Design Effective Due Diligence Process

Design Effective Due Diligence Process

This article is work in progress and not ready for prime time.  Please check within 4-6 weeks

 

Are you an asset manager looking to decide which investment is likely to create the best social or environmental impact?   Impact evidence is critical to raising much-needed impact capital. So where do you start?  Let’s show you how to develop an effective survey that can align with an investor's impact thesis. To understand any impact on people or the planet, data is needed across five dimensions: What, Who, How Much, Contribution and Risk.

Introduction

 

In this article, we will show you how to create an effective due diligence process based on stakeholder surveys. To understand any impact on people or the planet, data is needed across five dimensions: What, Who, How Much, Contribution and Risk. This video will provide a practical understanding of how to collect data across the five dimensions to understand the impact created on people and the planet through your programs.  The impact can be both positive and negative - the crux of the matter is to ask and collect data on the right questions.

We will discuss how you can build an impact evidence-based due diligence survey that aligns with five dimensions of impact based on the Impact Management Project and Lean Data approach from 60 Decibel.  This approach is fairly new and provides a great start if you are just beginning to establish an impact measurement process for your projects.  

According to the impact management project, to effectively measure and understand the impact data needs to be collected across all five dimensions.

The first step requires enterprises to start by understanding who their customers or stakeholders are.   By collecting data on their demographics and seeking feedback on their wants and needs (i.e. What). 

 

Second, an enterprise might then seek more specific feedback from stakeholders about what other kinds of impact, positive and negative, they are experiencing when engaging with the enterprise for the product, service. You can also ask feedback through the operations of the enterprise as an employee, community member or supplier. 

 

To manage these impacts, the enterprise will then need data on which impacts are most important (What) to the stakeholder affected, as well as the degree of change (How Much) that have occurred for each.

 

Self-reported data is collected directly from people such as employees, customers, suppliers who interact with the enterprise.  Self-reported data can be either objective or subjective

 

Impact Cloud’s innovative impact strategy allows a better alignment between investors’ impact framework and enterprise’s intended impact.  Both investors and enterprises can collaborate to create self-reported data that can easily align with due-diligence and regular recurring monitoring and evaluation results that investors may be looking to learn.

 

Once you have designed a survey, you should test the effectiveness of the survey with a limited group.  Once finalized use whatever mechanism is best suited for the given situation. Data collection could be door-to-door when collecting data in areas with poor network or it could be online if network connectivity is good.  

 

Let us now look at all the 5 dimensions in detail and the types of data that needs to be collected in each of the dimensions.

 

1st Dimension: WHAT What outcome(s) do business activities drive? How important are these to 

the people (or planet) experiencing them?

Key here is to ask -

  • Is enterprise generating a negative or positive outcome?
  • Is enterprise delivering a level of outcome above or below a national or international performance standard?
  • Is enterprise generating unimportant outcomes?



[Chris, I have provided appropriate Infographics to make a point.  When it says Before in the bracket, make sure to keep them on screen on the right side.  Whereas After is designed to demonstrate an example of a response that can be used to evaluate a particular dimension]

Infographics  (Before)



There four Impact Data Category required to assess “What”

 

    • The outcome level experienced by the stakeholder when engaging with the enterprise. The outcome can be positive or negative, intended or unintended

 

    • The threshold for a positive outcome. The level of outcome that the stakeholder considers to be positive or ‘good enough’. The threshold can be a nationally- or internationally-agreed standard. 

 

    • Importance of outcome to stakeholder Stakeholders’ view of whether the outcome they experience is important 

 

    • Sustainable Development Goals or other globally recognized goals 



   For example,

  1. A  gym company that provides high-quality, low-cost services may ask “When you first visited gym, what improvements in your life were you looking for”?

    







Infographics  (After)

 

2 ND Dimension 

Who

Who experiences the outcome? How underserved are the stakeholders in relation to the outcome? 

There are four impact data category that describes Who

Stakeholder The type of stakeholder experiencing the outcome 

Geographical boundary The geographical location where the stakeholder experiences the social and/or environmental outcome. 

Baseline outcome level The level of outcome experienced by the stakeholder prior to engaging with the enterprise reaching well-served populations? reaching underserved populations

Stakeholder characteristics Socio-demographics and behavioral characteristics of the stakeholder to enable segmentation

    • Infographics  (Before)

 

    • Infographics  (After)

Continuing with the same hypothetical gym example, the Gym company could determine our of all the people who join the gym how many of them are overweight?

This gives them a good understanding of how under served the people are, giving them a good baseline to start measuring their impact effectively.

  1. How Much?: 

How much of the outcome occurs across scale, depth, and duration? 

Scale The number of individuals experiencing the outcome generating the outcome for few? generating the outcome for many? 

Depth The degree of change experienced by the stakeholder. delivering a small degree of change towards the outcome? delivering a large degree of change towards the outcome? 

Duration The time period for which the stakeholder experiences the outcome generating short term change? generating long-term change?

    • Infographics (Before)

 

    • Infographics (After)

For example, if the gym company identified that many people were indeed overweight in the “Who” dimension then can now ask questions to determine if a lot of people indeed lost weight and are not enjoying the benefits of weight loss. This tells the enterprise the degree to which the outcome is experienced by the stakeholder.

  1. Contribution 

What is the enterprise’s contribution to what would likely happen anyway? 

Depth counterfactual The estimated degree of change that would occur anyway for the stakeholder contributing marginally or not at all, relative to what would have happened anyway? contributing significantly, relative to what would have happened anyway?

Duration counterfactual The estimated time period that the outcome would last for anyway

    • Infographics (Before)
    • Infographics (After)

 

For example, the gym company could ask its stakeholders if they have used services from some other company or used some other products to experience the weight loss. This would clearly indicate if the outcomes experienced by the stakeholders can be attributed to the Gym company.

  1. Risk: 

What is the risk to people and planet that impact does not occur as expected? 

Impact Risk type The type of risk that may undermine the delivery of the outcome taking a low level of impact risk? taking a high level of impact risk?

 

Impact Risk level The level of the risk specified in risk type (e.g. High, Medium, Low)

    • Infographics

 

This is a very important data category. In the example, the gym company could continuously measure the number of people who drop-off after starting the program this gives them the drop-off rate which can effectively tell them the risk they are running toward the product or services they offer to people.



Once results from a large enough population are collected, enterprises can classify results for each effect as shown in the impact scorecard here.  Investors can use the information presented for their due diligence. Once investment is made, investors can request yearly improvement to monitor improvement year after year.

 

Take this final screenshot from to demonstrate final impact scorecard

https://xd.adobe.com/view/c91c25d1-197f-4b3e-5f51-626465b47da0-bf2d/screen/f23bc477-35a6-40ac-a0ed-e3bc43352fdb/Impact-Scorecard-16?fullscreen



Are you ready to give a spin? Start your impact journey with impact cloud

 

Well, Thanks for watching everyone. I hope you learned something new, and I’m curious to hear what challenges you and your organization are currently facing when it comes to building an effective Theory of Change.

 

Drop a comment down below and let's get the discussion started!

 

And if you found this information helpful, don’t forget to like and subscribe to our channel, so you never miss an upload

 

and until then, this has been Chris Gaines.

 

I’ll see you in the next one! 

 

Reference:

 

https://socialvalueint.org/wp-content/uploads/2019/06/IMP_Using_Self-Reported-Data_150519vf.pdf




TELEPROMPTER VERSION

 

Are you an asset manager looking to decide which investment is likely to create the best social or environmental impact?   Impact evidence is critical to raising much-needed impact capital. So where do you start?  Let’s show you how to develop an effective survey that can align with an investor's impact thesis. To understand any impact on people or the planet, data is needed across five dimensions: What, Who, How Much, Contribution and Risk.

Introduction

 

Hi Everyone, My name is Chris Gaines, Lead Trainer at SoPact.  Today in this session I will show you how to create an effective due diligence process based on stakeholder surveys. To understand any impact on people or the planet, data is needed across five dimensions: What, Who, How Much, Contribution and Risk. This video will provide practical understanding on how to collect data across the five dimensions to understand the impact created on people and planet through your programs.  The impact can be both positive and negative - the crux of the matter is to ask and collect data on the right questions.

In this video, we will discuss how you can build an impact evidence-based due diligence survey that aligns with five dimensions of impact based on the Impact Management Project and Lean Data approach from 60 Decibel.  This approach is fairly new and provides a great start if you are just beginning to establish an impact measurement process for your projects.  

 

According to the impact management project, to effectively measure and understand impact data needs to be collected across all five dimensions.

The first step requires enterprises to start by understanding who their customers or stakeholders are.   By collecting data on their demographics and seeking feedback on their wants and needs (i.e. What). 

 

Second, an enterprise might then seek more specific feedback from stakeholders about what other kinds of impact, positive and negative, they are experiencing when engaging with the enterprise for the product, service. You can also ask feedback through the operations of the enterprise as an employee, community member or supplier. 

 

To manage these impacts, the enterprise will then need data on which impacts are most important (What) to the stakeholder affected, as well as the degree of change (How Much) that have occurred for each.

 

Self-reported data is collected directly from people such as employees, customers, suppliers who interact with the enterprise.  Self-reported data can be either objective or subjective

 

Impact Cloud’s innovative impact strategy allows a better alignment between investors’ impact framework and enterprise’s intended impact.  Both investors and enterprises can collaborate to create self-reported data that can easily align with due-diligence and regular recurring monitoring and evaluation results that investors may be looking to learn.

 

Once you have designed a survey, you should test the effectiveness of the survey with a limited group.  Once finalized use whatever mechanism is best suited for the given situation. Data collection could be door-to-door when collecting data in areas with poor network or it could be online if network connectivity is good.  

 

Let us now look at all the 5 dimensions in detail and the types of data that needs to be collected in each of the dimensions.



1st Dimension: WHAT What outcome(s) do business activities drive? How important are these to 

the people (or planet) experiencing them?

Key here is to ask -

  • Is enterprise generating a negative or positive outcome?
  • Is enterprise delivering a level of outcome above or below a national or international performance standard?
  • Is enterprise generating unimportant outcomes?




There four Impact Data Category required to assess “What”

 

    • The outcome level experienced by the stakeholder when engaging with the enterprise. The outcome can be positive or negative, intended or unintended

 

    • The threshold for a positive outcome. The level of outcome that the stakeholder considers to be positive or ‘good enough’. The threshold can be a nationally- or internationally-agreed standard. 

 

    • Importance of outcome to stakeholder Stakeholders’ view of whether the outcome they experience is important 

 

    • Sustainable Development Goals or other globally recognized goals 



   For example,

A  gym company that provides high-quality, low-cost services may ask “When you first visited gym, what improvements in your life were you looking for”?

    









2ND Dimension 

Who

Who experiences the outcome? How underserved are the stakeholders in relation to the outcome? 

There are four impact data category that describes Who

Stakeholder The type of stakeholder experiencing the outcome 

Geographical boundary The geographical location where the stakeholder experiences the social and/or environmental outcome. 

Baseline outcome level The level of outcome experienced by the stakeholder prior to engaging with the enterprise reaching well-served populations? reaching underserved populations

Stakeholder characteristics Socio-demographics and behavioral characteristics of the stakeholder to enable segmentation

Continuing with the same hypothetical gym example, the Gym company could determine our of all the people who join the gym how many of them are overweight?

This gives them a good understanding of how under served the people are, giving them a good baseline to start measuring their impact effectively.

  1. How Much?: 

How much of the outcome occurs across scale, depth, and duration? 

Scale The number of individuals experiencing the outcome generating the outcome for few? generating the outcome for many? 

Depth The degree of change experienced by the stakeholder. delivering a small degree of change towards the outcome? delivering a large degree of change towards the outcome? 

Duration The time period for which the stakeholder experiences the outcome generating short term change? generating long-term change?




For example, if the gym company identified that many people were indeed overweight in the “Who” dimension then can now ask questions to determine if a lot of people indeed lost weight and are not enjoying the benefits of weight loss. This tells the enterprise the degree to which the outcome is experienced by the stakeholder.

  1. Contribution 

What is the enterprise’s contribution to what would likely happen anyway? 

Depth counterfactual The estimated degree of change that would occur anyway for the stakeholder contributing marginally or not at all, relative to what would have happened anyway? contributing significantly, relative to what would have happened anyway?

Duration counterfactual The estimated time period that the outcome would last for anyway

 

For example, the gym company could ask its stakeholders if they have used services from some other company or used some other products to experience the weight loss. This would clearly indicate if the outcomes experienced by the stakeholders can be attributed to the Gym company.

  1. Risk: 

What is the risk to people and planet that impact does not occur as expected? 

Impact Risk type The type of risk that may undermine the delivery of the outcome taking a low level of impact risk? taking a high level of impact risk?

 

Impact Risk level The level of the risk specified in risk type (e.g. High, Medium, Low)



This is a very important data category. In the example, the gym company could continuously measure the number of people who drop-off after starting the program this gives them the drop-off rate which can effectively tell them the risk they are running toward the product or services they offer to people.



Once results from a large enough population are collected, enterprises can classify results for each effect as shown in the impact scorecard here.  Investors can use the information presented for their due diligence. Once investment is made, investors can request yearly improvement to monitor improvement year after year.

 

Take this final screenshot from “The Water Project” to demonstrate a final impact scorecard

https://xd.adobe.com/view/c91c25d1-197f-4b3e-5f51-626465b47da0-bf2d/screen/f23bc477-35a6-40ac-a0ed-e3bc43352fdb/Impact-Scorecard-16?fullscreen



Are you ready to give a spin? Start your impact journey with impact cloud today

 

Well, Thanks for watching everyone. I hope you learned something new, and I’m curious to hear what challenges you and your organization are currently facing when it comes to building an effective Theory of Change.

 

Drop a comment down below and let's get the discussion started!

 

And if you found this information helpful, don’t forget to like and subscribe to our channel, so you never miss an upload

 

and until then, this has been Chris Gaines.

 

I’ll see you in the next one!