Validating your impact measurement for stronger reporting Lessons - PowerPoint PPT Presentation

February 2018 Validating your impact measurement for stronger reporting Lessons from an Impact Investor Dean Hand ACCESS MORE A part of the FirstRand Group

Corporate overview FirstRand group operating structure • Listed on the Johannesburg Stock Exchange (JSE) and the Namibian Stock Exchange (NSX), FirstRand Limited is the largest listed financial institution in Africa by market capitalisation. • Through its portfolio of financial services franchises, FirstRand provides banking, insurance and investment products and services to retail, commercial, corporate and public sector customers. In addition to South Africa, the group operates in nine key markets in the rest of Africa. • FirstRand Limited is a Level 2 BEE contributor • Ashburton Investments is a signatory to the UN Principles for Responsible Investing (UNPRI) • FirstRand executes its strategy through separately branded operating franchises: 2 A part of the FirstRand Group

̶ ̶ ̶ Corporate overview A new generation investment manager Ashburton Investments’ vision • To become the African-based new generation investment manager of choice providing global investors with African/Asian corridor products by: Offering our clients investment solutions using our traditional and alternative product capabilities Actively managing the risks inherent in these investment solutions Providing them access to the group’s origination and structuring capability by developing new investment opportunities Competitive advantage • Unique access to attractive assets and origination capabilities of FirstRand Bank • Innovative culture combined with strong risk management skills • Investment strategies suited to client liabilities and other constraints • Offerings structured to match investors’ requirements 3 A part of the FirstRand Group

Targeted returns High Financial First Solely profit- Targeted Investors: maximising Optimise financial returns investment returns with an impact floor Impact First Target financial return Investors: Optimise impact return with a financial floor Financial return floor Impact return floor Philanthropy None Target social/environmental return High None Source  4 A part of the FirstRand Group Fulton, K (2005) The future of Impact Investing, The Monitor Institute

Social Investment Continuum Primary driver is to Primary driver is to create social value Organisations can create “blended” social & financial value create financial value COMMERCIAL PURPOSE SOCIAL PURPOSE ORGANISATIONS ORGANISATIONS Charities Revenue generating social enterprise Social Purpose Traditional Business Business Potentially Profitable social Profitable Grants only: No Breakeven: all sustainable enterprise: social Company allocation trading Trading revenues income from Mainstream Market social enterprise surplus reinvested entreprise: a percentage of Includes traditional and grants trading Company (>75% in trading (no dividends to surplus profit profits to charity philanthropy revenues revenues) shareholders) distribution Impact only Impact first Finance first Venture Philanthropy Source: Balbo, L. et al., 2010. Establishing a venture philanthropy organisation in Europe: A practical guide 2nd ed., Brussels: European Venture Philanthropy Association. Available at: https://avpn.asia/wp- content/uploads/2014/12/Establishing-a-Venture-Philanthropy-Organisation.pdf. 5 A part of the FirstRand Group

Stakeholders Pension fund and corporate investors Ashburton ACEF Investee companies 6 A part of the FirstRand Group

Guarantee mechanisms An underutilised tool • GIIN: “guarantees offer exciting ways to stimulate increased private -sector investment in solutions to social and environmental challenges” • Perceived impediments to impact investing strategies with traditional capital ‒ Very few overt investment opportunities exist for fiduciary capital that offer a financial return with an intentional and measured social/environmental return, and if they do, they are very risky ‒ Impact investing strategies are nascent and as yet have unproven viability over time ‒ It is demanding to achieve impact and market related returns at the same time without a trade-off between one goal or the other ‒ Investor choice - more proven strategies and asset classes with better visibility and liquidity • Unsurprisingly there has been less adoption of impact investing strategies • Guarantees offer one way to facilitate adoption • Potential to provide investor comfort to step over the line and thus a track record is developed Source: Schiff, H. & Dithrich, H., 2017. Scaling the use of guarantees in U.S. community investing , New York p 2. 7 A part of the FirstRand Group

Principles of our measurement Our ToC and Logic Model Our Theory of Change • Useful for demonstrating why an approach will be successful in achieving impact • Graphic with multiple multi-directional arrows showing joint causality • Less useful for program development or management • Shows the why not the how Our Logical Models • Appropriate for managing a programme • Focus how indicators are associated with activities • Graphic & reflect a time order with one-direction arrows • Helpful for both for program M&E and management • Can show both why & how • Can include major indicators for different project stages • Use focus groups, messy, stakeholder inclusion, consensus- driven approaches Source: Denise L. Baer, Ph.D.: Centre for International Private Enterprise (CIPE) 8 A part of the FirstRand Group

Theory of change Guarantee mechanism to ‘crowd in’ investors 9 A part of the FirstRand Group

Results Chain Guarantee mechanism to ‘crowd in’ investors 10 A part of the FirstRand Group

Impact: Alignment to global priorities United Nations: Sustainable Development Goals Impact indicator Sustainable development goals New permanent jobs created New permanent jobs created: female New permanent jobs created: previously disadvantaged Growing businesses supported 11 A part of the FirstRand Group

Measurement continuum Anecdotal Evidenced Atlantic Credit Ashburton Money Ashburton Impact Enhanced Fund I Market Impact Fund Fund Ashburton Credit Enhanced Fund II • • • IRIS Measurement IRIS Measurement IRIS Measurement standards standards standards • • • Quantitative measures Quantitative measures Quantitative measures (job creation) (job creation, loans (job creation) • • granted, homes built, Sample evidence Data generated from • etc.) Independent evaluation other investments in • • the same portfolio Qualitative case Audited • studies Qualitative case studies 12 A part of the FirstRand Group

Independent evaluation June 2016 ACEF #1 achievements • 96% of job creation target (June 2017) • Jobs Fund Recognition Award (2016) • Chosen by Jobs Fund as one of 8 projects to contribute to Oxford Policy Management’s learning report to National Treasury • Eleven reporting quarters successfully completed to June 2017 (1 quarter remains) • Project, Fund & Guarantee Mechanism Trust all independently audited Source  13 A part of the FirstRand Group Greater Capital Independent Evaluation 2016

How we have met job creation targets June 2017 How do we define job sustainability? ACEF #1 Impact target Target job creation 9 635 • The job is newly created Verified job creation 9 223 • As a consequence of our investment Target achieved 96% • The job is permanent 100% full-time equivalent jobs • Evidenced by a letter of appointment or similar 89% female • The job is considered ‘decent employment’ 99% previously disadvantaged • Salary is well positioned relative to minimum wage 78% of jobs created in underserviced provinces • Focus on most marginalized (Eastern Cape, Limpopo and North West) ‒ HDI, youth, geography, gender R8,274 cost per job ACEF #2 Impact target Target job creation 4 200 14 A part of the FirstRand Group

M&E plan Scaling a guarantee for growth & job creation Impact Monitoring Impact Evaluation Programme Input Process Output Outcome Impact Indicator 1 Debt funding provided by Expansion activities of New permanent jobs 4,200 new permanent jobs Contribute to job creation Ashburton Investments to the business created by the business created across all in the national economy growing businesses as a result of the funding investees as a result of the funding 9 & 13 Debt funding provided by Expansion activities of Routine impact reports: Cumulative impact: Contribute to job creation Ashburton Investments to the business No. of jobs created within Total no. of jobs created in the national economy growing businesses the reporting period 7 & 8 Development of a Leverage the Raise 900 million to Change the perception of Demonstrate that Guarantee Mechanism and guarantee to raise leverage the guarantee by risk related to investments investments (mainly related structure investor capital 10 times that result in impact unlisted) in job creating initiatives are viable 11 & 12 Leverage Ashburton Building investor Assess individual Assess collective attitudes Contribute to positive Investment’s fund confidence in impact investor attitudes toward of investors towards change in the investment management expertise investing impact investing in the impact investing in the sector Fund Fund 15 A part of the FirstRand Group