Impact investing has a few essential components. According to GIIN, the Global Impact Investing Network, impact investing must be intentional, positive, measurable, and have a social or environmental impact. In this article, we will focus on the measurable component of impact investing and what happens behind the scenes at FLIT Invest. Impact tracking is a feature unique to our app, meaning that not only do we do all this analysis, but you get to see it too! Read on to learn more.
How Do We Measure Your Impact?
We use industry best practices to calculate impact. Our methodology aligns with the Global Impact Investing Network’s recommendations, and it follows the norms of the Impact Management Project. Our team of analysts scour data to calculate the impact of your investments with carbon metrics, thematic metrics, and the UN Sustainable Development Goals. On top of this, we also use multiple 3rd party datasets for analysis and present impact on a whole portfolio level and per investment theme.
What Do We Measure?
FLIT Invest measures the carbon exposure of each portfolio using two well-defined metrics by the Task Force on Climate-related Financial Disclosures (TCFD) standards: Weighted Average Carbon Intensity and Exposure to Carbon-Related Assets. Essentially this is:
- How much carbon per million dollars of revenue a company emits
- What carbon-related business lines they hold
The calculation of each metric is based on the TCFD guidance. FLIT Invest presents carbon metrics to all users based on a total portfolio level, considering listed equity investments.
Thematic metrics are specific to the investment theme and measure impact in that area. We track multiple thematic impact metrics and present 3 key metrics per investment theme. These metrics are based on industry best practices, primarily sourced from GIIN’s IRIS impact measurement and management platform.
To see which metrics we track, you can check out the investment theme pages: Affordable Healthcare, Clean Water, Climate Solutions, Gender Equality, Green Energy, and Pet Welfare. Details on the calculation and descriptions of each metric can be found inside the app.
UN SDG Mapping
The UN Sustainable Development Goals sit at the core of the 2030 Agenda – they aim to provide a shared blueprint to secure sustainable, peaceful, and equitable life on earth for everyone. The 17 goals recognize the importance of social, environmental, and economic development occurring in harmony within and between nations.
At FLIT Invest, we conduct SDG revenue mapping to understand the business model, products, and impact of each company within your portfolio. Through our analysis, you can track how much your investments contribute to the UN SDGs. You can learn more from our article, The UN SDGs Explained for Impact Investing.
Do We Present Personal Impact or Collective Effort?
A bit of both. The carbon metrics (relative carbon intensity and fossil fuel involvement) are the score of your portfolio, and you can also compare yourself to the global average. Other metrics, such as the UN SDG tracker and the thematic metrics, are related to your portfolio companies – meaning the companies you invest in through your FLIT investment portfolio. Your portfolio companies achieved these impacts from when you first started investing in them via FLIT Invest. The thematic metric data shown is not your personal impact but what your portfolio companies have generated under your ownership collectively with other investors. You can check your impact inside the FLIT Invest app, which we update weekly.
Stay tuned for more information on each of these impact measurements. In the meantime, why not brush up on your Impact Investing know-how with our Impact Investing 101 series? Knowledge is power, and financial literacy is a core tool in the financial activism toolkit. Improving our financial literacy helps to make more informed and powerful choices when we vote with our dollars and shape a better future.