Sustainably-focused small and medium enterprises (SMEs) manufacture and market environmentally friendly products and serve low-income communities. Not only do they create jobs and spur economic growth, but they also provide models for the businesses of the future, those that will thrive in a low-carbon, resource constrained world. The Global Impact Investing Rating System (GIIRS), used by investors worldwide to evaluate SME’s in developing countries, has adopted environmental criteria, thus raising the visibility of environmentally-focused businesses in emerging markets.
GIIRS is a standardized rating system that generates an easily digestible single value for scoring an emerging market SME and/or impact investment fund. Investment funds obtain a calculated GIIRS score based on the ratings of the portfolio of companies they invest in and the operations of the fund manager. GIIRS is crucial to the growth of the impact investing industry as it makes impact measurement accessible much like the Lipper or Morningstar ratings did for the mutual fund industry.
WRI’s New Ventures team persuaded the GIIRS managers to embed key environmental metrics into the ratings system in part through its position as the environmental expert on the GIIRS emerging markets standards advisory committee. By August 2010 eleven leading emerging market fund managers agreed to use the GIIRS rating system in their investment decision-making. Collectively, they have raised around US$1 billion to invest in high impact GIIRS-rated enterprises. These GIIRS “Pioneer Funds” will be pilot testing GIIRS with their portfolio companies throughout the developing world. Additionally, it has been adopted as the standard all companies and funds must reach to participate in the socially responsible angel network Investor’s Circle.