YSB: Impact Management Strategies for Corporate Innovation

What’s Yunus Social Business Model?

At Yunus Social Business, we attentively choose social enterprises that are moving toward achieving operational and financial stability on their path to Impact Sustainability.

What’s Impact Sustainability?

In our view, Impact Sustainability refers to the business’s ability to create a lasting impact. We plan to achieve these impact results by investing in and offering capacity building to enterprises with a defined social and/or environmental mission that aligns with YSB’s impact objectives of creating a world of Three Zeros: Zero Poverty, Zero Unemployment, and Zero Net Carbon Emissions.

C.R: At Humus4change we consider Social Return on Investment and Social Capital two essential aspects of  Sustainable Investing for the development of Social Entrepreneurship.

In 1987, Sustainability was defined by the World Commission on Environment and Development (WCED) as the “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

What’s YSB Impact First Approach?

Our Impact First Approach differentiates us from traditional investors by focusing on social-business solutions that inspire Corporate transformation, applying industry competencies to global challenges.

We work collaboratively and strategically to improve the value chain of assets, products and services around the world.

We perform deep market analysis in collaboration with our local teams and then we match them with the most relevant impact investing experts.

We follow the Asset Management structure and we connect Corporate Innovation to Social Value Creation, facilitating financial performance. Together with our Corporate Innovation Business Unit, we integrate the resources, tools and strategies that build bridges between our corporate partners and our social entrepreneurship investment portfolio for an emerging support ecosystem that creates employment opportunities and protects people’s health and the planet.

C.R: Catalytic capital is defined by the MacArthur Foundation as debt, equity, guarantees, and other investments that accept disproportionate risk and/or concessionary returns relative to a conventional investment in order to generate a positive impact and enable third-party investment that otherwise would not be possible.

Can you please share an example of the previous projects that YSB supported?

One example is the investment in Tugende, a social business based in Uganda helping boda-boda drivers own an income-generating asset, directly improving their livelihoods and providing a pathway out of poverty. 

YSB invested in Tugende in 2017, as one of the very first investors, taking a higher risk by providing Catalytic Capital. Since our investment, Tugende has been able to raise a Series A funding round of USD 9.9 million and continues to grow. By now Tugende has had 29,000+ active clients, 22,000+ successful alumni and created 800+ full-time employee jobs.

What are the most effective methods and tools to measure Social Impact?

One of our core principles for IMM at YSB is pragmatism. Our ambition regarding IMM and the related data collection is to strike a balance between what is required for methodological rigour and what is realistically achievable. To keep the reporting burden on the social businesses side reasonable, we only collect what is required to inform decisions from YSBs’ perspective and enable entrepreneurs to gain impact insights for their internal decision-making. To enable a consistent and coherent Impact Measurement and Management, IMM processes and tools are indispensable. We have developed a Toolkit of templates and guidelines that follow industry standards such as SDGs, IMP’s 5 Dimensions and IRIS+, that allows our Deal teams to implement and standardize the application of IMM elements along the investment lifecycle. In light of a steadily growing portfolio and not to sacrifice rigour in data collection and analysis, YSB opted for a scalable solution for impact reporting, choosing a dedicated IMM software, called SocialSuite. The software is integrated with Salesforce, which provides for a central database of both financial and impact performance information and enables an integrated and consolidated data management system across our five geographies. 

How does YSB connect investors with innovative projects for social impact?

Our deal teams in Uganda, Kenya, India, Colombia and Brazil source the most impactful social business in their local markets. Thus investors have access to a steady stream of hand-picked social businesses. Depending on the mandate, some of YSB’s investors sit on the Investment Committee where social entrepreneurs present their venture and social/environmental mission. To make the impact tangible, we equally organise “Investor field trips”, where investors get the opportunity to visit the social businesses and speak directly to the entrepreneurs on the ground. 

What are the phases of YSB impact model? 

YSB performs an in-depth analysis of each Social Business’s business and impact models during the Due Diligence Phase. The entrepreneurs are consulted throughout the process to provide information on their operating model, the identification and profile of their target stakeholders and any impact evidence they use to back their impact model. At the Investment Committee stage, our local Investment Teams conduct field visits to assess the operations and company at large, as well as speak to their target stakeholders directly to ensure the relevance and appropriateness of the social businesses model. Besides the impact information shared by the entrepreneurs, this direct exchange allows our Investment Managers to get a first-hand view of their socioeconomic background, their needs, how the Social Business interacts with their target population and provides anecdotal insights into perceived changes of stakeholders. Upon deal structuring, we use these insights to structure the loans in a way to best fit the social business realities. Upon onboarding, we use these insights to set up their Impact Profile, which is composed of a Theory of Change, Impact Value Chain mapping and Impact metrics, and forms the basis for the reporting requirements. This process allows us to only focus on only requesting relevant information from entrepreneurs. 

What is the role of Partnership Development in Impact Management?

The discipline of Impact Measurement and Management is still nascent in comparison with the Financial Measurement and Management practice. Industry bodies like the GIIN and others have done and are still doing a great job in pushing for industry standards. However, as with all standards in the making, they do not always fit the reality on the ground perfectly. Therefore, in my role as Impact Manager at Yunus Social Business, I have gained great value through knowledge exchange with other IMM experts and partners in strengthening our IMM practice. Besides knowledge exchange, we have recently started a collaboration to deliver IMM capacity-building support to our portfolio companies under a partnership with Business Call to Action (Bcta) by UNDP.

What’s the relationship between Impact Management and Stakeholder Engagement?

Stakeholder Engagement is one of the core principles of Impact Measurement and Management. The stakeholders expected to be affected should be involved to ensure the relevance and appropriateness of the activities and later to provide insights into whether the outcomes they experience as a result of the activity actually occurred. For impact investors, this principle applies on two layers: the direct stakeholder level i.e. the social entrepreneur and on the indirect stakeholder level i.e. the ultimate stakeholders such as suppliers (e.g. smallholder farmers, waste pickers etc.), employees, customers and/or the planet.

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