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FMO uses Steward Redqueen’s methodology to quantify impact

Assignment

Imagine you are an investment officer… how would you divide your portfolio to maximize employment impact, while minimizing greenhouse gas (GHG) emissions? Would you invest in a renewable energy plant in Indonesia or in a traditional plant in Senegal? And which investment supports most jobs and incomes in the economy, a rice farm in China or in a cotton processing plant in Ghana?

Just a couple of examples a development finance institution like FMO faces every day. FMO aims to be a leading impact investor by doubling its impact and halving its footprint by 2020. In order to track its progress towards that goal FMO asked us to develop a tool to measure its socio-economic impact and environmental footprint. 

Solution

In the past year, we have closely collaborated with FMO to develop an Impact Model that quantifies the economic impact and environmental footprint of FMO’s investments.

The model doesn’t only provide insight into the direct results at client level, but also traces the indirect effects of FMO investments on a local economy in terms of jobs, GDP growth, GHG emissions and GHG avoidance.

The tool estimates the effects of new investments, measures the effect of the portfolio at a specific moment and tracks progress made over time. An external audit has verified our data sources as ‘among the best available’

Benefits

The Impact tool will help FMO to communicate about its impact with stakeholders and to align decision making with its development objective. The tool allows for a comparison between investments in different countries and sectors, helping FMO to allocate its capital where the strongest development impact can be achieved. 

FMO will use the Impact Model to track and steer on its audacious goal to double its impact and halve its footprint by 2020. The first baseline results can be found in FMO’s Annual Report

With the model developed by Steward Redqueen we are a frontrunner among impact investors and DFIs in the area of impact measurement. With the model we distinguish ourselves by providing more insights in the important indirect effects of our investments, and by combining both economic (jobs, value add) and sustainability impact (GHG) in one innovative tool. This will support our ambition of becoming a leading impact investor.
Nico Mensink
Manager Evaluation Unit FMO