Our investments are directed toward Canadian local and social ventures that have a demonstrable intention to generate a measurable, beneficial social or environmental impact alongside a financial return.
Rhiza is, generally, using the B Corp approach and Assessment Tools as our guide and methodology for indicating the impact of our investing activities. Additionally, we ask our portfolio companies to self-identify specific, quantifiable metrics they track and report on as well as with which of the United Nations Sustainable Development Goals they most closely associate.
What Measurement System we use:
“We manage what we measure. This is one of the most basic truths in business. It follows that we ought to measure what matters most: the ability of a business to not only generate returns, but also to create value for its customers, employees, community, and the environment.” – B Impact Assessment
Rhiza is committed to keeping track of our portfolio companies’ performance using the B Corp Assessment Tools. We’ll employ this impact measurement methodology in two stages.
Community Futures of the Sunshine Coast has been studying, developing and now piloting a Community Impact (CI) Tool. We developed the measures based on the B Corp assessment framework yet more accurately applied to the context of our region and mandates. These are the major sections of the CI Tool.
Community Impact Metrics
Total CI points [max. possible 24 points]
The CF Community Impact (CI) Tool is included in the intake process for all application packages going to our Investment Committee. The CI Tool provides an opinion of how aware a business is of its impact and how much effort they have already put forward to manage that impact. This Tool provides a maximum score of 24 points, however, the assessment and tool itself is as much about beginning a conversation as it is scoring their performance. For many start-up, small and medium-sized ventures this will be the first introduction to responsible business practices let alone the B Corp Certification. We believe that business leaders need to be supported, mentored, and coached into the impact mentality as opposed to subjected to it.
Once Rhiza staff have that score in hand it is considered in both the due diligence process and included in the report to the Investment Committee. In some cases this will be merely an introductory step of learning for the investee yet in other cases the investee may already have an advanced understanding of sustainability and responsible business practices. In the latter case, Rhiza staff may employ a second, higher stage of the B Corp Assessment to both incentivize improvements and further entrench our commitment to having a positive impact.
Should the investee/applicant already exhibit progressive, responsible practices or orientation, Rhiza staff will encourage them to take the full B Corp Assessment, if they haven’t already done so. The full assessment is a bit longer process (2-3 hours plus some follow-up with the B Lab staff) requiring a greater commitment level of resources, attention and intention. That said, Rhiza believes the intrinsic alignment between our mandate, company, investees and the B Corp Certification both makes explicit our dedication to using “business as a force for good” and moves our portfolio forward along the path to a positive impact.
Once the full B Corp assessment has been completed Rhiza staff will consider the score achieved. If the B Corp score is greater than 60 points, Rhiza staff will recommend multiple investments in the investee company. Recognizing that B Corp certification requires a score of 80, we feel that 60 points indicates a positive impact, and perhaps more importantly, an intent to manage the harmful impacts if not improve their operations for positive impact. Should a company achieve B Corp Certification Rhiza will go even further in considering our investment, either through follow-on tranches of capital, investment terms or both.
With a minimum score of 60 points on the full B Corp assessment, Rhiza staff may recommend to the Investment Committee at least a second tranche of investment. For example, if Staff would be recommending a $30,000 investment without the full B Corp assessment, we may now recommend a second tranche of $30,000, doubling our investment in the company and support of the B Corp movement.
In addition to the above method of assessing and articulating our impact, we ask our portfolio companies to self-identify the impact metrics that they regularly and diligently track and report. For example, one of our food-based companies tracks both ‘lbs of food kept out of the landfill’ and ‘lbs of food going to the underprivileged.’
As well, we ask our portfolio companies to self-identify which of the UN Sustainable Development Goals they most closely associate. The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries – developed and developing – in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.
21% of our portfolio companies are working on Goal #3: Ensure healthy lives and promote well-being for all at all ages.
16% of our portfolio companies are working on Goal #9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.
16% of our portfolio companies are working on Goal #8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
10.5% of our portfolio companies are working on Goal #4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
10.5% of our portfolio companies are working on Goal #13: Take urgent action to combat climate change and its impacts.
10.5% of our portfolio companies are working on Goal #16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.
10.5% of our portfolio companies are working on Goal #15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.
5% of our portfolio companies are working on Goal #2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture.
Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending upon the circumstances. The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, clean technology, microfinance, and affordable and accessible basic services including housing, healthcare, and education.
Impact investing has attracted increasing interest among investors who are allocating more capital to impact investments year-over-year. What does this mean for the social and environmental good that might be funded by impact investing now and in the future?