Giving Compass' Take:

• Harvard Law School Forum on Corporate Governance and Financial Regulation discusses measuring effectiveness when it comes to impact investments that aim to meet the Sustainable Development Goals (SDGs).

• Investors need to look beyond simply "aligning" with the SGDs and look at how systems are changing. Do we have the right tools to measure that progress?

• Here's how digital technology can help us meet the SDGs.

As responsible investment in its various forms makes increasing inroads into the investment community, the question of how such investors set their goals and measure their progress toward these goals is of ever greater importance.

As to their financial goals, the answer is relatively clear: traditional investors integrating environmental, social and governance concerns into the security selection are seeking either competitive or enhanced returns, while investors with a philanthropic mission may be willing to accept concessionary returns or combine conventional investments with philanthropic activities.

But what about their social and environment goals? Aside from vague statements about “doing good while doing well” or “investing in a better world,” how clearly have investors delineated their specific goals? And what metrics do they have to measure their progress toward these goals? Equally important, as increasing numbers enter the field what benchmarks can help answer the question: who is or is not doing an effective job?

First, to increase their effectiveness, goal-setting by investors can focus on the paradigms operative at system levels. Paradigms are “philosophical and theoretical frameworks within which we derive theories, laws and generalizations.” [6] As a driving force within complex systems they are a primary contributor to the output of the system.

Second, investors can best measure their impact at a system level in general, and on system-level paradigms in particular, by assessing their potential to have influence within the system.

To set goals with relation to paradigm shifts, investors will need to start with an assessment the current paradigms relating to the system-level challenges with which they are concerned and develop a vision of what alternative paradigms would produce less problematic results. With a clear definition of both old and new paradigms in mind, investors can then develop with a reasonable degree specificity goal or milestones along the road in the shift from the one to the other.

Read the full article about how to assess system-level and SDG investments by Steve Lydenberg and William Burckart at corpgov.law.harvard.edu.