At Long Last, There’s a Metric for Quantifying the Monetary Value of Sustainability Investments

Astanor Ventures’ Impact Multiple on Investment methodology translates the expected and realized benefits of invested-in products or services into monetary terms — helping investors make more informed, strategic decisions.

By Tom Idle | Published 1 year ago | About a 6 minute read

Image: Gerd Altmann

Anybody working in sustainability is only too aware how crucial impact measurement is to maintaining performance. Measuring and reporting progress boosts transparency, helps in setting goals and allocating resources, enhances risk management and improves stakeholder engagement. All of this can seriously improve brand reputation and build long-term resilience.

Historically, companies have struggled to get their hands on good data that could help them work out where to focus efforts, make investments and report on the things that matter most.

Now, most firms are swimming in information, facts, figures and data on all manner of non-financial issues — from carbon emissions and electricity use to philanthropic ventures and modern slavery risks. The key task for corporates is to distill the data, prioritize it, translate it and work out how best to use it.

As Better Cotton Initiative CEO Alan McClay recently wrote for Reuters: “Every protocol for reporting performance data carries with it the priorities and proclivities of its creators.” Some approaches are geared to avoiding risks, others to find opportunities. “The overall picture is complex,” he added. “Yet, one crucial dividing line runs through almost every reporting methodology — namely, the emphasis (or not) placed on the higher-level effects of a given intervention; its impact, in other words.”

One company with a laser-sharp focus on impact measurement is Astanor Ventures — a global investor in agrifood technology startups. Motivated by the series of economic and environmental shocks that rocked the economy in 2022, Astanor has worked hard to develop a stronger, smarter way of measuring, managing and communicating impacts to its investors. As co-founder Eric Archambeau recently said in a LinkedIn post, measuring impact is at the heart of achieving Astanor’s vision of “transitioning the agrifood system and achieving wide-scale transformation of the global economy, away from an extractive and destructive system towards a regenerative, bio-based economy.”

Since the firm was launched in 2017, Astanor has invested in over 40 agrifood tech startups — including Modern Meadow, Notpla and Ÿinsect. Overall, its portfolio companies have avoided 25,000 metric tons of CO2e in greenhouse gas emissions, one million hectares of land-use change and 1.8 million m3 of water use.

These figures and more are highlighted in the firm’s latest Impact Creation Report, in which it takes its approach to impact valuation one step further through an Impact Multiple on Investment (IMOI) methodology: a proprietary impact-calculation methodology that takes impact metrics and translates them into impact return on investment — perfect for demonstrating the value of impact creation that can be attributed back to investors. Inspired by the True Cost Accounting and Social Return on Investment approaches, the model translates the expected and realized benefits of its invested-in products or services into monetary terms.

Leslie Kapin, Astanor’s Director of Impact and Sustainability, admits that it’s still early days in terms of deploying the model but that the approach shows the deep potential for creating long-term value for investors and portfolio companies alike by translating impact into monetary value. As she told Sustainable Brands®, she predicts the approach “will be a game-changer in the impact investment industry.”

She says the company focuses on early-stage impact investments “from the soil and sea to the guts — right along the entire value chain,” including everything from bio-input specialists to autonomous, electric tractors and sustainable packaging. For Kapin, the alignment intentionality is key in impact investing; it is something she and her team assess carefully before deciding what companies to support.

Astanor’s impact-measurement work started four years ago.

“We had just five deals and we started with six KPIs — including greenhouse gas emissions (GHGs), biodiversity and water. These haven’t changed as they are still relevant; a third of carbon emissions come from the food sector,” Kapin says.

Alongside these three planetary KPIs are two people-centered ones: health — looking at nutritional value and access to nourishing food; and social — focused on livelihoods and income. The sixth KPI is known as ‘impact intelligence:’ “This is the KPI for the enablers. We have companies that do not have a direct impact on the first five KPIs but they’re enabling the system.”

One such enabler Kapin’s team is supporting is US-based HowGood — a platform providing lifecycle environmental footprint assessments of products. The firm might struggle to quantify how many million tons of carbon it has helped its clients save. But it is having a positive impact — an impact that Astanor wants to capture.

“When we look at any deal, we carefully assess any negative externalities,” Kapin explains. “We have a philosophy that we will never contribute or enable one of the KPIs if it means harming any of the others. So, we won’t invest in a deal that’s going to save millions of fishes and generate millions of jobs for people if it’s going to have a negative impact on GHGs.”

However, reporting impact creation only goes so far; it is only in comparing the impact different companies or investments are having that genuine positive change can be realized:

“At some point, we knew we’d have to think about: ‘How we are going to compare deals?’ ‘How can we really translate easily to our investors that we’ve created impact?’ ‘Did we deploy the capital carefully enough?’ ‘Did we really create any impact for them?’

“We needed to find something that focused on monetary value, because that’s what the world understands; tons of carbon still doesn’t mean much.”

Astanor’s IMOI methodology is an attempt to do just that. The proprietary model combines so-called ‘impact pathways’ of an investment into a single, aggregated metric. It considers both positive aspects — such as cost savings from healthcare or the prevention of overfishing — and negative aspects, such as water pollution.

As the company explains in its 2022 Impact Creation Report, impact valuation aims to provide an integrated perspective across these dimensions by converting heterogeneous indicators — usually available in multiple physical units (e.g., tons of CO2e or number of jobs created) — into a single indicator expressed in a monetary value. With a better understanding of the impact generated by a product or service — and a more granular view of that impact across different regions — investors can make more informed, strategic decisions and create positive impact on a bigger scale.

You can read more about the specific impacts that Astanor’s portfolio companies are creating in its latest report. The highlight is that, based on seven portfolio companies across a number of subsectors in agrifood tech, the company’s €97 million invested translates into an estimated €250 million annual, cumulated, potential impact creation.

Luckily, Astanor has no plans to keep its IMOI methodology all to itself.

“Our goal is not to keep it in-house; the whole point is to have a common language for everyone around the table,” Kapin says. “We want all investors to be able to say, ‘okay, Astanor had a 4x return here; and this other VC fund did a 2x; or another fund achieved a 5x return.’ Impact measurement will never be perfect; but this approach is helpful to any impact investor — and it’s applicable across all industries.”

Tom Idle

Content creator extraordinaire.

Tom is founder of storytelling strategy firm Narrative Matters — which helps organizations develop content that truly engages audiences around issues of global social, environmental and economic importance. He also provides strategic editorial insight and support to help organisations – from large corporates, to NGOs – build content strategies that focus on editorial that is accessible, shareable, intelligent and conversation-driving.

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