 The title of the session today is Accountable Impact, The Desired Death of Vanity Metrics. So let's have a show of hands, one more little activity. How many people here think that vanity metrics is the norm in impact measurement? About, maybe half, okay, a little disconcerting depending on what you think. So I'm David Johnson, I'm the deputy editor at Stanford Social Innovation Review and I'm very pleased to be here. So the title of today's session indicates that impact reporting continues to be challenging for the sector. The title, The Desired Death of Vanity Metrics suggests that we do not want vanity metrics but they persist nonetheless. Why is that? How have we gotten to this point and how do we kill them off once and for all? Vanity metrics are typically contrasted with actionable metrics, metrics that can guide and improve future performance. The persistence of vanity metrics suggests that what companies and organizations measure too often fails to inform better performance going forward. At the expense of the people and communities that impact investing is intended to serve. If we wanna do better, we need to measure accurately what doing better amounts to. But to be fair, impact reporting is a young field. What are some signs of growth and maturation and how do we help impact reporting become a fully realized adult practice? So here to discuss these topics today are three experts. We have two of them here, one will be here shortly. Impact investing and measurement. So over on the left, we have Sandra Moore. Sandra Moore is the chief impact officer at Advantage Capital, where she oversees the firm's impact investment strategy. Advantage focuses on high growth and high wage business investing in communities where access to investment capital has historically been hard to find. She is also the former president of Urban Strategies, former CEO of the Missouri Family Investment Trust and has served as an administrative judge for the U.S. Equal Employment Opportunity Commission, as well as in the cabinet of Missouri Governor Mel Carnahan as the director of the State's Department of Labor and Industrial Relations. Next to Sandra is Erica Karp. Erica Karp is executive managing director and chief impact officer at Pathstone, an independently owned and operated wealth management firm where she chairs the impact committee and the thematic research committee. She is also the founder and former CEO of Cornerstone Capital Group, a purpose-built sustainable investment advisory firm that she launched after 20 years in global equities at UBS. And here, last but not least, next to me is Lindsay Smalling. Lindsay is the head of sales at 60 decibels, a tech-enabled impact measurement company that uses, among other tools, phone-based surveys of end customers and beneficiaries. She is also the former CEO of SOCAP and former strategic initiatives officer at Impact Investments. I guess to start us off, I wanted to get a sense of what would you say is the norm nowadays for impact reporting in the impact investing field and how is that norm serving us or failing to serve us? So why don't I start with Sandra on that question? See if you mind. It's on, it's on already. Okay, great. You know what? I'm gonna push back and I'm gonna bounce that question to my colleague Erika because she came here this morning, loaded to bear on this question. And so I'm gonna defer to Erika first. So the situation today is a little different from the situation five or 10 years ago because there's enormous pushback, there's enormous skepticism right now on ESG. And by the way, ESG data is nothing, but it's everything all at the same time, all right? So ESG data, which by the way remains a crap, okay? That's not my word, that's Dan Doctoroff who was at Bloomberg and this is when we were building SASB. And the reason I say that is because we need comfortability, we need projectability, we need quality, we need assurance, we're getting there and thankfully a lot of the reporting structures, regulatory structures are coming through. So we're getting there. But as of now, the data is still questionable, all right? So that's where we are in the investment world. The key thing to remember is that most investors, serious investors do not look at every metric across every company and every sector that they use. Good investors have been using ESG data forever, the material data by sector and by company that supports economic outcomes. So the truth is where we are, it's still all over the place. And if you know, maybe that was a bit much for me to say that it's crap, but what I will tell you is that the ESG data that is used in, you pull it out from the companies and then you put it into ratings and rankings and indices and ETFs. And the reality is errors all along the way. And so you end up with nothing. And those who understand ESG data know that it is simply a starting point for inquiry, further inquiry on stuff that really matters to investors that understand engagement. So what I will add to that, that it's crap, is a critical missing piece is that we never report where we failed. So primarily we are using this very important impact data to tell a marketing story as opposed to identifying where we fall short so that we have an opportunity to develop improvement plans around those metrics. And the improvement plan can be a different metric. It could be measuring nothing but widgets. But until a recent study done out of the Wharton School, 22 study, says that companies generally only report one, only one to 3% of impact companies doing reporting in. I think they did. They looked at some 250 impact reports. Only one to 3% ever talked about what they did not achieve. So how possibly can we get better? So I knew she wanted to say about that failure part. So I'll let her get that out first. Can I just add one distinction to just early on? So I think this context is a public markets context and Sandra, your comment is both public and private. I will most likely represent more of the direct impact private market context for vanity metrics. But I think one of the things that's important to understand when we say ESG data, that's largely data about the way that environment, social issues, governance issues affect the bottom line of the company, not data that shows the way that company impacts the environment, impact society, impacts governance. You are talking exactly about the future of ESG, post ESG. It's called double materiality, how the company is affected and how the company affects. So this is- But that's not the current state of things. No, it's not the current state at all. In fact, most investors think that the board of directors is there to represent the shareholders. Even that's not true. The board of directors is there to represent the company. And I'm talking about the law now. Most people don't even know that. So we're gonna get to double materiality. And that's when we can start to really measure the cool stuff that's going on. And if I can just speak to the private market side, then for one side, I think the norm in private market impact investing when folks are calling themselves impact investors, setting out to have an impact with their investments, the standard of practice is still outputs. So it's still to understand, here's how much money we deployed, here's how much our companies have grown, here's how many microfinance loans they have made or lanterns they have sold. Those don't actually tell you if anyone's lives are improving. They tell you what we did, but they don't tell you what happened. So that I think is a big reason why people are largely dissatisfied with impact metrics, because I think there's this sort of, if you've chosen to be in this space and do this work, you wanna know if it's working. And right now the metrics aren't getting us that. So we brought up the notion of ESG. Is ESG and impact reporting, are they the same? Or is there an overlap? Are they entirely separate sort of ways to think about things? Totally separate. ESG. By the way, if you hear people say ESG investing, or if you hear people say ESG, an ESG company, right? Run in the opposite direction as good as you can because they don't know what they're talking about, okay? For sure. ESG is a discipline. It's an analytical process. By the way, I used to manage global research at UBS. So I had 600 publishing analysts who all thought they knew everything. And I pretend that I was interested in everything. But the point is ESG analysis is very, very helpful, whether it's private markets, public markets, it gives you that avenue of inquiry to go down in a deeper way, to look at risks and rewards and profitability. So when it comes to impact, and we were saying that it's the outcomes, it's not the output that we want, it's the outcomes. Honestly, ESG analysis is simply a little starting point for that. And here's what's really important on the private sector side of that, is that ESG misunderstood as it frequently is not taken in the context of which Erica has just described as an analytical tool, as a methodology, as an analytical framework can very often, particularly now in this environment, be a conversation stopper for achieving impactful outcomes. Because people want to argue about what is the E and they want to argue about what is the G and they want to argue about what is the S and they want to apply all of their political filters on each one of those letters and on and on and on. So in our firm, I have been pushing our team hard. Let's not worry about that. Let's worry about what it is that we do on the ground that changes outcomes for the entities that we're engaged with, the businesses, the employees, the communities where they sit and what changes up top in the entities that we engage with, what happens at government, what happens at regional planning, those are the things when you start to lay down some outcomes that can make a difference because otherwise we can get hung up, we do investing in places where others don't. I don't want to be in the middle, I don't want to be in Greenwood, Mississippi, having a discussion about whether the work that we want to do there and the plant that we're trying to invest in is not the right S or not the right G. I want you to look at the community in which this work is being done, where this capital is being driven and let's agree on what it is we seek to achieve with that kind of investing and what are the outcomes that we can talk about together. And that is really problematic right now because there's just so much yin yang and noise in the ESG overview space. Can I just make one plug? So I used to run SoCAP, I have this library in my head of some of my favorite sessions. There's one that Matthew Weatherly White did seven years ago that was called the ESG opt out. I don't know if either of you were in the audience when he did that, but ESG investing is just smart investing. It just means you're actually considering all the risks of environmental risks, sustainability risk, et cetera, that really as advisors, his case was people should have to opt out of ESG investing because it's just the better way to invest. But I think what you're talking about with double materiality is that a prudent investor now does want to know not just the way that the company is potentially at risk from these factors, but the way the company is behaving in the world and the impact that the company is having on the world. And so I think just even if you take that sort of old language of prudent investor, I think it really fits that standard to start to move towards this idea of it goes both ways. Just to add, with ESG analysis, tell me how you're gonna use an ESG data point to give me a sense that a shipping company, for instance, has a culture of safety. Tell me how you're gonna give me a data point that a company knows that the UN Sustainable Development Goals have a lot of intersectionality and they are considering double materiality, right? Tell me how I'm gonna use an ESG data point to understand the extent to which an IT company has really filtered cybersecurity into the staffing of their company, because that's the biggest issue in cybersecurity. These kinds of issues, you can't put a data point on. Again, it shows that ESG is just a starting point. And it's, again, it's a discipline, that's it. And by the way, I'll also tell you that some of the biggest, nastiest hedge funds in the world have been using ESG analysis, even if they don't call it that. They've been doing that because that's good research, right? And then the really good ones, in fact, I'll give you an example. Some people think it's hard to find fund managers that are just not just public equities, right? Well, there's one fund manager, I'll give you an example, DSC Meridian, right? They're a long, short, distressed, debt governance hedge fund. This is amazing, it's beautiful, because they're about engagement. It's not about ESG data points, and they beat the hell out of the markets year over year over year. So this is not new, you know? And by the way, some of the issues, some of the pushback that has come to ESG and the discipline is self-inflicted. Let's not pretend that it's all about beating the markets. It's not. It's about doing better research and analysis, right? So you just made a point that I'd like to speak to. To get where you just ask us to go, or ask the audience to think about going, and that is to think about whether your IT investing is really looking at one of the biggest dangerous outcomes for everything up and down the food chain of IT investing. Absolutely right, because then we're gonna look at outcomes. We're gonna look at outcomes for business. We're gonna look at outcomes for vulnerable households. But the first thing we have to do is decide as an IT firm that that matters to us, which is another big problem on the private side for sure. We don't decide what our own metric is. We're measuring ourselves against nothing. Where else is that done? I'm doing great, because I said I'm doing great. What did I set out to do? Oh, I said I had to do great. Aren't I doing good? It's nonsensical. And that is, I have one full partner in the room with me and then I have a significant push of my team, so y'all might need to see if you got any openings, because I may be looking for a job. But it's nonsensical. We need to set the goal, the outcome that we seek to identify as a serious impact investor. And then measure, and that goal, and I would argue, should be set in the context of the community that we operate in. And then we measure ourself against that goal. But we start the other, you know, we go the other way. We do all the work and then we say how much of it was good against the goals that we make later. So why don't we drill down a little bit on this notion of vanity metrics. Lindsay, you talked about outcomes versus outputs, where we're measuring like how many customers serve like McDonald's, or rather than looking at how are people's lives being improved. So could you say a little bit more about the vanity metrics you see and also who's vanity is being stoked when we're talking about vanity metrics? Is it investors? Is it the public? So I think I like the provocative title of this session. And I think in thinking about why would we call them vanity metrics? I think the problem with so many of these metrics is that they have been driven largely by seeking funding. So they've been upwards facing. It's been a concern for a general partner to secure more limited partners investors into their funds. It's been for a social entrepreneur trying to get more funding or keep the funding that they have from whether it's a foundation or an investor or whatnot. Once those impact sort of KPIs are set on folks, it feels really contingent that if they don't show that they're having the impact they said they would have, that there's some sort of risk to them. And so it's perceived all the way down the chain as sort of like a risk and a burden and something they have to do for compliance versus what I think the real potential of impact measurement is, which is a learning function and is an improvement function and is a way to say how do we be deeply curious about the people's lives that we are trying to impact and design our impact measurement around understanding them better. Understanding whether this product or service we've created is actually serving them well. They probably have the best intelligence that even better than our team on what could be better about it. Is that the way it's being delivered? Is it the pricing model? Is it whatever that is? And so you look in public markets, they do lots of consumer research. Like it's just a good practice to actually ask the people who are buying your soap or your french fries what they like about it, what they don't like about it, what's their association with it, et cetera. But I don't think that this field has had that sort of downward facing for the lack of a better construct than up and down. Customer facing orientation to orient impact measurement around how do we understand what is working about this? What could be better? How can we best serve these? And are we really making progress towards these outcomes? If we just have the upwards orientation, we have no motivation to understand the flip side of like where we're not actually doing the best, doing great. The vanity is exactly whoever it is. We need to please. So that's where the metrics go and it's very, very challenging as an investor. It is very, very challenging as you get partners and they expect a set of financial returns along with whatever are the social economic outcomes that you sign on for. And balancing that can be really, really, really tough. And so the development of the strategy for the impact investing is so very important because otherwise you'll be hitting the metrics and telling the story to get your money or to satisfy your LPs or even to get to your optimal return. And again, as we've been saying here, change nothing or worse, create a disaster. Let me give one quick example. So Wells Fargo leadership, prior to the Wells Fargo debunkle of the last six, seven years, decided that the outcome that they were seeking was more stickier engagements with their customers. Great, that's a great outcome, right? You want your bank to really be more engaged with you. They put in a metric for their employees that said how many interactions and cross interactions have you engaged in with our customers? Well, 3.5 million new accounts opened without anybody's permission. Bingo, wonderful outcome with horrific impact and huge reputational risk. They threw 20 years worth of decent reputation down the toilet. So this having a strategic framework that you're operating in, as Lindsay points out here, is just so very important, not because they don't help you do what you're supposed to do, but it will also help you avoid things that you don't want to do. You know, this example is gorgeous in terms of complete explosion of good governance. I'm gonna give you some others now. Actually, I'm gonna give you the flip side. I'm gonna give you ESG theoretically factors that can't represent what's really going on. And by the way, when it comes to my former firm, UBS, I don't give a rat's ass what their water efficiency is. It's not the point. It's really not material to that company. Now as a human being, I care a lot about water, but it's not the impact I'm expecting UBS to really have unless they're financing water infrastructure and then it's very cool. But think about this. You might wanna, as a human being, kind of crap on McDonald's because of what they sell. You know, some people say with overuse, it's really deadly. Okay, but another thing is that McDonald's offers nutrition to millions and millions in the emerging markets, but we can be mad at them because they're not using locally sourced beef in those emerging markets. Let me tell you why they don't. Because of their brand of safety, right? They value that enormously and so they're very careful when they use locally sourced. This is a highly sustainable thing that the company does that is not effective. It's not representable by ESG factors. I'll give you another one. SAP, software company, right? So SAP, this is years ago, put out a metric associated with employee turnover. Now SAP is kind of a sales marketing operation as well as a tech company, but they actually connected their turnover with their profitability and they actually gave a number. How many euros more do they get for lower profitability? Now I can guarantee that that's number is wrong. That said, they tried, they are trying and it's actually really interesting in terms of being a representative of a culture of sales, what they need in a constructive way. Turnover is a really interesting metric, but a lot of these are not demanded. Again, I was one of the founding board members of the SASB and over 10 years ago we were trying to look for infrastructure and comparability by sector, all right? And it was just intended to be the markets, okay, the company and the investor. That's it. So we didn't intend to go really broadly for all stakeholders, but that's okay. When you know what you're doing and you're trying to hit it, it's okay to understand your definitions. So again, it goes back to our issues that ESG factors are a starting point for inquiry. Can we just ask actually how many folks in the room are more on the public markets ESG side of the market? You all are, you just don't know it because your pension money is all there, right? And by the way, the analysis works for small companies and large, but you are all likely in the public markets. Right, so you're in them, but that's not your day job maybe or why you're at SoCAP. And how many are private market investors? Okay, awesome. How many social entrepreneurs? Let's give them a round of applause. My favorites at SoCAP. Cool, okay, so I mean, I just wanna comment one other thing just because we do have such a strong private markets representation and this dynamic between entrepreneurs and investors, I think is really important in this vanity metrics conversation because I think investors, whether they're philanthropic funders or they're private market investors, are becoming more aware of the power dynamics of impact measurement and wanna be good actors, I think for the most part. There was a really great publication maybe a year ago called Ventures at the Helm and some great thought leaders in the impact measurement space took the time to really create this manual for entrepreneurs and investors to speak together about what are the metrics that will really help those ventures improve their business, drive intelligence within their business, et cetera and a way to really engage with their investors around that and there's also some tools for investors there too. So I think that was one of the most sort of practical things that I've seen to try to move away from the ways that there is this sort of investors are asking for things because they need some way of tracking and entrepreneurs are like, okay, you're my investor so I'll do that, but I think that's created this sort of less meaningful vanity dynamic and that engagement even around how do we decide what's meaningful and that doesn't by the way preclude sort of the standardization and the comparability that is also super important for understanding performance but just because I know you'll all be curious about this post this conversation so that's another resource to look at. Yes, I wanted to turn towards the positives. So I read all your bios. You've obviously had long careers in the sector. How have things gotten better and what resources are available nowadays that weren't available five, 10 years ago? Maybe Sandra you wanna start up? So one of the things that's gotten better is this kind of open conversation. So I really want Kudos to Socap because you've been pushing this conversation for the last five, six, seven, eight, nine years for sure. So that's one thing. The other thing that's gotten better is that we do now have big frames. We've got the sustainable development goals. Those things are not worthless. I don't wanna knock them as oh, that's not getting us to outcomes but we need those big frames because from where I sit in the private market side you use those big frames to give you a place to start in identifying what your customized outcomes that you will be seeking. So I think that's gotten better and is very, very useful. Again, the work that 60 decibels is doing is so important because it comes from people who know exactly what they're doing. They know this feel and he knows this feel and they're doing what I think is critical. They're listening from the bottom up. You have to be able to put real voices so that part is good. And then the other thing that I think has really gotten better is that we are just beginning to talk plain language. There was a point at which it just seemed to be such an elite approach to talking about impact and I'm sitting there going, it really is not, that language is not going to cause an investor to understand why I want to do this kind of investment versus that. So that's what I would offer is changes. To me, the thing that's so cool is that if we think about climate and we think about biodiversity and we think about food systems we need to move trillions, trillions of dollars towards this. And the thing that's really cool is that public companies have gotten really sensitized to being sustainable. Some of them talk about it and some of them, like, Intel doesn't talk about it but this is a highly sustainable company, right? Some companies or asset managers talk about it and they're not, right? But in total, public companies have trillions of dollars to move and the cool part is they are doing more and more partnerships and acquisitions and looking for innovation and so it's really a great time to be a social entrepreneur because ultimately you're gonna see these public companies doing financings and acquisitions and looking for innovation and they have the capacity to move trillions. So that's what, you know, that's why it works so beautifully together, the capital markets, you know? You guys innovate and they either steal it, hopefully not, or just buy it or help to grow it with partnerships, that's hopefully how it goes. But that makes me very positive, the companies get it. And by the way, in this idiotic ESG backlash thing the companies are basically ignoring it even if they change their language. They're doing it, they haven't given up and it's kind of a race to the top, so it's great. Erica came in this morning like a lion ready to roar because she read a column this morning and the FT, there was an ESG critique, but. This is not being taped, right? The guy was such a douche, I'm sorry. I did not say that, but I mean this article, this commentary in my view was so ignorant and it was just written for attention, you know? And I just, I wish I could kind of be on the stage with him with some boxing gloves, it'd be fun. There are a lot of ignorant people having a point of view about these topics right now. So I would say the thing that's changed, this is just my opinion of, I guess, from running impact measurement sessions for a long time. I always felt like at Socap it was kind of like taking our vitamins, it was like the session we had to have but that I wasn't really that excited about because I do think for a long time it felt sort of like an academic thought exercise and that a lot of the tools and frameworks, I was like maybe I'm just not a systems person, like I just wanna know what's actually happening, you know? Like I don't care what new triangle thing you've created with whatever the thing is. I do think the most useful and very practical thing that has come out of the field in the last few years is the impact management projects, five dimensions of impact. It's so basic. It says, who are you impacting? What is the impact you are having? How much, so depth of impact? Contribution, what it have happened but for your investment or product? And risk. Those are the five things that investors should be thinking about, entrepreneurs should be thinking about. They apply in lots of different contexts, whether that's real estate infrastructure or solar lanterns. And so I just think as an organizing framework it's amazing that it took a whole like coming together of the industry to organize around those five dimensions but I'm so glad we have them and they just feel really essential. So start there if you are trying to think about this. And then I think we also have a lot of things working in our favor in terms of European legislation and other things that are sort of saying it is really important for us to understand this. Even new, I spent a lot of my time trying to build our work in the United States listening. There's just as much demand to sort of listen to the underserved in the US as there is in emerging markets. And so right now, for example, the way that the entire community development financial institution system is set up in the US. This essential network of arteries into underserved communities of the banking system. The current requirements from the federal government are that they report number of loans made and into which census tracks. And that doesn't tell you anything about whether the loan actually went to a person who is systemically excluded. It just tells you that the loan went to someone who lives in that census tract. So it's just so insufficient for really understanding. And I think an overall problem is that we've been settling for like, well, what? Like I heard someone say this to me yesterday, like we're trying to get the best data we can without doing any extra work. And I'm like, that's probably not gonna get you very good data. So it's like this minimized expectation. What's the lowest bar we can set? And what's the data we already have? And what are the ways that we can extrapolate outcomes from that? That is never gonna be satisfying. So I think the new legislation though around like these different government programs for CDFI, sorry, off my digression, is it's saying we wanna understand borrower demographics, we wanna understand is this closing the racial wealth gap? Like really trying to get to outcomes more. I think it's still handicapped by being federal legislation, but I think the messaging is more clear that there's an awareness that the data we've been asking for is really not telling us if we're getting any closer to solving this problem. David, I have to add something to this. And I know we're supposed to be talking about what works, but it's one tiny not working, seven A loans, SBA, designed specifically to drive capital to minority and women veteran business enterprises, sectors that have historically had less access to capital, has invested more in those businesses in the last five years than ever in history and in the last three years or so have doubled. Yet the wealth gap has widened. Shouldn't that make somebody say what the heck is going on? But that's where there's no connection between the program and the outcomes. The businesses are still failing. They aren't scaling. They aren't able to make great business decisions that allow them to transfer wealth. They're just getting along. Tick, got another one, tick. You know, I'm thinking when you say that, in terms of having a framework, let's talk about the UN Sustainable Development Goals for a minute, okay? No poverty, no hunger, life below the seas, clean air, the biggest things, you know, 17 goals. To some degree, when you look at them from up there, these goals are uninvestable. So they're just too big and you can't find the outcomes. So one of the things that we've done is we've tried to find a single common denominator among all the Sustainable Development Goals. We've tried to be conscious about the intersectionality in all the Sustainable Development Goals. You can't get SDG number five, right? Women's Economic Equality. Unless you get a bunch of other SDGs, access to water, access to education, access to capital, access to broadband, right? So these are all connected, every one of the SDGs. So when you think of the single common denominator, I like to think in terms of access, all right? So access to the SDGs that you need, access is what big companies and small private companies give to investors. So when we think about social justice, when we think about gender equity, I think if we start thinking about giving access to these things, granted it may not be the outcome directly, but it certainly is an output and it certainly does, in my view, start to alleviate some of the social justice issues that we have. So think in terms of access and then we can start to change these inequities that are structural, access. I agree completely. And I left unaddressed the other end of the 7A story. What I would argue is there's been plenty of access, plenty of access, there's been no accountability to an outcome because as Linsley says, that requires you to get to know these businesses. That requires you to understand the differences that occur in minority owned businesses and distressed communities. That requires a level of dig down that we don't have in many of our government programs for sure that we don't have yet. That's why you're talking about CDFIs. It's so important because these are big government programs that have a clear goal. It could tie easily to sustainable development goals, but it has no operating framework to get to those answers. The CDFI fund, and I gotta stop, my coffee's kicking in, but the CDFI fund, the CDFI fund, this administration has put 10 times as much money in CDFIs as any other administration in history. They did it miraculously. On January 1 or 2 or whatever the first business day is, after President Biden was elected, CDFIs got an automatic deposit in their bank accounts. They woke up with $2 million more than they went to sleep with. Now, in my real old self-world, I'm like, oh my God, this is the greatest thing ever, but what the heck are you gonna do with $2 million that you woke up and got it this morning? So it's another tick. It was great. I don't want the government to take the money back, but I want the support that CDFIs need in order to be able to put the money on the ground and make it count for something, so. Let me ask one more question, and then I'll turn to the Q&A part. So how do we get everybody on board with a better impact measurement and reporting and who pays for it? So Lindsay, why don't you start, since some people are paying you to get a better understanding of end users and beneficiaries, so. I mean, I do think it starts with sort of a philosophical orientation like where I started. So I mean, I just think moving from this orientation around sort of proving impact to improving impact. So I think that's on every person in this room that when you think about your impact measurement that you have that curiosity for how do I learn how to do this better and how do I go all the way to where that impact like rubber meets the road to figure that out. So I think that's part of how we get there. But when it does require additional muscle to go out and sort of get data that you don't already have, I think this is attention that we face every day is that going to get end stakeholder data. So just to give you the quick sense, 60 decibels does phone surveys at the scale of like when we work with a microfinance institution we'll call to get a representative sample about 250 to 300 customers and do a 15 minute phone survey that's like a structured phone survey across those customers. But then we do that for hundreds of microfinance institutions. So then those individual customer stories layer up to become comparable data across MFIs where they're understanding how they perform against their peers and whether they're at the top of those benchmarks or the middle or the bottom of those benchmarks it drives change within those organizations because we are all innately competitive at some level. They either want to stay at the top or how could we get to the top or oh my God, we're at the bottom. And so that's the really powerful part of these phone surveys. They don't free, like you can't, it's either you have someone in your organization doing it and you're taking them off the work they would be doing or you're hiring us and we are charging what it costs us to do that work. And that cost right now is not built in to the way that funders are funding and the ways that organizations are creating their annual budget. So I think a big part of it is on us for this very specific part of this conversation which is incentivizing people to gather more customer data is to prove the business value and we are doing that all the time but then to tell those stories more clearly because obviously lots of companies have seen the benefit of market research and they pay for it and it's part of their sort of how they're operating business runs. So I do think this should not be sort of like, yeah we do the work and then someone asks us to measure our impact. This should be part of the integrated like the way we do our work is to do something, ask how it's working, learn, improve, iterate and then that that funnels up to investors as well. I think right now about 85% of our projects are funded by investors for their portfolio companies. I think what's encouraging to me is that other 15% is a lot of cases where companies that got projects paid for by their investors first have seen the business value and are coming back and paying for it directly and I would love for it to be more than that but I think right now it is more in the investors power and even more in the asset allocators or LPs power. They have discretionary capital and if we wanna raise the standard like that expectation needs to come all the way from the top along with funding I think it will then sort of ideally be a subsidy that works its way, you know, levels down over time because as it becomes more of an integrated business process it should just be the way that if you're trying to have impact on folks so that's essential data and it's maybe worked in there more. I don't want it to have to be like a sidecar philanthropic fund forever but that's the reality right now and I kind of think that's the way that we will get more of this is if more funders and more LPs can say I really want a higher standard of impact measurement what's like how can I engage with my fund managers and with portfolio companies to say what would it look like to do this better? See, Lindsay's now talking like a public equity investor, I like that. I like that. I don't even know what that means, Erica, but. Listed stocks and everything else. By the way, just to give you some context in the world there are something like 65,000 funds all right that manage money. That is like so much more than there is stocks listed so it's just ridiculous right and how many fund managers there are. So our job is to sort through it so we advise on about $100 billion in client assets and the idea that it starts with the asset allocation so most investors, families that we serve, foundations gotta have public equity as the majority but they are getting more in terms of having privates and privates with the impact so that's cool and the one thing I also wanted to point out there have been studies and the one I think about is George Sarah from Harvard that has shown that if a company focuses on the wrong metrics, right, it's kind of wasting time and it actually could underperform the markets if they give you a vanity metric. We don't care, right? So that's an interesting study and then the final thing that I would add is if anyone's interested and this is to what Lindsay is saying benchmarking is an organization called the World Benchmarking Alliance and the WBA is about a race to the top, like I said before. No CEO wants to know that his company is falling behind in terms of sustainability type metrics. So that's primarily Fortune 500 companies, right? Yeah, that's large companies but the WBA is a good structure to look at, you know? I just have a simple answer as an investor, private investor. We do, we need to pay for it. Just like we rely on a quality of earning statement, we don't ask who's gonna pay for the quality of earning statement. We know we need it, it's gonna help us make a better decision about the investment. It's gonna help us be able to raise more money with people who care because we can prove out that the earning statements and the earning projections is the same with a quality outcome or a quality impact study. We should build the infrastructure, we should pay for it. It only makes sense. As my colleague said, it's smart investing. So I have several questions from the audience and if you have a question as a reminder, please write it down on an index card or piece of paper and it'll be collected and passed to me. So one question here. Can you give me an example of a non-vanity metric employed by an organization? Or maybe perhaps also maybe a time when an organization struck upon a metric that they thought this was really counting something important. So my favorite from our sort of core set of metrics which aligns pretty directly to the IMP five dimensions. We ask a question that says whatever the product or service is, has this had an impact on your quality of life from very much worse to very much improved? And then we ask a follow-up open-ended question to that. And it's subjective, of course it is, but whose opinion is more important than the person who has the product or service about whether their quality of life has improved because they have it. And when we ask that question, another favorite piece of mine is that about like across the off-grid energy sector and primarily like around the impact of solar lanterns when we ask has this had an impact on your quality of life and the percentage of people who say that it's improved or very much improved. One, it's something that solar lantern companies can compare against each other. Like when they get the data back that 25% of my customers say it was very much improved. Well actually the standard for the industry is 40% of customers saying very much improved. So what does that mean? Like how can you get deeper into sort of client delight and how it could do better, et cetera. So one, you're like orienting around improving lives. But then the follow-up open-ended question to say, why? Why did that? And then when we code those responses, there are all these SDGs layered on off-grid energy that are like it will improve women's economic outputs and it will improve children's education outcomes and it will align to all these SDGs. The number one reason that people say it improves their quality of life is that they feel safer in their own home. That actually has to do with maybe like they can read at night and lots of other things. But that safety in your own home is a pretty essential thing that would really improve your quality of life. And if the industry isn't orienting around understanding that that's like where they're driving quality, that's just a huge miss. And so I think that's one to me that that is not a vanity metric. Like that's meaningful data to understand, you need to understand a lot of other things too, but that is not a vanity metric. I should say as a journalist and a magazine editor, when I hear outputs, I hear like widgets. But if I hear safety in your own home, that makes sense to me as a reader. We have one, we have a few that we've designed and the one that I really love is we ask, we drive capital to largely for job creation, high wage, high growth, high opportunity job creation. And we ask our businesses in a semiannual survey of your new employees in the last six months, brand new employees, how many report that they have reduced or eliminated food stamps or whatever you call it, SNAP in your community, Medicaid or whatever is public health insurance and unemployment compensation. Now it took a while and it still takes work just to raise your hand over there. It's my colleague, Justin, put your hand up high. He's always wanna be so shy. It has taken a ton of work for us to figure out how to help companies answer that question. But that's not a vanity metric because then you know that the money we invested in the company and the way that we structured the money so that they could pay wages at the rate that we ask them to pay, which is one and a half times the area living wage has now resulted in an outcome that is really an improvement when a man or woman goes to work and they don't have to take government assistance to feed their kids or they take less government assistance, that's a real win, that's not a vanity metric. And whenever we go somewhere and we talk about that to legislators, they're like, whoa, what you're talking about, Willis? Yeah. So again, some of the metrics that you really wanna know from companies are not vanity metrics, but you also can't capture them without going and doing some engagement. So as an example, chemicals, all right? Sustainable investors might not be involved in chemicals. BASF, largest chemical company in the world, highly sustainable because in their 10,000 product supply chain, they do a lot of auditing, okay? Over years and they are really good at kicking out suppliers that are not sticking with their standards. That matters a lot. And by the way, you aren't investing in chemicals because you have cars and wheels and motorcycles and chairs that you're sitting on. You're all invested in chemicals. Wine has like 5,000 chemicals in it. But that's something that it's not just gonna be in a sustainability or ESG port, it's wildly important. And when we think about mining companies, think about what is going on with their waste and sludge that comes out of there, right? Think about your battery companies, the extent to which they're properly disposing of toxic waste. I mean, these things are big and they're real and they're not vanity metrics. I mentioned water and investment banks. That's a little bit vanity. Companies like media companies, you know, that are looking at eyeballs and stuff, like totally vanity, not interested. The key is that with public companies, it's harder to show those outcomes, but they are actually massive. And one other example I'll give you, and this is hard, but it's doable. When we think about safety and we think about wellness, the idea of thinking about mental health as a serious crisis, an overwhelming crisis, and trying to put infrastructure in place to support the world in terms of mental health, the idea of getting rid of bias and stigma, hugely important, how do you measure that from the standpoint of ESG, right? But it is critical in terms of the outcomes. And you can engage with companies and start to figure it out. Another question here. Please talk about timescales for outcome metrics. What if it takes 10 years to see the outcome or impact? What do I do until then? Pray, it's tough, it's tough, right? Because who has that kind of, what investor typically has that kind of patience, right? I gotta tell you, so I was with the Chief Investment Officer of Oxford, you know, and she's talking about, we're talking about 10 years and long-termism. And she said, look, I'm the Chief Investment Officer at Oxford, my timeframe is 800 years. That's a good answer. I would say we think about it in the sense that there are things you can understand today just about satisfaction and experience. And I mean, I'm obviously coming at this with a very particular point of view. So for some things, yes, it's very hard. If you're like building a building and it's not gonna get, you know, I mean, there are cases where that doesn't work, but I think sometimes even educational outcomes or economic outcomes, like what are the things you can understand now that would help at least give those sort of forward-looking indicators that, oh, they like this workforce development. Did they, what was their satisfaction with the training they received? Did the first job they get, you know, there's gonna be outcomes that continue to sort of mature over time. But what are the things you can learn now and then continue to build on and be curious about over time? We also, when we work with groups that maybe haven't been doing a ton of impact measurement, but they've been operating for 10 or 15 years and then they wanna start doing it, sometimes we'll say, well, why don't we do a survey that's sort of a representative across that 15-year set of alumni and then segment the data by folks who have been through your program more than five years ago, within the last five years, within whatever. So even within a point in time, you can start to see the ways that maybe the outcomes are starting to manifest for folks who worked with you longer ago. So I mean, sometimes I think just being intensely practical about what are the things we can learn now and not sort of letting that, but really you're gonna see it 10 years ago, every 10 years from now, stop you from trying to understand something now. I would say something else about that too. My answer was a little bit flip, but it's true, because it's really hard. But another tool is to make certain that the audience, the entity, the investor, the foundation, whoever you are in partnership with for tracking these outcomes understands the long game and understands whether in fact there is a short game. So being very much upfront, we have to tell states that yes, we are going to, if we have a seven year investment cycle, we're not gonna be able to show you anything until year three. And so that just kind of putting that out there can be a tool to use. I have another question here. We all understand that impact measurement work is extra work and extra cost. Yesterday it was said that commercially impact, commercially impact investors will always struggle to compete because our business models are more expensive and less competitive. What are your thoughts? More expensive and less competitive in the short term. But if it's about, if we're talking about innovation, that's where it's at. And yes, that takes a little bit longer. But in terms of impact investing, hopefully what you see is less volatility. And I think you may see that in the public markets as well as with private markets. But again, it's innovation that's always gonna allow, hopefully even leapfrogging of what's here. In fact, definitely leapfrogging. So it is about long termism. I guess I'm idealistic. So some of you will like roll your eyes at this answer. But I think there's such a broad spectrum of capital from negative 100% returns through philanthropic money to just return of principle to whatever this market rate is. And there's so little brain flexibility to think about the whole range there. That like, okay, so your fees are a little bit higher, but you're still gonna get 20% return. And why is that not a good choice instead of just investing in good old market rate, public markets, and then having to give away your money to solve that problem? I just think there's a lack of creativity in thinking about what is the purpose of capital and go back to the blended value concepts that Jed Emerson advanced years ago. What are you trying to achieve? What is the way that your capital gets you there? And think across that whole spectrum of capital so that you're not locked into these frameworks. I know that the person who's struggling because someone's asking them, telling them their fees are too high is like, that is not helpful, Lindsay. But that's where I'm gonna come at that question from. And you do have to hold some ground there. And I'm not unmindful, but you do have to hold some ground around it. I led a large not-for-profit for a very long time. And I constantly got pushback from foundations on things like, what are you paying them? And what it costs to do these kinds of studies. And I just was very firm about, don't send me to do the hardest work imaginable and expect me to do it on the cheap. Facts. You want good outcomes, you gotta pay for them. And there were places that I didn't get that work, but I didn't want it because I'm not gonna work people like slaves to do something that's gonna be useful in the moment and they'd be useful to the field and then pay them nothing. And more often than not, we were able to pull it out. So this is a new and emerging practical approach to improving our entire world. And so we gotta press for it and you can't do it on the cheap. You just simply cannot.