It has been five years since we took the decision to develop an approach to impact investing at Arisaig, and nearly three years since launched our emerging markets public equity impact strategy. The value of global impact investing assets has increased dramatically over that time, reaching over USD 1.16tn by 2022[1]. Industry initiatives, tools and guidance for impact measurement and management (IMM) have also evolved over the same period although are still relatively nascent compared to ‘ESG solutions’.
We have learnt a huge amount over this period and whilst there have been a number of incremental refinements over this period, in in the first quarter of this year, we made two meaningful changes: firstly, we meaningly revised our impact scoring framework; and secondly, we created the Arisaig Impact Forum, a council dedicated to impact discussions.
Impact scoring framework
As shared in a previous Insights piece, our impact scorecard is a crucial component of our IMM framework. It summarises the extensive qualitative impact analysis that our investment team undertakes based on the Five Dimensions of Impact[2]and the translation of this into a numerical measure which aids comparison between companies and over time. Over the last five years we are confident our understanding of what ‘good’ impact looks like has improved.
While the original scorecard served us well initially, we have struggled with certain aspects. Specifically, we felt the scorecard wasn’t comprehensive enough as it didn’t capture all relevant impact considerations. It also was too backward looking, failing to capture impact potential. Finally, it had certain biases e.g., companies that had large numbers of beneficiaries tended to score disproportionately high.
The updated impact scorecard implemented in Q1 2023 is more sophisticated in that it includes an assessment of a wider range of impact factors. Our original scorecard focused on Reach, Criticality, and Effectiveness; the updated version goes beyond these considerations and incorporates Evidence, Net Impact, and Alignment (see table below). The total number of impact-related metrics which are scored has doubled from six to twelve.

The final impact score is expressed as a percentage of the maximum theoretical score. Holdings are reassessed at least every three years, more frequently where there is higher impact risk or a significant change in the business.

Impact Forum
Establishing a forum for the discussion of impact scores – which we imaginatively called the ‘Impact Forum’ was the other major step we have taken. The Forum’s mandate is to ensure that our impact investments deliver positive societal impact. It acts as a filter between the Research Team, which is responsible for impact due diligence and scoring of companies, and the Investment Committee, which makes portfolio decisions. For each potential holding, the Forum:
– Reviews and discusses the impact assessment (including scoring) prepared by covering analyst. Forum may revise the impact score if deemed appropriate;
– Identifies strengths and weaknesses of the impact case; and
– Sets priorities for impact engagement/research.
The members of the Forum are our Strategy Research Heads for impact strategies, Co-CEO, Global Head of Research, and Research Director (Impact and Engagement). This is a diverse group in terms of gender (40% women), ethnicity (60% Asian), and experience (50+ years between them spanning impact, investment and ESG). While it is a not inconsiderable investment in time (the Forum meets every two weeks and must prepare in advance of meeting), we believe the additional layer of scrutiny provided by the Forum adds value to, and enhances conviction, in our IMM process and is more than merited.
Since implementation in early 2023 we are already benefitted more productive discussions on impact around a wider range of key assessment areas. We will continue to look for ways to improve our assessment further. This might include explicitly incorporating investor contribution into scoring[5], identifying ex-ante triggers for impact engagement, and exploring impact monetisation[6]. Arisaig’s Purposeful Growth culture means that we are built for learning and improvement, which should stand us in good stead to help demonstrate what ‘good’ looks like when it comes to impact assessment in public equities.
Notes:
[1] GIIN Annual Impact Investor Survey 2022
[2] For more information, see: https://impactfrontiers.org/norms/five-dimensions-of-impact/
[3] Critical groups are those that are underserved with respect to the type of product/service that the company is providing. This may be due to discrimination, exclusion or unequal status across economic, political, and social spheres. Varies depending on the nature of the impact (e.g. health vs environment) and the market(s) that the company is operating in. Examples of critical groups include: women, rural communities, lower income, ethnic minorities.
[4] The Upright Project is an independent impact data provider which uses artificial intelligence to quantify the ‘real world’ net impact of companies based on their products and services (rather than their operational policies or commitments). More information available at: https://www.uprightproject.com/
[5] We are monitoring the Impact Frontiers’ work on this front: https://impactfrontiers.org/work/investor-contribution-2.0
[6] The Upright Project (ibid.) has recently introduced monetary values into its net impact model