An increasing number of players seem to agree that getting transparency into what impact is occurring, using a language people can agree on, would do wonders for the capital markets. It is one of the key dominos that needs to fall for the social capital markets to be unlocked.
At SVT we admire startups that have clearly identified a specific set of proverbial dominos to topple, and the order in which they think they will fall, and who are working with all they’ve got to knock those dominos over. For example, GoodGuide’s dominos are basically: 1) customers have access to data on products’ environmental and social practices at the point of purchase; 2) customers buy products that have a more benign impact; 3) producers of those products have a growing financial incentive to decrease their impact; 4) the information about impact becomes more valuable; and 5) GoodGuide as the source of that information gets lots of “eyeballs“ and makes money. Being crystal clear about what the dominos are is essential to being able to figure out whether they are in fact tipping, and whether they’re doing so at a cost that will allow the process to become profitable and scale.
We’ve been thinking about what the dominos are in the impact management space. Some of the cardinal ones might be:
1. Impact information is definable in terms people generally can agree on, and is accessible.
2. Enterprises want information about their impact.
3. Enterprises obtain information about their impact.
4. Money and other benefits flow more freely to those enterprises that know and manage their impact.
5. Enterprises with impact information become more effective and efficient at creating positive impact and reducing negative impact.
6. The planet becomes healthy, happy and sustainable.
And there are other dominos we could identify (which do you think are important?). Until this point for obvious reasons there’s been a lot of energy focused on #1, making impact information definable and accessible. We see this in everything from GoodGuide to the exciting efforts of B Lab, the Rockefeller Foundation, Acumen Fund and the Global Impact Investing Network, who have formally announced the creation of their Impact Reporting and Investing Standards (a taxonomy of units of measure of various kinds of impacts and proxies for impact), to the host of frameworks that articulate the process for defining and measuring impact, and the host of software-enabled tools for lowering the cost of doing so. But what about domino #2, enterprises wanting the information?
The funny thing is, while a lot of the visionary leaders in this space realize the power of this information to help them persuade others that there is a more efficient and effective way to solve their chosen problem, scale with quality, capture value, decrease risks, and inspire, when you really start to unpack the demand for this information, the benefits are by no means universally embraced, and the reason isn’t just that the information has seemed relatively expensive to acquire.
What are the down sides to transparency about impact? We will be unpacking the dark side of impact in coming posts. What negatives to knowing one’s impact, real or perceived, have you observed?