The EIF's impact methodology for social impact

European Investment Fund

8 Aug 202202:00

Summary

TLDRThe video script explores the possibility of businesses achieving both positive societal impact and financial success. It emphasizes that when a company's intention to create a positive impact is as strong as its intention to profit and scale, these goals can be harmonized. The script introduces an impact methodology that helps measure and reward positive change across various industries. It outlines three key steps for a social impact company to ensure their impact is measurable and rewarded: defining impact indicators, setting targets, and prioritizing their importance. The video also highlights the role of impact funds in monitoring progress and aligning financial rewards with the success of their investments, advocating for incentivizing impact at all levels to ensure sustainable and tangible change.

Takeaways

💡 Companies can be both impactful and financially successful if creating positive change is as important as profitability and growth.
📈 Measuring a company's positive impact is crucial for assessing its value and success.
🌍 The impact methodology helps in investing across Europe, focusing on social and environmental changes in various industries.
🍎 An example given is a food sharing app that reduces waste and fosters community, illustrating how social impact can be created.
📊 To ensure measurable impact, a company should define clear impact indicators, such as user engagement and food saved.
🎯 Setting absolute targets is a key step for a social impact company to measure its success and societal impact.
🔍 Impact accountability extends to investors, who are also monitored to ensure their financial rewards align with the success of their portfolio.
💼 Investors are incentivized to ensure impact at all levels of the investment journey, promoting tangible and sustainable change.
🏆 The script emphasizes the importance of rewarding those who make a positive difference in the world through their business endeavors.
🔗 There's an implied connection between measuring impact and the potential for financial reward, suggesting a symbiotic relationship between doing good and making money.

Q & A

What is the core belief of the company mentioned in the script?
-The core belief of the company is that a business can be both financially successful and generate a positive impact on the world, as long as the intention to create a positive impact is as important as the intention to be profitable and scale.
How does the company approach the challenge of measuring the 'doing good' aspect of their business?
-The company uses an impact methodology to measure and reward positive change, whether social or environmental, across a wide range of industries.
What is the role of impact funds in the company's strategy?
-Impact funds invest across Europe to measure and reward positive change. They are also held accountable for the progress of their investee companies, ensuring that their financial reward is directly proportionate to the success of their portfolio.
Can you provide an example of a social impact company mentioned in the script?
-An example given is a food sharing app that helps neighborhoods cut down on waste while creating a sense of community.
What are the three key steps a social impact company should take to ensure their positive impact can be measured and rewarded?
-The three key steps are: 1) Define their impact indicators, such as the number of active users and food sharing interactions. 2) Set an absolute target for their impact. 3) Establish the relative importance of their impact.
How does the company ensure that the impact funds are also accountable for the success of their investments?
-The company monitors the progress of the impact funds as well as that of their investee companies, aligning the financial reward of the funds with the success of their portfolio.
What is the importance of incentivizing impact at all levels of an investment journey according to the script?
-Incentivizing impact at all levels ensures that real, tangible, and sustainable impact can be achieved, and those making a positive difference in the world are rewarded.
What is the significance of defining impact indicators for a social impact company?
-Defining impact indicators is crucial as it helps quantify the positive change the company is making, such as the number of people using the app or the amount of food saved, which can then be measured and rewarded.
How does setting an absolute target contribute to the success of a social impact company?
-Setting an absolute target provides a clear goal for the company to strive towards, which can help in planning, resource allocation, and measuring the success of their impact initiatives.
What does the script suggest about the relationship between financial success and positive impact?
-The script suggests that financial success and positive impact can go hand in hand when both are given equal importance in the company's intentions and strategies.
How does the script emphasize the importance of accountability in the impact investment process?
-The script emphasizes accountability by highlighting the role of impact funds in monitoring the progress of investee companies and aligning their financial rewards with the success of their impact initiatives.

Outlines

00:00

🌟 Integrating Social Impact with Financial Success

This paragraph discusses the possibility of a business being both socially impactful and financially successful. It emphasizes that when a company's intention to create positive change is as strong as its intention to be profitable, the two goals can be harmonized. The paragraph introduces the concept of impact methodology, which is used to measure and reward positive social and environmental changes across various industries. An example is given of a food sharing app that reduces waste and fosters community, and it outlines the steps such a company can take to ensure their social impact can be measured and rewarded, including defining impact indicators, setting targets, and ensuring accountability.

Mindmap

Keywords

💡Positive Change

Positive change refers to the process of making improvements or advancements that result in beneficial outcomes. In the context of the video, it is the core objective of business owners who aim to create a better world. The script emphasizes that a company can achieve positive change when its intention to create impact is as strong as its intention to be profitable, illustrating the balance between doing good and making money.

💡Impact

Impact denotes the effect or influence that an action, event, or initiative has on a particular situation or group. The video discusses the importance of generating impact through business practices, particularly when it comes to social and environmental aspects. The script mentions an 'impact methodology' that helps measure and reward positive changes, highlighting the significance of impact in evaluating a company's success.

💡Financial Success

Financial success is the achievement of profitability and growth in a business context. The video posits that financial success can go hand in hand with creating a positive impact. It suggests that when a company's goals are aligned with generating impact and profitability, it can achieve both, as exemplified by the food sharing app that not only cuts down on waste but also creates a sense of community.

💡Intention

Intention refers to the aim or plan that guides actions or decisions. The video script stresses the importance of having a dual intention in a company: to create a positive impact and to be profitable. This dual intention is portrayed as essential for ensuring that doing good and making money are not mutually exclusive but complementary goals.

💡Measuring Success

Measuring success involves assessing the effectiveness or achievement of goals. The script points out the challenge of measuring the 'doing good' aspect of a company's operations. It introduces the concept of an 'impact methodology' that helps in measuring and rewarding positive change, which is crucial for a company to understand its value and success.

💡Impact Indicators

Impact indicators are specific metrics used to evaluate the effectiveness of an initiative or program in achieving its intended impact. In the video, the food sharing app company defines its impact indicators, such as the number of active users, food sharing interactions, and tons of food saved, to measure its societal impact and ensure it can be rewarded accordingly.

💡Absolute Target

An absolute target is a specific, quantifiable goal that an organization sets to achieve a particular outcome. The script mentions setting an absolute target as one of the key steps for a social impact company to ensure its positive impact can be measured. This target helps in providing a clear benchmark against which the company's progress can be assessed.

💡Relative Importance

Relative importance refers to the significance or priority of one aspect over another in a given context. The video script suggests that after defining impact indicators and setting an absolute target, a company must also understand the relative importance of these targets to ensure that all aspects of its impact are considered and prioritized appropriately.

💡Impact Funds

Impact funds are investment vehicles that focus on generating measurable social and environmental impact alongside financial returns. The video script discusses investing in impact funds across Europe to measure and reward positive change. These funds are portrayed as a means to ensure that companies making a positive difference are rewarded for their efforts.

💡Incentivizing Impact

Incentivizing impact means providing motivation or rewards for achieving desired outcomes, particularly in terms of social and environmental benefits. The video emphasizes the importance of incentivizing impact at all levels of an investment journey, suggesting that this approach ensures tangible, real, and sustainable impact and rewards those making a positive difference.

💡Investee Companies

Investee companies are businesses in which an investment fund or investor has placed capital, with the expectation of generating returns. In the context of the video, the impact funds monitor the progress of their investee companies to ensure that their financial rewards are directly proportionate to the success of their portfolio companies, reinforcing the link between impact and financial success.

Highlights

Business owners aim to bring positive change while being financially successful.

Positive impact is as important as profitability and scaling a business.

Measuring a company's positive impact can be challenging.

Impact methodology helps measure and reward positive change.

Investing in impact funds across Europe to measure social and environmental change.

Example of a food sharing app reducing waste and fostering community.

Three key steps for a social impact company to ensure measurable impact.

Defining impact indicators such as app usage and food sharing interactions.

Setting absolute targets for the company's impact.

Determining the relative importance of the impact.

Impact accountability extends to investors and funds.

Monitoring progress of funds and investee companies.

Financial rewards are proportionate to the success of the portfolio.

Incentivizing impact at all levels of the investment journey.

Ensuring real, tangible, and sustainable impact.

Rewarding those making a positive difference in the world.