Impact Assessment Tool

Shared Impact Assessment

The Shared Impact Assessment project provides the framework and methodology for socially-oriented lending institutions to monitor and report the positive social impact generated from their financial investment of capital and services in the sustainable SME sector.

Recent years have seen the rapid growth of the micro-finance sector globally; however the needs of sustainable SME producer organizations have remained unmet for the most part.

Socially-oriented lending institutions have emerged as a response to the lack of SSME financing, working to fill this critical void in capital markets for these borrowers in low-income markets.

Despite the development and growth of socially-oriented lending institutions, the amount of capital available to SSME markets is still very small relative to the current need. Total funds held by the largest socially-oriented lending institutions are estimated at US$100m. Set against an estimated $800m in demand, the need to reduce the current “financing gap” is evident.
Socially-oriented lenders are eager to mobilize an increased amount of capital to fulfill the growing need within the sustainable trade sector but currently lack specific data to support their case.

The Shared Impact Assessment project provides the methodology and tools needed by socially-oriented lenders to calculate the positive social returns generated from investments in the sustainable SME sector. With the provision of quantifiable, sector specific data and analysis to support their efforts, an increase in investment in the sector is highly probable.

For the first time, a robust, transparent and comparable methodology for calculating the social impact of lending activities in this sector will be developed; enabling lenders to ensure that their activities are achieving the greatest impact possible, while also enabling investors to understand the social returns that their invested funds generate.

By providing socially-oriented lenders with the tools and methodology that they need to effectively assess social impacts, the Shared Impact Assessment project will improve the effectiveness of lending and increase overall investment in SSME sectors.

For borrowers
The project will ultimately lead to improved access to financial capital and services from an overall increase in sector investment. It will also provide detailed granular information on impact, allowing the improvement of processes to present a more socially beneficial investment opportunity to lending institutions.

For lenders
The project will create a new methodology for research, enabling lenders to make better sustainable lending decisions, based upon positive social returns. It will also provide tools to gather critical impact information for lending institutions, allowing them to better update their internal processes, procedures and practices to ensure that they are maximizing the social impact of lending activities.

For investment
The project will encourage increased investment in socially-oriented lending institutions by helping investors better understand the social returns that their investments are generating. It will also empower investors to be more selective when deciding with which lending institutions to invest their capital, based upon demonstrated social returns generated.

Phase One: Research and Stakeholder Consultation
Using a multi-stakeholder approach, key actors from across the sustainable trade area including lending institutions, certification agencies, traders, buyers, producers, NGOs and development agencies are recruited to consult on project development.
Working in collaboration with this diverse group of stakeholders, a comprehensive and highly suitable methodology and toolbox that is highly adaptable across regions and commodity sectors will be developed.
A review of existing approaches to identify current practices and their relative strengths and weaknesses. Research will be conducted into innovative and alternative approaches.

Phase Two: Methodology and Tools Development
Phase II will develop a comprehensive draft methodology in collaboration with specialists in the field. A series of workshops and consultations presents this methodology to stakeholders across the sustainable trade sector to gain further insight to fine-tune the approach.
A pilot program is developed to test the methodology with at least three socially-oriented lenders across various regions and commodity sectors.

Phase Three: Public Launch
Following the pilot study, the methodology, its processes and procedures, as well as auditing requirements, are documented in one final package.
The project is rolled out across socially-oriented lending institutions, with publication and announcement to the wider public.

Developments of this project have been made possible thanks to the support of:

Return to Projects page.