To drive performance, LeapFrog implements a leading integrated measurement tool, FIIRM (Financial, Impact, Innovation and Risk Management).
“We are living in a phenomenal age. If we can spend the early decades of the 21st century finding approaches that meet the needs of the poor in ways that generate profits and recognition for business, we will have found a sustainable way to reduce poverty in the world.”
The central premise of LeapFrog’s profit with purpose approach is that there should be no trade-off between financial return and social impact. In fact, we are demonstrating that orientation towards a social purpose can drive greater long-term financial returns.
To drive profit-with-purpose performance, the LeapFrog team have developed a distinctive proprietary measurement framework, FIIRM, which encompasses financial, impact, innovation and risk management factors. FIIRM incorporates measurement of financial and operational Key Performance Indicators as well as governance indices, which are benchmarked to global best practice standards such as GIIRS, IRIS+, and PRI. This enables LeapFrog’s investment teams and portfolio company CEOs and CIOs to measure and drive performance towards both profitability and impact objectives. The FIIRM system is complemented by an in-house Consumer Insights team, gleaning feedback from customers in-store, by telephone and online, as well as extensive emerging consumer research data sets.
LeapFrog’s decade of experience in impact measurement led to the co-creation of and support for the Operating Principles for Impact Management issued by the IFC and World Bank Group. The nine principles were created to set a basic market standard for impact investing. They will serve as a guide to deployment of capital by institutional investors – including pension and sovereign funds, insurers and banks, endowments and family offices. The impact investment market stands at $228 billion today, a five-fold increase from the 2016 launch of the UN Sustainable Development Goals. Please click here to view LeapFrog’s Annual Disclosure to the Operating Principles for Impact Management and click here to view Tideline’s verification summary and statement.
LeapFrog’s Responsible Investment Code
LeapFrog’s Profit with Purpose investment approach pursues synergies between financial returns and social impact, where each enhances the other. The Responsible Investment Code sets out the overarching policy, standards, and guidelines that enables LeapFrog and its portfolio companies to deliver integrated financial and social results by incorporating best practice across ESG and impact management. LeapFrog supports its portfolio companies in adoption of the code for effective on-going management of risks and opportunities. LeapFrog recognizes that best practice evolves with time and updates the code regularly for ensuring relevance.
Operating Principles for Impact Management
LeapFrog has been a pioneer in measurement and management of impact since its founding in January 2007, 8 months prior to the adoption of the term “impact investing”. Throughout its history, the firm has made essential contributions to the metrics and industry bodies that now define the industry.
The Operating Principles for Impact Management arose from the need to have common disciplines for management of investments for impact, helping to ensure authenticity and high standards of measurement by creating guidelines against which impact management systems of funds and institutions are assessed.
LeapFrog was one of the external members of the consultation group that designed the Principles and became a founding signatory to the Principles in April 2019. An independent impact verification was completed by Tideline, a leading impact investing consultancy, in September 2019. Tideline concluded: “LeapFrog’s IM system demonstrates an advanced level of alignment across all of the Impact Principles.”
Globally, LeapFrog’s was the first independent impact audit ever completed and announced against these agreed principles.
The audit applies across every LeapFrog fund, rather than to one or another fund in a larger suite of funds not dedicated to impact investing.