seeking to generate financial returns. The definition of impact investments, however, also requires strong impact measurement and management practices (IMM), which conceptually sounds relatively easy, but the actual implementation and execution is not as simple. The three main steps involved in IMM include:
Defining Goals & Indicators: Outline the desired impact and establish measurable indicators to track progress;
Choosing Methods & Tools: Select data collection methods (surveys, interviews, etc.) and utilize relevant tools for efficient measurement; and
Analyzing, Benchmarking, Reporting and Managing: Analyzing, comparing, and drawing insights on the data.
The first step is probably the easiest one to begin with. Meanwhile, the data collection piece can be considered as the most difficult one at the moment given that it is dependent on having the portfolio companies or organizations provide their data and there are also costs involved in collecting and verifying the data. Without the data, the analysis and management become difficult.
This entire process is currently quite manual, but some tech enabled tools are coming to the market. Agile Impact for example, provides key performance impact indicators (KPIs) aligned with an organization’s Theory of Change; SoPact provides relevant tools and streamlined dashboards and reports.
We have also observed a rise in the number of tech companies, particularly in Europe and the US, utilizing AI to provide ESG and Impact data. Platforms like Reprisk and TrueValueLab for ESG data, and Impaakt and Clarity AI for impact data, empower investors to make informed portfolio choices. However, much of this data relies on publicly available information or from impact and sustainability reports from established companies that may not have been verified or audited.
Impact-ESG Data Providers—Competitive Landscape Mapping (Dec 2023)
Another challenge has been the adoption of a common set of impact standards and language. The Global Impact Investing Network (GIIN) with IRIS+, the Impact Management Platform (IMP), and Impact Frontiers have been making substantial strides in getting investors aligned and using similar frameworks. These organizations also offer online courses, empowering impact investors to demystify impact measurement with structured frameworks and user-friendly tools, turning a potentially complex task into a clear and actionable process.
Effective impact investing requires strong impact measurement and management (IMM) practices, beyond simple data reporting and collection practices. While the industry is still in its early days of mastering the practice of IMM, there is strong acknowledgement of its importance for transparency and accountability purposes. This presents an opportunity for impact investors in Asia to collaborate and learn from each other and thereby generate a rising tide to lift all boats.
We at Mana Impact are excited to be part of this ecosystem by being a trusted advisor in supporting investors in building impact-driven investment portfolios with robust impact measurement practices and leveraging technology to bring more transparency and efficiency to this process. Want to learn more? Please connect with us.
Written by Johanna Lepeu - El Iman, Impact Manager at Mana Impact
References:
Investing in Women Report, May, 11th 2023 “Impact Investing in Southeast Asia Update - 2022-2022”