A key factor behind emerging markets investor Actis being crowned 'Private equity manager of the year' was the launch last year of the Actis Impact Score (AIS).

The company, which has raised over $15 billion from institutional investors since 2004, recognised that asset owners faced an array of incompatible impact measurement frameworks and aimed to provide a solution.

The AIS is an open-source tool to help organisations compare their investments across different sectors and geographies. Its underlying methodology is rooted in the Sustainable Development Goals and begins by identifying up to five environmental or social positive outcomes associated with the activities of an investee company or project. It then assigns points for each dimension of impact, namely:

· depth and duration of the positive change;

· amount of people or beneficiaries positively impacted and their relative need; and

· contribution of the investor or management team to achieving the positive impact.

These individual scores are added together and then multiplied:

· by 5, if the outcome is generated by a core business activity;

· by 3, if it is generated by an ancillary business activity; or

· by 1, if it is generated by a peripheral business activity.

This provides "a systematic and repeatable framework for measuring the overall impact of an investment," Actis says. Effective measurement and verification will also expose 'impact washing' which it believes "is the biggest threat to investor trust".

"We're really keen to promote consistency and clarity to help asset owners to select in a more discerning manner," says Shami Nissan, head of responsible investment.

The company notes that all its impact policies, practices and management systems align with the World Bank's Operating Principles for Impact Management, and that this has been verified by PwC. Importantly, Actis decided to make the measurement framework open-source, to encourage collaboration and aid the process of developing a single industry standard.

"Lots of asset owners" and several industry peers have asked the company to explain its approach, Nissan says, and this is happening through bilateral and collaborative fora. EF