WHO USES IRIS AND WHY?
IRIS was designed for investors and organizations seeking investment. IRIS was born as a spinoff of an organization of investors and therefore reflects an impact investor’s perspective. It is useful to several types of investors including:
- Investors in funds that may or may not focus on social investment
- Direct investors in companies
- Companies raising capital
One could also make the case for additional use of IRIS metrics by exporters seeking to participate in global supply chains.
- Organization Description – the organization’s mission, business model, and location
- Product Description – description or the organization’s products, services, and target markets
- Financial Performance – standard financial statements and ratios plus other metrics related to micro enterprises and community service
- Operational Impact – metrics that describe the organization’s policies, employees, and environmental impact; this is where sustainability is measured as well as other social metrics such as diversity
- Product Impact – the performance and reach of the companies products and services; these metrics address the extent to which the venture contributes to the local or national economy and to quality of life indicators
The IRIS website also contains a glossary of terms used in impact measurement.
Most IRIS metrics are relevant to the organization across sectors. Some have particular relevance to organizations whose activities impact a certain sector.
IRIS identifies eight specific impact sectors:
- Financial Services
- Housing/Community Services
IRIS is a useful tool for measuring social impact in a developing country context. International organizations and development financial institutions such as the International Finance Corporation often require companies seeking funding to show the economic, social and or environmental impact of their venture. IRIS can be used for making the case for investment in a given company, product or service, or project, even when it does not maximize returns on a purely financial basis. It is also useful for tracking progress against goals and reporting to stakeholders.
I would encourage all businesses operating in emerging and frontier markets to begin measuring the sustainability and social impact of their activities. This is especially true for exporters. These indicators are growing in importance not only for investors, but also for larger corporate and government buyers facing pressure to demonstrate corporate social responsibility. These companies will look to their supply chains to help boost their CSR scores. If the expertise does not exist in-house, seek out professionals with the technical and financial expertise to get the job done.