As impact assets under management continue to grow – reaching over $700 billion at last count – so too have calls for improved transparency about what this capital is achieving.
It is no longer sufficient for impact funds to simply state how they intend to contribute to positive changes. These statements must be backed up by evidence of real-world action and results.
Investment managers generally accept that targets are important for evaluating financial performance, but targets have largely eluded the social impact side of the equation, not least due to challenges related to data availability, comparability, and consistency – and a lack of guidance and examples of impact target setting.
At Johnson & Johnson Impact Ventures (J&J Impact Ventures), a fund within the Johnson & Johnson Foundation, we have spent the last year refining our Impact Framework to define criteria for measuring our impact within healthcare, building consensus internally and drawing on the wider field expertise of the impact advisory firm The Good Economy.
Our Impact Framework, based on the Impact Management Project and our Theory of Change, intends to show how our investments in healthcare innovations are addressing health workforce and healthcare challenges in low-income and diverse communities.
In screening, scoring, and steering our portfolio, we consider impact to be multi-dimensional and focus on five key criteria: the scale of impact, access by under-served populations, depth of change, portfolio company contribution to outcomes that would otherwise not be experienced, and the additionality of J&J Impact Ventures financing and non-financial support.
We have concluded that setting an ambitious but defensible impact target is imperative both for learning and accountability purposes.
We now want to share the decision-making framework that underpinned this target-setting – the “what,” “who” and “how” – to increase the dialogue and momentum with other investors in this exciting and still nascent field.