Impact Conversations #2
Interview with Gianluca Gaggiotti
Romeo Heukamp
November 27, 2024
Special issue: Conversation between Gianluca Gaggiotti and Jacopo Butafarro on the evolving landscape of impact investing.
Who is Gianluca Gaggiotti?
Gianluca Gaggiotti is a Senior Knowledge Manager at Impact Europe. With over 7 years of experience in the impact investing and measurement industry, he has continuously contributed to research in this rapidly evolving field. In 2022 he established a boutique consultancy called IMPACTips, which offers consulting services for investors and enterprises seeking to refine their impact measurement and management practices and support the structuring of impact financing instruments.
An In-depth Look at Impact Investing and Measurement: A Conversation with Gianluca
Harmonising Industry Standards
In 2013, EVPA (former Impact Europe) published the first five-step impact measurement and management framework, recognized by the GECES (Commission Expert Group on the Social Economy and Social Enterprises). Since then many frameworks have been published. Some of the most adopted are the Social Value International principles, Operating Principles for Impact Management, UNDP SDG Impact Standards, and the Impact Management Project's five dimensions. Gianluca notes that itโs important to build bridges between these initiatives. In their 2021 report, "Navigating Impact Measurement and Management," Impact Europe explored the extensive range of frameworks and initiatives available to practitioners and created a visual mapping showcasing their interconnectedness. Indeed Gianluca believes that we are entering a phase of consolidation and harmonisation of these principles and standards.
Vision for the Next Decade
In the next decade, Gianluca envisions the industry converging on a unified set of principles and standards, forming the bedrock for impact assurance. The need for third-party verification of impact claims is growing and must respect two key dimensions to ensure the efficacy of impact assurance:
Accessibility for All: The assurance process should be available to all organisations, regardless of size or resources, promoting accountability across all levels of the organisation.
A Unified Methodology: To avoid the inconsistencies seen in the ESG landscape, with its multiple rating agencies and varying ratings, the industry needs to establish a single, agreed-upon methodology for impact assurance
๐ฅ๐ฒ๐ด๐๐น๐ฎ๐๐ถ๐ผ๐ป ๐ฐ๐ฎ๐ป ๐ฏ๐ฒ ๐ฎ ๐ฑ๐ผ๐๐ฏ๐น๐ฒ-๐ฒ๐ฑ๐ด๐ฒ๐ฑ ๐๐๐ผ๐ฟ๐ฑ
Regulation is acknowledged as a powerful tool for promoting the widespread adoption of standards and principles. However, Gianluca cautions against regulations being perceived as mere compliance exercises. Existing regulations like SFDR or CCSRD are often viewed as costly obligations rather than drivers of strategic value.
Impact measurement and management should be approached strategically with companies and investors needing the flexibility to adapt metrics and practical applications to different contexts, while adhering to consistent standards and approaches.
๐๐ป๐๐ฒ๐๐๐ผ๐ฟ ๐๐ฑ๐ฑ๐ถ๐๐ถ๐ผ๐ป๐ฎ๐น๐ถ๐๐ ๐ถ๐ ๐๐ฒ๐
Impact Europe has consistently been vocal about the significance of investor additionality, referring to practices that enable investors to create an impact that would not have otherwise materialised. This is at the core of additional impact investing, aiming to provide capital and support where traditional financial mechanisms fall short. It is, for example, particularly vital for early-stage organisations or those operating in challenging environments, where prioritising impact over short-term oriented financial returns is essential for their business to thrive and generate their intended impact. While many impact investors have inherently operated in an additional manner, they haven't always rigorously measured or highlighted their additionality. There is increasing consensus that focusing on providing tangible evidence of investor contribution offers a more practical approach than conducting complex counterfactual analyses.
Essential Lessons Learned
From his seven years in the impact sector, Gianluca highlights two key takeaways:
Change is a Gradual Process: While accelerating processes and encouraging collaboration can expedite change, it's essential to recognise that change inherently requires time for cultural shifts to occur, for evidence to be gathered, and for effective solutions to be developed and implemented at scale.
The Power of Collaboration: Collaboration is fundamental for achieving greater impact than individual organisations can accomplish independently. Breaking down silos and working towards shared goals is paramount for driving systemic change.
Guidance for the Next Generation
Gianluca offers encouraging advice for young individuals aspiring to enter the impact sector:
Jump on the Boat: The sector is experiencing rapid growth, leading to an increase in entry-level positions and jobs related to impact and sustainability (see Bonus section below).
Invest in Skill Development: Actively pursue training and online courses to acquire the skills that are in high demand by companies and investors.
Be Critical: In any work environment, challenge the way things are done and try to become agents of change. We need critical people towards impact and sustainability at any level and in any organisation to build a just and sustainable future.
A huge thank you to Gianluca for sharing his expertise and passion for building a transparent, collaborative, and impactful ecosystem.
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