The second pillar of our approach, in conjunction with the TOC, consists of estimating two types of impact indicators: general indicators and specific indicators. General indicators allow to measure the contribution of each investment to the fund’s overall impact objectives. Specific indicators reflect the specific impact of each investment, which is not reflected by the general indicators (e.g., increased productivity for an investment in a company marketing solar water pumps); wherever possible, they are derived from the UN’s Sustainable Development Goals. The calculation methodology and the achievement of objectives, as well as the choice of specific indicators, are validated by the fund’s Impact Committee.

The third pillar of our approach is to measure the efficiency of our investments. To establish an objective measure, we are developing a cost-benefit analysis (CBA) tool, in partnership with the Paris School of Economics, through the funding of a thesis. CBA is a scientifically robust quantitative evaluation methodology used by financial backers to determine the collective utility generated by an investment. It can be used to rank different investment options in terms of their socio-economic profitability. CBA has three distinctive features:

• It is an incremental analysis: the costs and benefits generated by the investment are compared with the costs and benefits that would have occurred in the absence of the investment.
• All costs and benefits are monetized: in order to be able to compare all the costs and benefits of the investment, which are different in nature (environmental, social, economic and financial), these costs and benefits are transformed into a common unit, the monetary unit.
• The analysis is carried out over the long term: all costs and benefits are estimated over the life of the project, and reduced to a present-day value using a socio-economic discount rate. Two types of indicators can then be estimated: – The Socio-Economic Net Present Value (SE-NPV) indicates the creation of social well-being, net of costs, by the project over its entire lifespan: – The Socio-Economic Return on Investment (SE-ROI) indicates the creation of social well-being for each euro invested.

In addition to measuring our impact, we also take ESG factors into consideration. These factors are measured by activity indicators: they measure our performance in absolute terms, and not against a counterfactual. These indicators are measured during the due diligence phase (ESG performance is assessed using our ESG due diligence tool (DD ESG)) and through annual reporting of PAIs, as defined by the SFDR. In addition, all companies in the portfolio are committed to a plan to improve their social, environmental and governance practices.