How is impact measured?

Georges Bock
Table of contents
Georges Bock

Finding a way to measure the impact of a fund has been an eighteen-month long journey. When we set out to build Moniflo, one of the key issues we wished to solve for people investing in funds was a lack of transparency about the impact of investments. Finding the right data to set this right was one of our first major priorities.

How we measure impact

We work with Clarity AI, a sustainable data provider, to get the impact measurement you see in Moniflo. Their impact score shows whether the companies in the fund or portfolio are aligned with a specific UN Sustainable Development Goal (SDG).

Before launching, we analysed +30 data providers and met with over 15 of them in person or by call to get an understanding of how they work and seek assurance that the data would be as accurate and useful as possible.

We’ve now had hundreds of conversations and exchanges with Clarity AI about their methodology, and their commitment to constantly reviewing and improving their data.

To calculate the impact score, Clarity AI tracks and measures a set of 60+ relevant metrics linked to 52 of the targets that come with the SDGs. That’s twice as many metrics as most other providers of impact scores.

What metrics are used to calculate the impact score?

Companies can deliver positive value to the environment and society either through their products (e.g., selling treatments that save lives) or through their operations (having women on the board). Clarity AI uses metrics that cover both these kinds of contributions.

If we look at the Gender Equality score, for example, the metrics that Clarity A Ilooks at include number of women on the board, access to day care services, and female employment growth.

How the metrics are chosen

Clarity AI reviews hundreds of diverse sources of information from the relevant literature – from data released by public bodies to recent scholarly articles published in leading journals – to understand what company actions can have what impact. They then look at the metrics that companies report, and match these up to the different company actions so that they can effectively measure their performance for each of the actions with an impact.

Why we trust the score

The score is designed to allow investors to have a complete yet simple picture of a portfolio or fund’s impact, understanding each company’s positive and negative contributions to society and creating a view of where the portfolio is exposed to better or worse performing funds across a single or several goals.

Clarity AI includes new data whenever it becomes available and is constantly assessing and reviewing its methodology to ensure the scores are as effective, trustworthy, and unbiased as possible.

Soon, companies in Europe will be asked to report on even more social and environmental issues. With each new set of data, the methodology will evolve and the scores will increase in accuracy.

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Georges Bock is the CEO and founder of Moniflo. He sees money and investing as a way to shape the future by taking a bottom-up approach. He lives in Luxembourg with his family and his dog Yola and enjoys nothing more than watching his two children discover the world.


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