1. 2nd International Symposium on Social Investment
ARUN’s Social Impact Measurement Framework
and Result from the JICA Research Project
October 13, 2013
Takara Tsuzaki, Partner
URL ： http://www.arunllc.jp

2. ARUN’s Social Impact Measurement Framework
Q: Why social impact measurement is the key component for ARUN’s social
investment activities?
Objectives for Social Impact Measurement:
a.To share ARUN partners (investors) the up-to-date information and monitoring/
evaluation results of current state of the investment business
b.To highlight the improvements on both social and business/management aspects and
encourage investees further development by giving feedbacks on monitoring and
evaluation results.
c.To provide information to external parties (incl. potential investors) and making
ARUN’s social investment activities accountable for the wider public.
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3. Social Impact Measurement and Evaluation
■Evaluation
Steps
Dialogue with investees
Step1 ： Setting on the field/area of
evaluation (overall scope)
Survey to ARUN partners
Discussions among ARUN
partners (investment committee,
Dialogue with investees
Step2 ： Deciding on evaluation criteria
social performance assessment/
evaluation team)
・ Acquisition of relevant data
・ Monitoring system
Data submitted by
investees
Step3 ： Social impact evaluation
Evaluation of investment (midterm, progress, result)
Step4 ： Feedback
Improving business
Report to ARUN partners
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4. Basic approach to the financial evaluation
•
•
•
Social Enterprises which ARUN makes investment in have not fully established their financial base in most of the
cases. Funding sources are scarce at this very initial stage, and financial institutions do not open their doors to them.
With respect to business operations, entrepreneurs are conscious of the social mission, and it is generally the period
of trial and error for their new business.
In light of these circumstances, ARUN decided to take the following approach in social impact evaluation and
assessment.
Profitability
Merkmal - Entrepreneur/social enterprise is generating profit while paying a decent wage
to employees, and making repayment of principal and interest on borrowings, and
assessment focuses on profits that occur after applying financial expense.
Stability
Merkmal – Ability to secure the operating cash flow to perform scheduled repayment of
principal and interest of loans and making sure that debt of loss compensation is not built
up. Assessment mainly focuses on "operating cash flow" and "debt ratio“.
Growth
potential
The most important criteria for business operation is the growth of sales; therefore the
social impact assessment focus on the "sales growth".
Social enterprises generally extends their impact into social aspects, producers, employees,
the community through business activities. Therefore, expansion of business scale is an
important factor to determine the scale of social impact.
Reliability
Evaluation is made on the basis of how much ability the enterprise/entrepreneur has to
create financial statements at the level that ARUN requests, and assess whether they can
provide reliable data.
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5. ARUN’s Social Impact Evaluation Scheme
ARUN selects investee enterprises in conformity with both social and business/management criteria. ARUN
developed its own social impact evaluation scheme and utilizing it for DD, reviewing and reporting of
investment activities.
Social /Developmental Effectiveness
Criteria
Business/Management Criteria
Commitment by the entrepreneurs to bring
about social changes for the cause
Business Model
Financials
Degree in which
social value is
created
Governance
Employment
Leadership
Impact on
Community
■Social Monitoring: Stakeholder analysis
Return on Investment
Local
■Evaluation of Social Impact
(applied to our investees) Leadership
Customers
Environment
Innovativeness
Suppliers
ARUN
Entrepreneurs
Workers
Family
Contribution to
local communities
Employment
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6. ARUN’s social impact performance evaluation
■Focus and basis of the evaluation:
Relationship between the mission and purpose of the business is crucial. Discussions with investees focus on
how they related to each other to enhance the business potentials.
※Achievement of mission is the priority, and business is the means to achieve the mission. Social performance
is assessed accordingly.
■Comprehensive approach in different phase:
To evaluate impact of the business, comprehensive approach is taken; whether the business is producing
tangible outcomes for the ”purpose” that was set forth , what kind of results came out of the business
(outputs) and how they lead to the overall impact of the business in the given area/field.
Social Performance
Mission and
purpose
of the
business
Input
Invest
ment
Output
Outcome
Impact
Resour
ces
Main focus for assessment and evaluation
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7. REFERENCE ONLY
Monitoring and Evaluating the Social Impact of Investment
① Monitoring components for social entrepreneurs and social enterprises
Item
Key Questions
Metrics/Index
Social
entrepreneurship
a. As a social entrepreneur, commitment and enthusiasm to resolving social
issues is strong and has not been declined.
・ Clear awareness of social problem and its
solution
Willingness and
commitment to the
society
a. Awareness of the social purpose of the organization is listed clearly and
unchanged, and outlook and anticipation of the future is stated.
・ Clear awareness of the social purpose of
the organization, stated and reflected in
business plan
b. Spirit of innovation / creativity in the business.
・ Ratio on economic /social
Comparative reference with other cases
a. Impact of job creation is maintained in a stable manner, and the scale is
greater.
・ Total # of people employed, changes of #
over time
b. Is the business successful in creating the employment of vulnerable groups?
・ Women / elderly / disabled, changes over
times
Wage
a. Impact of income generation is maintained in a stable manner, and the scale is
greater.
・ Income, Percentage of sales, Income of
the socially vulnerable people, changes over
time
Networks and
business expansion
a. In order to achieve the social purpose of the business, is network of customers
and suppliers are expanding?
・ Communication with suppliers /
customers
Level of mutual understanding , satisfaction
Contribution to the
community
a. Does the business actively utilize as much local resources as possible?
・ Use of local resources in equipment and
raw materials
b. Does the business actively engage in the re-investment in the area?
・ Relationship improvement in the regional,
details of the relevant activities
c. Does the business contribute to the vitalization of local economy?
・ Relationship improvement in the regional,
details of the relevant activities
d. Does the business contribute to regional revitalization efforts? (Movement
creation through interaction)
・ Relationship improvement in the regional,
details of the relevant activities
e. Ripple effect on society and other stakeholders.
・ Presence or absence of effect, details of
the relevant activities
Employment
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8. REFERENCE ONLY
Monitoring and Evaluating the Social Impact of Investment
① Monitoring components for social entrepreneurs and social enterprises
Item
Key Questions
Metrics/Index
Consideration on
Environmental
a. Active efforts on eco-friendly/environmentally sustainable actions.
・ Achievements
Consideration on
working environment
a. Active efforts on improving working environments.
・ Achievements
Consideration on
customers and
consumers
a. Does the business strive to maintain and improve safety · QC of products
and services as consideration for consumers and customers.
・ Achievements
b. Do you strive to disseminate information about safety · QC of products
and services as consideration for consumers and customers?
・ Achievements
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9. REFERENCE ONLY
Monitoring and Evaluating the Social Impact of Investment
②Monitoring components for employees
Item
Key Questions
Metrics/Index
Understanding of the
social purpose of the
organization
①Employees understand the social purpose of the
organization?
・ Changes of understanding, shared value
among employees
②Spirit of innovation / creativity in the business?
· Understanding of social issues to be solved by
the company
· Degree of the influence that their services has
solved (%)
· Aware of the companies and organizations with
same business model
Awareness of
environmental
considerations
①Among employees, are needs and social significance of the
organization/company’s efforts of eco-friendly activities being
shared and understood?
・ Changes in the understanding of the need for
consideration in eco-friendly activities, Changes in
social trends
Awareness of
working
environment
①Among employees, are needs and social significance of the
organization/company’s efforts of improve working
environment being shared and understood?
・ Changes in the understanding of the need for
consideration in working environment, Changes in
social trends
Considerations on
customers and
consumers
①Among employees, are needs and social significance of the
organization/company’s efforts on maintaining and improving
the safety and quality control being shared and understood?
・ Changes in the understanding of employee
Changes in social trends
②Among employees, are needs and social significance of the
organization/company’s efforts on disseminating information
on safety and quality control being shared and understood?
・ Changes in the understanding of the need for
information dissemination of employee,
Changes in social trends
Skills
①Skills originally held by employees improved? Have they been
acquiring new skills? Are motivated to work?
・ improvement of skills, details of new skills,
process of acquiring.
Confidence and selfesteem
①Are employees gaining confidence and self-esteem by
working in the organization?
・ changes in confidence and self-esteem
Contribution to the
society
①Through the work in the organization, do employees actively
contribute to the region and society?
・ Changes in the regional contribution
awareness / political awareness / sense of
entitlement of employees
Status of family
①What changes happened to quality of life of the family?
・ mental strength, voice of women, education of
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10. REFERENCE ONLY
Monitoring and Evaluating the Social Impact of Investment
③Monitoring components for investors
Item
Consciousness
of investors
Key Questions
Any changes occurred in the consciousness of
investors by participating in the project?
Metrics/Index
・ Information and number of feedbacks received from ARUN
(investors)
・ Changes in motivation or interests caused by dissemination of
information on the progress of the project
・ Number of people (investors) participated in the study tour to see
the actual investment sites.
・ Changes in motivation or interests caused by having participated
in the study tour/visited investment site/interacted directly with
entrepreneurs/employees.
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11. Uniqueness of ARUN’s Social Impact Evaluation & Measurement
■Team Structure and Collaboration:
- Investment Committee
- Social Impact Measurement Team
- Research Team (+ ARUN Lab)
■Geared towards “goal setting” for producing high impact, rather than driven by
evaluation/assessment tool
- local office in Cambodia working together with entrepreneurs/social enterprise on a regular basis
- ARUN directors/partners (investors) and ARUN lab members frequently interact with
entrepreneurs and employees
- workshop/facilitation style evaluation/assessment to highlight the positive aspects of the business
- constantly revising and improving the questions and index by reflecting the needs and
feedbacks from the entrepreneurs, and applying the global trend and analysis on social and impact
investment
Going forward…
- Developing and improving ARUN’s Social Impact Evaluation and Measurement in accordance with
our investment area/region (South East Asia, South Asia etc.) and sectors .
- Strengthening research arm
- Advisory service to Japanese corporations operating abroad (BOP business)
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12. Global Study on Evaluation Frameworks
Components
#
Development effectiveness
assessment framework
1
Impact Reporting and
Investment Standards (IRIS)
2
Steps
Business/
manageme
nt
outputs
Global Impact Investing
Network (GIIN)
○
○
○
○
◎
Global Reporting Initiative
Guideline
Global Reporting Initiative
(GRI)
○
○
○
○
3
Global Impact Investing Rating
System (GIIRS)
GIIRS members
○
○
○
△
○
4
Measuring Value of BCtA
Initiative, A Result Reporting
Framework
Business Call to Action (BCtA)
○
○
○
△
△
5
Development Outcome Tracking
Systems (DOTS)
International Financial
Corporation (IFC)
○
○
○
○
△
6
Measuring Impact Framework
World Business Council on
Sustainable Development
(WBCSD)
-
-
○
○
○
△
7
Poverty Footprint Framework
Oxfam
-
-
○
○
○
×
8
Baseline Form for new projects
DFID Business Innovation
Facility (BIF)
-
-
○
○
△
9
Social Return on Investment
(SROI)
Roberts Enterprise
Development Foundation
(REDF), New Economic
Foundation (NEF)
-
-
○
○
△
10
Progress out of Poverty Index
(PPI)
Grameen Foundation
○
○
○
impact
○
Metrics/
index
○
Process
Reco
gniti
on
Social
Developed by
outco
me
framework
△
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13. Research Findings: Summary
1
Balance between social/developmental
criteria and financial/management criteria
Business/
Mgmt
criteria
Social
criteria
Impact
2
Importance on output while considering
the outcome
3
Importance on both the measurement
metrics/index and the process of how the
impact is achieved and assessed
Outcome
Output
Index/me
trics
oriented
Process
Oriented
Global Recognition and application
4
Recognized globally and aligned with
targeted mission and social impact
IRIS
Mix
Develop own
measurement scheme
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