Quoting Nike CEO Phil Knight at his afternoon keynote at SoCap 2010, Jay Coen Gilbert says: “No one gets excited about a product. They get excited about a brand.” It is for this reason that GIIRS, the Global Impact Investment Ratings System, is creating a brand: a new asset class of impact investing. Created by the non-profit B Lab, GIIRS is a ratings agency that provides social and environmental impact ratings for companies and funds seeking to raise capital from impact investors. GIIRS, which has received funding from USAID, Prudential Financial, Rockefeller Foundation, and Deloitte, is based on the existing impact ratings system that B Lab has used to certify over 350 B Corporations.
With the support of a standards advisory council that includes many of the major players in the institutional and impact investing space, GIIRS has developed a rigorous, comparable and independently-assured set of metrics to rate impact investments. They are now ready to launch with a group of 25 pioneer funds. The 13 Emerging Markets GIIRS Pioneer Funds, which include Acumen Fund, SEAF, and Root Capital, were announced this April at the Presidential Summit on Entrepreneurship. Today at SoCap, Gilbert announced the remaining 12 North American Pioneer Funds. Together the 25 funds represent $1.2 billion in assets invested in 200 high impact companies in 30 different countries.
North American GIIRS Pioneer funds include City Light, Capital Core Innovation Capital, Equilibrium Capital, Good Capital, Mindful Investors, Murex Investments, Renewal Partners, RSF Social Finance, Satori Capital, SJF Ventures, SustainVC, and TBL Capital. Along with the 13 Emerging Markets Pioneers, the funds will participate in the beta launch of GIIRS in January 2011. The hope is to then launch a public version of GIIRS by Q2 2011.
GIIRS fund ratings are based on a roll-up of the ratings of each company in the fund’s underlying portfolio. As Gilbert explains, the ratings reduce transaction costs for impact investing, increasing transparency and ultimately increasing impact as more capital is driven towards businesses that can generate measurable and comparable social and environmental benefits. Nonetheless, ratings systems are imperfect, as has been demonstrated by the role that traditional ratings agencies played in the recent financial crisis. Developing the right systems that will continue to evolve and improve requires leadership, Gilbert says. The pioneer funds will provide that leadership, creating a brand and a marketplace for impact investing that people can get excited about.
Vale is a second year MBA student at Duke University’s Fuqua School of Business and is interested in how for-profit businesses are finding innovative ways to create social and environmental value and how capital is being driven towards those businesses. Prior to enrolling at Fuqua she was the Deputy Director at Empowerment Group, a non-profit microenterprise development organization based in Philadelphia. This summer she interned with B Lab, auditing certified B corporations and working on the organization’s policy and capital markets initiatives. Vale has a BA in Economics and Political Science from Swarthmore College.