LocationsSDG Impact Standards: An Effective Impact Measurement and Knowledge Management
November 14, 2024
Measuring Up
As a developing country, Indonesia represents a prime opportunity for impact investment to make an outsized impact on key development issues. From 2020 to 2022, Indonesia accounts for an estimated 20% of all impact capital flowing into Southeast Asia, with an estimated USD 1.44 billion invested through 131 impact deals ranging from clean and affordable energy; sustainable infrastructure and housing; agriculture; and healthcare.(1)
With impact investing continuing to gain traction, it has brought an unprecedented focus on impact measurement. Investors need a way to effectively and transparently measure and report impact performance of their investments. Equally important, and perhaps inseparable from impact measurement, is the need for knowledge management. Capacity and awareness building, as well as providing a platform for dialogue — where stakeholders engage in discussions and share best practices — can build a more informed community and further encourage businesses towards sustainable management approaches.
From 13-15th of May 2024, UNDP Indonesia partnered with Social Value International (SVI) and Indonesia Impact Alliance (IIA) to organize the first SDG Impact Standards Training of Trainers. The training was held in Jakarta and involved a total of 17 ecosystem players active within the Impact Measurement and Management (IMM) space in Indonesia, Malaysia, and Singapore.
But what exactly do these standards entail for impact investing?
Decision Making for Sustainability
The impact investing market has grown in notable ways. It now hosts diverse stakeholders that span various sectors, pursue different impact goals and each with varying levels of risk tolerance and expected returns — a shift that has brought about a demand for effective IMM. The SDG Impact Standards step in as a crucial set of standards for stakeholders aiming to measure social and environmental impact effectively. It functions as a decision-making framework that helps make sense of existing principles, tools, and methodologies in impact management and measurement.
The standards not only consolidate established practices but also identify and address gaps in current market practices that undermine progress toward sustainability and the SDGs.(2)
In this way, they empower businesses and investors to engage in more informed and accountable decision-making by helping to determine how much data is needed to make an informed decision and guide in managing risks when data is insufficient.
The Global Impact Investing Network (GIIN)’s 2023 GIINsight report found that nearly a fifth (19%) of the investors surveyed are using the SDG Impact Standards as the framework to guide their impact strategies, with increasing integration IMM into their organizational budgets. The report also found that in 2017, 64% of investors tracked their investments against the SDGs, a figure that increased to 75% by 2022.
The training helped to enable business professionals in the ecosystem meet their ever-growing knowledge demand on building a sustainable ecosystem through the SDG Impact Standards. Participants – ranging from consultancies, investors, social enterprises, venture builders, to academia – were encouraged to consider how to build a business case for sustainability. From embedding sustainability and the SDGs into core business strategies, to ensuring transparency and accountability on reporting their impact performance. They were also introduced to self-assessment tools to implement the standards for their businesses and investments.
The training serves as a platform where practitioners and experts can exchange best practices and promote the adoption of effective IMM. It fosters a sense of community among participants, bringing about networks and the expertise from different backgrounds and experience. Together, they advocate for higher standards in IMM implementation through the SDG Impact Standards.
Participant Lishia Erza, Co-Founder of Candra Naya Lestari, found that the training offered major value into decision-making, stating
“Reporting alone is not enough. In Indonesia, the skill sets available are largely reporting-driven, not strategic decision making. This training bridges that gap.”
Eric Natanael from the Indonesia Impact Alliance remarked,
“Many businesses are finding it difficult to set a strategy when it comes to impact. This framework would guide you on your own path that puts impact – not as a side project – but as an inseparable part of your business.”
Jessica Novia, Founder of CarbonEthics, shared how the standards can help organizations to effectively assess their performance on the SDGs. She remarked,
“It serves as the umbrella of all other existing frameworks in the industry. It enables organizations to conduct comprehensive audits of their performance vis-à-vis the SDGs, establishment of thresholds and targets.”
The SDG Impact Standards are the missing piece of the puzzle. A universal framework and management approach for SDG-enabling investments. The standards provide businesses, investors, and policy makers with the tools to not only strengthen organizational resilience in response to ever-changing demands, regulatory requirements, and investor expectations, but also pave the way for sustained business prospects and investment performance in the years ahead.
Written by
Fathi Arsadipura
Impact Investing Officer
(1) Intellecap, Investing in Women. 2023. Impact Investing in Southeast Asia Update 2020-2022. Impact Investing in South East Asia Update 2020-2022
(2) SDG Impact. 2023. About SDG Impact Standards. About the SDG Impact Standards.pdf
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