Measuring CFC impact across its portfolio
Despite its broad scope, it can be challenging to report Impact Measurement using the SDG framework. Since the monitoring of the targets is done on a national and on a global level, it may be challenging to attribute the contribution of a particular enterprise/business/organization in advancing specific goals. Currently, there is no official guideline for the private sector and the civil society to report on their work related to the SDGs.
To overcome these difficulties, it is necessary to convert the SDG framework in specific indicators. Having considered the different options available, the CFC decided to adopt the Impact Reporting and Investment Standards (IRIS+) as its main reporting tool.
IRIS+ is a catalogue that pulls together the most useful metrics from across the impact investing industry, making it easier to create a system to measure performance. It is managed by the Global Impact Investing Network (GIIN) and is the most used tool for impact investor to report on their impact.
After an in-depth assessment, the CFC has mapped the most relevant IRIS+ metrics with its core SDGs. As result, the CFC has determined the main indicators to be monitored by its projects in line with its mission.
Implementing the impact strategy
The development impact is one of the major criteria for selection of interventions receiving CFC support. Each project, received through the Open Call for Proposals, is expected to provide indicators of its intended impacts. Starting with the 13th Call for Proposals in 2018, the CFC asks all proponents to present the estimated impact of their projects using the SDGs framework. More specifically, they are required to describe how their project would contribute to the advancement of the core CFC SDGs. The proponents need to express the target impact indicators for each year of their projects and their baseline values using the IRIS+ metrics. They are also expected to provide details of how project activities contribute to the core SDGs targeted by the CFC. Projects which are unable to provide such information are normally not recommended for further consideration during the screening stage.
The impact indicators are checked by the CFC at the due diligence stage and are included in the project agreement between the CFC and the project proponent. The project agreement assures that the project will aim to achieve the intended outcomes and will report specific impact indicators, as agreed with the CFC. This information is provided to the CFC on an annual basis. Consistent and regular impact reporting alongside with financial indicators is a distinguishing feature of the CFC Impact Strategy.
The CFC collects diverse information regarding the impact of its projects over their life cycle while seeking to minimize the overhead burden on the operational, organizational, and human resources. The CFC follows a robust approach covering impact indicators and impact-measurements requiring project proposals to include:
- Target Indicators: The indicators should clearly demonstrate the intended level of achievements for each year of the project. The CFC expects that these will be systemically assessed and reported by the proponent, demonstrating that the implementation plans are feasible and not based on unrealistic assumptions;
- Baselines: Baseline levels for impact indicators should be included in the proposals. The CFC reviews and compares baseline data with other sources, e.g. similar projects;
- Data on achievements: The CFC systematically follows up the achievements of its supported projects to ensure timely and accurate reporting of the progress and impact. The follow up procedures are introduced, and project proponents are informed of the consequences of incomplete or late reporting on the implementation and eventual success of the project;
- Monitoring and Evaluation: Selective monitoring and evaluation for individual projects may be included but is generally constrained by the financial and human resources made available by the project proponents. The current focus of the CFC is on developing a practical approach for monitoring and evaluation across the entire CFC project portfolio ecosystem;
- Co-financing of Project: Projects receiving CFC support frequently include larger financial institutions as co-financiers. Combining resources and technical facilities of the CFC with co-financiers enables more intense and detailed impact monitoring. This concept of co-financing not only make the implementation a shared journey in its truest sense, it also help CFC to punch way above its height.