In 2012, the Global Impact Investing Network’s (GIIN) Impact Investor Survey reported that USD 8 billion was invested in companies and projects designed to have a social or environmental return – a category often referred to as “impact investing.” In 2018, the same survey reported USD 228 billion in impact-oriented investment, showing exponential growth. It’s strong evidence companies are seeking not just competitive financial returns but also trying to achieve positive social and environmental outcomes, from addressing the problem of plastic waste in the oceans to combating climate change.

So how, exactly, is all this money being pumped into the impact investing market changing the world for the better? It turns out that this fast-growing trend is surprisingly hard to measure. Entrepreneur Takahiro Fushimi, director of the Japanese impact investment start-up ‘Capital for New Commons’, says that globally, it is difficult to find a common metric. “You have these different sectors,” Fushimi says, “and they are going to speak different languages and have different perspectives.”

The runner-up to this years’ Wings of Excellence Award, Natalie Hei Tung Lau, proposed an “impact database” to pool data on companies’ impact investments. “A global and standardised taxonomy,” Lau says, “could revolutionise the way in which investors and companies understand impact investing.”

One problem is that disclosing non-financial metrics such as staffing, governance and innovation is not mandatory in many countries. “That stops us from being able to  create the indices to compare and benchmark companies,” says Fushimi. This gap data reduces the chances for impact investing to work at its optimum as information is crucial to make better decisions. Martina Moosmann, Chief Financial Officer in asset management at the reinsurance company Swiss Re, stresses that “a lack of standards” is slowing the sector down. Clearer language is essential for understanding how changes to the global economy could reinforce the effects of investments. That doesn’t mean investors should hold back. “We need to act now, and not waste our energy in haggling over nitty gritty things,” Moosmann says. “We need to get that movement going.”

Experts agree: It is time to combine the clarity of communication, benchmarks and measurements of impact investing to ensure that the results of ‘impact’ in impact investing are crystal clear in the future.

Communication, benchmarks and measurements are the three main things that need to be improved in order to foster better long-term impact investing.