How We Measure and Manage Impact
We are building new tools to direct capital to where it is most needed and will be most effective at addressing poverty, inequality, and environmental degradation.
- We conduct social, environmental, and economic due diligence to understand conditions in the communities where our borrowers operate, and to gauge how agricultural enterprises are responding to those opportunities and challenges. This helps ensure that we only support enterprises that avoid harming human or environmental health. But beyond that: We seek to understand how each client—and our support of them—is expected to create positive impact. And we prioritize our loans based on those insights.
- We undertake extensive impact studies. To date, we have interviewed more than 4,000 farmers working with more than 30 enterprises across Africa and Latin America. These mixed-method studies include surveys with farmers and agricultural business employees, focus groups on critical issues like gender dynamics and climate-smart agriculture, and interviews with enterprise management. They help us expand our understanding of farmers’ challenges and opportunities, and the roles that agribusinesses play in improving livelihoods, food security, environmental conservation, and more.
In all cases, we make sure that the community directly benefits from our study, through an approach we call "client-centric evaluation." As we seek to measure impact, we also generate information that is useful to farmers and enterprises and deliver that data back to them.
Finally, we aim to make a clear business case for social and environmental due diligence. Due diligence is not just a way for financial institutions like Root Capital to create impact; it can also create financial benefits that partially or fully offset the costs involved.
The article “Toward the Efficient Impact Frontier,” published in the Winter 2017 issue of Stanford Social Innovation Review, describes how Root Capital integrates social and environmental considerations alongside financial risk and return to generate the greatest possible impact.