The Rockefeller Foundation and impact investor Radicle Impact have seeded the launch of new ‘impact verification’ business BlueMark, whose clients already include UBS, Nuveen (part of TIAA Investments) and the European Bank for Reconstruction Development.
BlueMark has been spun out of impact investing consultancy Tideline in response to client demand for the service. ‘Impact verification’ rose up the agenda last year with the launch of the IFC Operating Principles for Impact Management. There are some 100 signatories to the IFC’s impact Principles, including major players like BlackRock. Principle 9 requires signatories to publicly disclose and independently verify their alignment on a regular basis.
“Independent verification is essential for scaling the impact investing industry with integrity,” said Christina Leijonhufvud, a managing partner at Tideline and now CEO of BlueMark.
'We’ve only had one experience where a client essentially aborted the mission because they didn’t like the results. But that is a positive signal to me that our verification has teeth' – BlueMark CEO Christina Leijonhufvud
US-based Tideline already did impact verification work for a number of signatories to the IFC Impact Principles and with rising interest in impact investment and management has launched BlueMark as a separate dedicated business with an office in London to serve the European market.
The Rockefeller Foundation and Radicle Impact are its first investors, with fundraising still in process and a close expected in the coming weeks, Leijonhufvud says. Both seed investors say that BlueMark’s work will help evolve and scale the impact investment market with its focus on impact goals, transparency and the independent validation of results.
The BlueMark team has designed proprietary methodologies for evaluating how each of the three key components of an investor’s impact management process – impact mandates, impact management practices and impact reporting – are aligned with industry standards such as the IFC Impact Principles and others.
The impact investment market is gaining traction, with reports saying it could hit a $1trn under management this year, but there are still debates on the consistency and quality of products in the market.
Impact fund Snowball last month released a review of fund managers’ self-assessments of their impact and found many overestimated their impacts.
Leijonhufvud says there are a lot of gaps to fill with clients who think they have a “really gold standard system for both management and reporting”.
“They come in quite bold and then recognise they have a long way to go and have gaps to fill. Most of our clients, I’m happy to say, have come to the table in a spirit of openness and learning. We’ve only had one experience where a client essentially aborted the mission because they didn’t like the results. But that is a positive signal to me that our verification has teeth.”
BlueMark will also focus on impact reporting – a subject at the top of the agenda for standard setters and policymakers, with many efforts to coalesce and regulate on ESG and impact reporting standards.
“In addition to our impact management practice and impact verification, we will have a distinct service around impact reporting because some of our clients are demanding it,” Leijonhufvud said.
She said there was no universal standard currently for what constitutes a quality impact report, but it was looking to develop a standard.
“We are drawing on a number of frameworks like the GRI … and the Impact Management Project as well. And certainly some of the work coming out of Europe like the EU Taxonomy and the PRI reporting framework will be important inputs to this.
“I think the next phase of the market is increasing professionalisation and maturity to coalesce around a discrete set of standards for what constitutes robust quality in both ESG and impact reporting. It’s still a work in progress. There is definitely more harmonisation required. It was a positive signal to see SASB and the GRI signal they are going to work together going forward to harmonise their two frameworks and to harmonise their interpretation of what constitutes materiality.”
BlueMark’s verification clients include, among others: BlueOrchard Finance, Calvert Impact Capital, CDC Group, Closed Loop Partners, Community Investment Management, European Bank for Reconstruction Development, KKR, LeapFrog Investments, LGT Venture Philanthropy, Nuveen, PG Impact Investments, PG LIFE, the Osiris Group, and UBS.