Measuring Effectiveness: Roadmap to Assessing System-Level & SDG Investing

Burckart, W., Lydenberg, S., & Ziegler, J. (2018). Measuring effectiveness: Roadmap to assessing system-level and SDG investing: Click here to read the report.

This report provides investors with a breakthrough roadmap for measuring the effectiveness of system-level investing strategies, including measuring progress toward achieving the United Nations’ Sustainable Development Goals (SDGs).

The report examines how investors can chart a course to assess system-level issues (like those contained in the SDGs) appropriate for their specific situation, and then establish effective goals for influence against which to measure progress. In doing so, investors also can assess the potential usefulness of the tools available to them and the effectiveness of the tools they have selected. Ultimately, this approach enables investors to assess their influence in determining changes at the system-level itself and the potential contribution of their efforts and investments.

A companion document to the report, Measuring Effectiveness: Roadmap to Assessing System-level and SDG Investing—Supplemental Appendices, contains a series of appendices that provide tools and examples for investors, as well as additional context for and information about the concepts discussed.

Among the key findings in the report is the identification of four foundational characteristics of environmental, societal and financial systems. Investor actions which strengthen any of those four characteristics mitigates systemic risk, while investor actions which weaken any of those four will increase systemic risks.

  • Adaptability: the environment, society, or the financial system’s ability to adjust to shocks and major disruptions (i.e., high adaptability, or self-regulation, helps systems better adjust to unanticipated external shocks).

  • Clarity: the coherence, flow, access to, and transparency of information about and within a system (i.e., information flows among actors and about system components—and their interrelationships— enables investors’ ability to understand their influence and act accordingly).

  • Connectivity: the value of a good or service is determined in part by how many people use it. The more it is used, the greater the benefit to the system (i.e., systems so structured have positive feedback loops that increase their health and resilience).

  • Directionality: market incentives structured to encourage positive changes in stakeholder behaviour (i.e., healthy systems are those in which influential actors enhance positive characteristics and align their actions with the systems’ fundamental goals).

Watch a video of pre-release event hosted by Morningstar regarding the report here and read an overview of the key findings by Prof. Bob Eccles in Forbes here.


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