IRIS+ Implementation Guide for Fund Managers

Executive Summary

The IRIS+ system, managed by the Global Impact Investing Network (GIIN), is the generally accepted system for measuring, managing, and optimizing impact. For fund managers, implementing IRIS+ provides credibility with limited partners, enables portfolio aggregation and benchmarking, and aligns reporting with industry best practices.

This guide provides a comprehensive roadmap for fund managers seeking to implement IRIS+ across their investment process. We cover:

• Understanding the IRIS+ architecture and taxonomy
• Selecting appropriate Core Metric Sets for your strategy
• A phased implementation approach with clear milestones
• Data collection systems and technology infrastructure
• Portfolio-level aggregation and benchmarking
• LP reporting templates and best practices
• Common implementation challenges and solutions

1. Introduction to IRIS+

IRIS+ represents the evolution of the IRIS Catalog of Metrics, which has served as the foundation of impact measurement since 2009. The "+" signifies an enhanced system that goes beyond metrics to provide thematic frameworks, evidence-based guidance, and tools for implementation.

Why IRIS+ Matters for Fund Managers

For fund managers, IRIS+ adoption delivers multiple strategic benefits:

LP Expectations

Institutional limited partners increasingly require IRIS-aligned reporting. A 2023 GIIN survey found that 78% of institutional allocators expect fund managers to use standardized impact metrics, with IRIS+ cited as the preferred framework.

Portfolio Comparability

Standardized metrics enable comparison across portfolio companies, vintages, and peer funds. This comparability is essential for portfolio management, performance attribution, and continuous improvement.

Credibility and Due Diligence

IRIS+ adoption signals commitment to impact integrity. During fundraising, demonstrating IRIS+ implementation can differentiate your fund in competitive processes and streamline LP due diligence.

Operational Efficiency

While initial implementation requires investment, IRIS+ ultimately streamlines impact reporting by providing consistent definitions, calculation methodologies, and reporting formats across the portfolio.

IRIS+ vs. Custom Frameworks

Some fund managers develop proprietary impact measurement frameworks tailored to their specific strategy. While custom frameworks can capture nuances, they create challenges:

• Limited comparability with industry benchmarks
• Increased LP education and reporting burden
• Reduced credibility without third-party validation
• Portfolio company confusion across multiple investors

We recommend using IRIS+ as the foundation, supplemented by strategy-specific custom metrics where IRIS+ gaps exist.

2. IRIS+ Architecture

Understanding the IRIS+ architecture is essential for effective implementation. The system comprises four interconnected layers:

Layer 1: Impact Themes

IRIS+ organizes impact around nine thematic areas that align with investor priorities and global challenges:

Layer 2: Strategic Goals

Within each theme, IRIS+ defines Strategic Goals that reflect common investor objectives. For example, within the Energy theme:

• Increase access to clean energy
• Improve energy efficiency
• Reduce greenhouse gas emissions

Layer 3: Core Metric Sets

For each Strategic Goal, IRIS+ provides a Core Metric Set - a curated collection of metrics that represent the essential data points for measuring contribution to that goal. Core Metric Sets include both impact metrics and contextual information.

Layer 4: Individual Metrics

The foundational layer comprises 400+ individual metrics, each with standardized definitions, calculation methodologies, and reporting formats. Metrics are categorized as:

• Output Metrics: Direct products of activities (e.g., MWh generated)
• Outcome Metrics: Changes experienced by stakeholders (e.g., households with energy access)
• Operational Metrics: Organizational characteristics (e.g., employees, governance)

3. Core Metric Sets

Core Metric Sets are the practical starting point for IRIS+ implementation. Each set provides the essential metrics for measuring contribution to a specific Strategic Goal.

Selecting Your Core Metric Sets

Selection should be based on your fund's impact thesis and portfolio composition. Most funds focus on 2-4 Core Metric Sets that align with their strategy.

Example: Clean Energy Fund

Example: Financial Inclusion Fund

4. Implementation Phases

We recommend a phased approach to IRIS+ implementation, typically spanning 4-6 months from initiation to full deployment.

5. Data Collection

Effective data collection is the foundation of credible impact measurement. We recommend a structured approach that balances rigor with practicality.

Collection Frequency

Most fund managers collect impact data quarterly, aligned with financial reporting cycles. Annual collection may be sufficient for outcome metrics that change slowly, while real-time collection may be appropriate for operational metrics available through automated systems.

Data Sources

Primary Sources (Direct from Portfolio Companies)

• Management information systems (MIS)
• Financial statements and operational reports
• Customer/beneficiary databases
• HR and payroll systems

Secondary Sources (Supplementary)

• Third-party surveys and assessments
• Industry benchmarks and research
• Government and regulatory data
• Independent verification and audit

Data Quality Framework

Implement a data quality framework that addresses:

6. Technology & Systems

While spreadsheets can support initial implementation, most fund managers eventually require dedicated impact management software to scale effectively.

Key Technology Capabilities

• IRIS+ Integration: Pre-built metric libraries aligned with IRIS+ definitions
• Data Collection: Portfolio company portals for data submission
• Validation: Automated data quality checks and anomaly detection
• Aggregation: Portfolio-level rollup and visualization
• Reporting: LP report generation and export capabilities
• Benchmarking: Industry comparison and peer analysis

Leading Impact Management Platforms

Several purpose-built platforms support IRIS+ implementation:

7. Portfolio Aggregation

Aggregating impact across portfolio companies enables fund-level performance assessment and LP reporting. However, aggregation requires careful consideration of methodology and limitations.

Aggregation Approaches

Simple Summation

For additive metrics like "jobs created" or "households served," sum across portfolio companies. Ensure consistent definitions and avoid double-counting (e.g., when companies serve overlapping populations).

Weighted Aggregation

Weight company contributions by investment size, ownership percentage, or other factors. This approach better reflects the fund's actual contribution to impact.

Attribution

Allocate impact based on the fund's share of total capital deployed. If your fund provided 30% of a company's equity, claim 30% of its impact (subject to disclosure of methodology).

8. Benchmarking

IRIS+ adoption enables benchmarking against industry peers, though impact benchmarking remains less developed than financial benchmarking.

Benchmarking Sources

• GIIN Annual Impact Investor Survey: Aggregated data on impact metrics across 300+ investors
• IRIS+ Thematic Benchmarks: Sector-specific performance ranges
• Peer Networks: Informal benchmarking within investor networks (e.g., Toniic, CREO)
• Impact Platform Data: Anonymized benchmarks from technology platforms

Benchmark Interpretation

When interpreting benchmarks, consider:

• Stage differences (early-stage companies may show lower impact per dollar)
• Geographic variation (impact per dollar varies significantly by region)
• Sector differences (capital intensity varies across sectors)
• Measurement methodology differences

9. Reporting to LPs

LP impact reporting should complement financial reporting, providing a complete picture of fund performance.

Recommended Report Structure

1. Executive Summary: Key impact highlights and portfolio overview
2. Impact Strategy: Reminder of fund's impact thesis and measurement approach
3. Portfolio Impact Performance: Aggregated metrics with year-over-year trends
4. Company Spotlights: Deep dives on 2-3 portfolio companies
5. Challenges and Learnings: Transparent discussion of difficulties
6. Methodology Notes: Data sources, attribution, limitations

Reporting Frequency

Most funds provide annual impact reports, with quarterly updates on key metrics. Align impact reporting with financial reporting cycles for operational efficiency.

10. Common Challenges

Based on our experience supporting fund managers, these are the most common implementation challenges and recommended solutions: