Bottom-up Approaches to Measuring the Total Impact of Clean Energy Investments

“The Just Transition isn’t a movement anymore — it’s a reality for the way we are undertaking the clean energy transition.”

On October 27, 2021, Proof launched the first webinar of its clean energy webinar series focused on bottom-up approaches to measuring the total impact of clean energy investments. ICYMI, here is the recording.

Our three speakers — Aunnie Patton Power (Intelligent Impact), Rebecca Self (South Pole), and Todd Cort (Yale University) — covered a lot of ground (and with Aunnie doing some impressive motherly multi-tasking!).

Moderated by Evan Vahouny, Proof’s Chief Impact Officer, the webinar touched on the full life cycle of ESG measurement and management through the lens of a Just Climate Transition focused on social equity and inclusiveness. A few of the main takeaways from the webinar included the following:

Why should clean energy investors and companies care about the Just Climate Transition? As noted by Todd, “There’s the direct and the indirect reasons. Governments are incentivizing the energy transition to include aspects of the Just Transition, and therefore there’s direct financial implications. And then there’s the indirect, where environmental and social aspects are intertwined and overlapping in impact assessments, and it’s frankly impossible now to just focus on environmental aspects without considering the socioeconomic impacts of those investments.”

What are some of the leading frameworks and standards that incorporate social impact in addition to environmental? Jessica described the top industry frameworks and tools that provide investors and companies with a holistic ESG perspective: “Some of the top leading frameworks are SASB and GRI. And deep diving more into the ‘E’ — there’s the Greenhouse Gas Protocol, and also the TCFD (Task Force for Financial-Related Climate Disclosure) that provides a reporting framework.”

Why is a bottom-up, data-driven strategy important when measuring the total impact of a clean energy investment? Aunnie elaborated on the difference between top-down and bottom-up approaches, noting, “Top-down is a better starting point to look at processes, which are easier to verify than on-the-ground data. But what’s starting to be more important is this bottom-up, actually talking to people experiencing change and being able to do it at scale. And moving forward, it’s going to be a lot about getting massive data sets, parsing the data differently, and making sure we can verify the data.”

In putting a bottom-up approach into practice, what are some of the most common and important metrics that clean energy investors and companies could measure? Based on Todd’s experience working with the Global Impact Investing Network (GIIN) to define metrics in the IRIS catalogue, he gave a summary of where clean energy investors and companies could start: “There was four metric categories identified in the Navigating Impact process: access to energy, green energy generation, transmission and infrastructure, and energy storage. Underlying each of these four there is a Just Transition element, so in each case there are social metrics, such as ‘If you generated more energy capacity, or is that energy available to disadvantaged communities.’ Metrics range from megawatt hours generated, to average cost of electricity delivered, to jobs created in disadvantaged or BIPOC communities.”

What are some of the ways that investors can collect meaningful data from the bottom up? Rebecca emphasized the value of investors working directly with portfolio companies to collect technology-based data: “Activity data from the bottom-up typically comes directly from the companies and projects being financed. A few different ways to collect that data are through digital solutions or geospatial data that can be collected and analyzed real-time.”

Why is it important to build stakeholder feedback into the measurement and performance management process? Aunnie noted, “When we talk about stakeholders, we are talking about people and communities who are most impacted by the work we are doing. There are ways to think strategically about different metrics, and we need this data — and enough of it — from enough people who are most impacted in a way that is digitally verifiable. And then following up with them in the medium and long term.” As Todd also stated, “You can really boil the ocean on stakeholders. There’s some good standards out there such as the AA 1000, GRI, and SASB with stakeholder guidance and trying to navigate the balance between ‘how much do I need to understand stakeholders, and how much time and money am I willing to spend to get that information’.”

So, what’s next in the series?

Proof will be continuing the discussion on this topic in the second webinar of the clean energy series, Just Climate Investing: Pathways to Sustainable Value Creation, scheduled for November 23 at 11 AM ET. Our speakers will include Elizabeth Littlefield, former CEO of the US International Development Finance Corporation and Laurie Spengler, CEO of Courageous Capital, moderated by Proof’s CEO, Fleur Heyns.

Lean more and register here.

We look forward to you joining us!

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