Impact investing, that is, investing to support positive social and/or environmental change, isn’t a new concept, but it has been popularized in recent years, not only for individual investors but also for major organizations.
It’s a noble goal, of course, but the question quickly becomes how best to determine which impact investing opportunities are the most likely to deliver the desired results.
For many investors, the solution is IMM, or Impact Measurement and Management. This practice focuses on making sure that impact investing decisions are made wisely and that organizations receiving this investment capital are delivering the desired effects.
IMM is a fascinating specialization, and in this article, we would like to place a special emphasis on some of the key techs behind IMM efforts. Our guest expert on the topic is Ishita Jain.
Ishita Jain and the Autodesk Foundation
Ishita Jain is an industrial designer originally from India. She spent over ten years designing high-end products for clients in the 1%, but she had a strong desire to shift her career to focus on work that would benefit everyone, not just the privileged few.
This led to a major career shift for Jain. She earned a second Master’s degree in Design for Social Innovation and has since judged multiple related competitions, such as Energy Tech Challengers, the MIT Inclusive Innovation Challenge, the Big Ideas Contest at UC Berkeley, and BeChangeMaker.
This shift led to Jain’s current role as Impact Manager at the Autodesk Foundation, which is Autodesk’s philanthropic organization.
Jain: “The Autodesk Foundation supports the design and creation of innovative solutions to the world’s most pressing social and environmental challenges. We facilitate grants, impact investments, software donations, and training to nonprofits and startups that are de-risking innovations that are transforming industries to be more sustainable, equitable, and resilient.”
Autodesk’s software already serves users across many different industries, including architecture, engineering, construction, and manufacturing, and all of these industries in particular present opportunities to support environmental sustainability and positive social change.
Of course, since Autodesk wants to be sure that its impact investment capital is doing as much as it possibly can, IMM is central to the Foundation.
Jain discussed key aspects of how IMM works and potential areas for improvement.
At the core of IMM is evaluating various existing and potential impact investments to gain the most accurate understanding possible of the real-world effects of these investments.
IMM professionals can serve as auditors of a sort, and Jain’s work with the Autodesk Foundation is very no-nonsense. Investments aren’t based on hopeful, inspiring stories of all the wonderful effects an investment could support, but rather on hard data and analysis. The Autodesk Foundation wants to know that philanthropic spending is leading to the desired result.
At both the organizational and individual level, impact investors rely on “timely, data-driven feedback mechanisms to ensure that environmental, health and energy initiatives are delivering on their promises.”
Jain reaffirmed just how crucial this analysis is to her and the Autodesk Foundation as a whole, and the importance of advancing analytical tools and frameworks.
“For the communities directly impacted by these programs, continuous assessment and analysis provide an opportunity to provide feedback that informs how the initiatives move forward. Therefore, the more we can advance our IMM practices to understand the impact outcomes and generate actionable insights, the more we can learn, adjust, and improve impact performance over time for the organizations we invest in.”
Let’s move on to a brief overview of frameworks and methodologies currently in use.
Jain explained that there are quite a few frameworks used within IMM to evaluate impact, including the theory of change, self-reported KPIs (key performance indicators), third-party auditing, and predictive impact modeling.
Jain also provided additional details on a key, standardized metric that continues to be useful in the analysis of emissions reduction.
“One standardized metric related to investments in early-stage technologies that drastically reduce greenhouse gas emissions to accelerate a low-carbon future that most organizations track is the amount of greenhouse gas emissions (GHG) reduced. This metric tracks the number of greenhouse gasses emitted through the organization’s operations during the reporting period reported in Number of Metric Tons of CO2 Equivalent, or CO2e.”
This is just one example of a tangible metric that can be closely measured and tracked to provide an accurate idea of what an investment is accomplishing and whether that positive impact is increasing or decreasing over time.
Given the importance of accurate analysis, IMM experts are eager to improve methodologies even further.
Jain feels strongly that there is currently an opportunity to further develop IMM analysis and, in turn, discover more meaningful metrics, support portfolio organizations, and advance the industry.
“We need to get better at understanding the actual as well as the future impact of our interventions on people and the planet by gathering meaningful data, drawing actionable insights, and making the best predictions.”
These advancements could be facilitated in numerous ways, but an especially interesting angle from which to approach the topic is that of Artificial Intelligence and Machine Learning.
IMM + AI/ML?
As many tech industry professionals already know, AI and ML can be extremely useful for managing and analyzing mass amounts of data, and so there are significant opportunities for AI and ML in the context of IMM applications.
While Jain’s work doesn’t currently incorporate these technologies, she does see opportunities for its use in the future, and that future might be nearer than you think.
“In 2021, Autodesk began pilot testing an application of Machine Learning that harnesses the power of generative design and Artificial Intelligence to make building energy analysis faster and easier. This research prototype uses large datasets of building models to predict energy performance and enables users to quickly identify options that are optimized for energy performance. Real-time energy analysis can play a huge role in impact measurement.”
Jain explained that Autodesk recognizes its role in equipping both customers and other innovative organizations to understand the impact of design and make smarter decisions about energy and material use. These forward-thinking decisions will continue to be vital to the process of changing the world for the better.
Predicting Emissions Reduction
Yet another area of advancement within IMM is the move toward predictive impact analysis when forecasting outcomes.
Jain has personally been focusing on the quantification of Greenhouse Gas (GHG) emissions reductions with new technologies.
“Our impact management team partners with Rho Impact, the team behind CRANE, along with Prime Coalition, a tool for assessing the potential climate impact of early-stage ventures. This helps us calculate the ‘emissions reduction potential’ of technologies before investing in them. In addition to putting our dollars behind the most impactful investments, this process helps bubble to the forefront the primary assumptions and drivers of GHG impact.”
This practice is on the cutting-edge of IMM analysis, and improving predictive analysis will certainly be a major step forward for IMM as a whole, and once again, it all comes back to the core goal of impact investing: affecting real change.
Providing IMM tools to customers
Autodesk isn’t only concerned with IMM about their impact investments; they also want to make it possible for more of their customers to expand their IMM efforts.
With decades of experience in industry-leading software development, the company is well-situated to do just that.
Jain told us that Autodesk’s customers are working toward multiple goals common in impact investing, such as designing and building net-zero energy buildings, reducing embodied carbon, decreasing construction waste, and developing more intelligently designed and environmentally sustainable cities.
Autodesk wants to make all of this a little easier for customers by providing relevant software-based tools.
“Providing tools to support these objectives affordably and at scale is central to our sustainability efforts. By offering impact measurement solutions like the Embodied Carbon in Construction Calculator, also known as EC3, in our software, we are helping our customers enable energy and material productivity, and support the creation of healthier and more resilient places, products, and systems.”
This is a fascinating aspect of Autodesk’s overall impact investing efforts as it feeds into a positive cycle. The organization wants to support positive change. Capital is one way of doing that, but software tools that support impactful work contribute toward the same goal, just from a different angle.
On the Rise
Currently, IMM is already commonplace among impact investors, but it’s set to become even more common in the years to come.
For investors or investing organizations hoping to make a difference, IMM simply provides vital data and analysis that informs current and future investments.
Jain: “In the next ten years, I believe that IMM will become an integral part of how we allocate resources and equip others with the data that will help them make more impactful decisions towards solutions that will have the maximum social and environmental impact on the planet.”
Though still relatively new, IMM continues to advance and offer more and more valuable information to investors, and it could also be argued that IMM holds both investors and organizations receiving impact investment capital accountable in terms of generating real-world change.
We hope you’ve learned something new about IMM and the tech behind it.