Closing the Impact Reporting Gap with the New Impact Reporting Norms: Balancing Transparency, Comparability, and Flexibility
Thought Leaders in Action: Interview with Mike McCreless, Executive Director, Impact Frontiers
Impact management, measurement and reporting is the holy grail of impact investing and is a core component of any impact strategy. Qdrop helps its clients with making impact data management and collection easy. Until recently there was little if any guidance or consensus in the market about what information impact reports should include. Over the past year, Impact Frontiers, led by Mike McCreless, has taken a leadership role in this, publishing the Impact Performance Reporting Norms highlighting the best practices for impact reporting. The Reporting Norms are being piloted by leading impact managers now, and those interested can still get involved.
Qdrop Advisory Board Member Narina Mnatsakanian has provided input into development of the Impact Performance Reporting Norms. Narina and Qdrop founder Marjoleine van der Peet sat down with Mike to provide more colour on what Impact Frontiers does, context around the Reporting Norms, what they aim to do, and what to expect going forward.
Mike, what was your personal motivation behind setting up Impact Frontiers?
‘My journey began at Root Capital, where I led Root Capital’s impact management practice for almost 9 years. I was responsible for quarterly impact reports. Initially, I found the process unrewarding and almost gave up on impact reporting! However, through my work with the Impact Management Project (IMP) and other collaborations. I realized a better approach was possible. Impact Frontiers emerged from the IMP as an independent non-profit focused on creating resources for impact management in the investment sector. We work closely with investors to fill gaps in guidance and standards. While it’s gratifying to be a central sounding board, the most rewarding aspect is seeing investors collaborate and learn from each other.’
Our role is to facilitate these connections, enabling a ripple effect of shared knowledge and support within the impact investing community.
We recently published Version 1 of the Reporting Norms, which outlines the essential content for impact reports that fund managers can share with their investors. It is not intended to be a fully standardized framework due to differing views among stakeholders who each have different requirements for the impact reports. Instead, we have focused on agreeing on general topics and characteristics of useful information while allowing for flexibility in the use of frameworks and metrics. The characteristics of useful information are anchored in the International Accounting Standards Board’s Conceptual Framework for Financial Reporting. We’re now entering a pilot phase where various investor groups will test Version 1 over the next two years, leading to a revised Version 2 in 2026. This phase will involve diverse communities of practice, from venture capital fund managers to development finance institutions to pension funds to foundations.’
Can you explain the collaboration process behind creating the Reporting Norms and what inputs were particularly helpful?
‘Supported by the Rockefeller Foundation, we began with a desk review of existing impact and sustainability reporting standards. It was surprising that despite all of the standards out there, there was no standard for what an investor impact performance report should look like. We built on existing work, drafting an initial version and re-writing it twice based on two rounds of feedback from over 350 asset managers, owners, and allocators. The collaboration was incredibly inspiring, as it pooled ideas from across the sector to address common challenges in impact reporting.’
Are the new Reporting Norms based on the most widely applied ideas, or are they aspirational?
‘The Reporting Norms strike a balance. While they incorporate widely applied ideas, they are also intentionally aspirational, aiming to help investors achieve greater transparency and effectiveness in impact reporting.’
The norms are designed as a living document, expected to evolve over time as practices develop.
How do the Reporting Norms differ from the IMP framework?
‘The Reporting Norms are specifically targeted at guiding the content and structure of a specific document, namely, the impact report that a fund manager produces for their own investors. While they reference frameworks like the IMP and many others, the norms don’t prescribe specific frameworks or metrics. Instead, they are meant to be interoperable with existing standards, allowing flexibility in their application.’
How do the Reporting Norms help address some of the challenges of impact reporting?
‘The norms aim to standardize the structure of impact reports, making it easier for fund managers to produce them and for asset owners to interpret them. Currently, impact reports can be lengthy, costly, and vary widely in content, making them difficult to compare.’
How can investors participate in the piloting phase of the Reporting Norms, and what is the process?
‘Investors can participate by applying the norms in their impact reports over the next two years and providing feedback. The pilot phase is designed to be low-barrier and flexible, with optional support available through webinars and peer review sessions. The feedback collected during this phase will help refine the norms for future versions, ensuring they are practical and widely applicable.
During the piloting phase we think peer feedback is expected to be highly valuable. Sharing impact reports and receiving feedback from like-minded investors will help improve the quality and consistency of reports across the sector. This collaborative approach can push the boundaries of what is possible in impact reporting and ensure that the norms evolve to meet the needs of the market.’
With the rise of new sustainability regulations like the Sustainable Finance Directive in Europe and TCFD in the UK, do you think these help in standardizing impact reporting or do they complicate the core work of impact investors?
‘In principle, these regulations can help increase transparency, which is essential for asset owners and allocators to make informed decisions. However, the key challenge lies in how these standards are implemented. While they promote transparency, they sometimes set a bar too low or offer broad guidelines that need more specific guidance for effective implementation.
The Impact Performance Reporting Norms can serve as a voluntary sandbox to test high-quality reporting against ambitious regulatory regimes like the CSRD.
Transparency seems to be a recurring theme in our discussion. It seems that having more transparency is great but is more transparency always better?
‘More transparency isn’t always better if it leads to information overload or obscures the most critical facts. There’s an art to calibrating the right amount and type of transparency and disclosure to ensure efficient information flow and better decision-making. The goal is to find that balance to improve financial markets and impact investing.’
What role do providers like Qdrop play in improving impact data reporting for asset managers and owners?
‘Platforms like Qdrop are crucial for scaling up reporting from a bilateral (one-to-one) to a many-to-many model. The Impact Performance Reporting Norms provide a common structure, making it easier for data platforms like Qdrop to facilitate comprehensive performance reporting across the impact investing market.’
How closely is Impact Frontiers working with regulators on integrating these norms into impact label reporting?
‘Our goal is to eventually hand off the Reporting Norms to standard setters, both voluntary and regulatory. Regulators prefer market-tested approaches, so we engage with them to ensure our norms can be integrated into existing standards without creating undue burdens.’
Can you share any early successes in implementing these norms?
‘One exciting development is the evolving use of case studies. Initially, we were strict about including guidance on avoiding cherry-picked positive examples to prevent “impact washing.” However, investors challenged us to think more critically about how case studies can faithfully represent impact, including stakeholder validation. So one of the things that I’m really excited to see is that some of the reports that are published now use case studies in a way that deepens understand of impact more effectively without cherry-picking.’
What other projects is Impact Frontiers focusing on?
‘Our primary focus remains on the Reporting Norms as we’re also exploring their application beyond private markets, including listed equities and for development finance institutions. It seems that most of the norms can also be applied there. Additionally, we’re excited about our project on impact management for social equity, where we’re auditing the five dimensions of impact with an equity lens, focusing particularly on gender, race, and data equity.’
Thank you Mike for your time and sharing the great insights on the Global Norms and Impact Frontiers. And Narina for co-hosting this interview.
For more information about how Qdrop can help you measure and manage the outcomes and impact of your portfolio please contact marjoleine@qdropglobal.com
For more information about Impact Frontiers and how to get involved in the Global Impact Performance Reporting Norms Pilot phase please contact Mike info@impactfrontiers.org
Background: Impact Frontiers is a non-profit organisation focused on impact management for investors. It is the successor of the Impact Management Project, a non-profit forum for building global consensus on how to measure, manage, and report impacts on sustainability – thus serving as a natural platform for industry-wide collaboration. It has two main programs: a cohort-based training program in partnership with Duke University, and field-building consultations funded by foundations like Rockefeller and the Tipping Point Fund. These consultations address new areas of impact management, such as social equity and impact performance reporting.