WO2021133905A1

WO2021133905A1 - Methods for measuring an impact of investments

Info

Publication number: WO2021133905A1
Application number: PCT/US2020/066829
Authority: WO
Inventors: Uday Ramakant GARG; Asaf Barry SCHIFFMAN
Original assignee: Garg Uday Ramakant; Schiffman Asaf Barry
Priority date: 2019-12-23
Filing date: 2020-12-23
Publication date: 2021-07-01

Abstract

Methods to measure the impact of investments are disclosed. The disclosed methods cover the following areas: employment; CO₂ emissions savings; water savings; improved soil health; rural development; reduced food wastage; health and nutrition; and strengthened food safety.

Description

METHODS FOR MEASURING AN IMPACT OF INVESTMENTS

FIELD

[0001] The present disclosure relates to methods for measuring an impact of investments.

BACKGROUND

[0002] Sustainable impact requires durability that ensures impact on all stakeholders beyond an investment cycle or fund life. An impact is considered scalable when it has a meaningful effect, which can be replicated at a larger scale without diluting the impact. Measuring and/or monitoring the impact of investments by taking their sustainable and scalable aspects into consideration presents technical challenges. [0003] The present disclosure provides methods to measure the impact of investments that overcome these technical challenges.

SUMMARY

[0004]A method for measuring employment impact of an investment is disclosed. The method includes generating a metric based on total employee spend per year, spend on urban employees, spend on male rural and low income employees, spend on female rural and low income employees, equity stake and debt share; and using the metric to measure the employment impact of the investment.

[0005] A method for measuring CO2 emissions savings of an investment is disclosed. The method includes generating a metric based on additional installed capacity of cogen plants, CO2 emissions savings of cogen plants, additional installed capacity of solar plants and equipment, CO2 emissions savings of solar plants, social costs, trade value per ton of CO2, equity stake and debt share; and using the metric to measure the CO2 emissions savings of the investment.

[0006] A method for measuring soil health impact of an investment is disclosed. The method includes generating a metric based on acres of soil tested, healthy soil, severely damaged soil, extension of soil life in years, crop value per acre per year, equity stake and debt share; and using the metric to measure the soil health impact of the investment. [0007] A method for measuring water savings impact of an investment is disclosed. The method includes generating a metric based on meters of drip irrigation sold, average annual water savings per meter lateral, cubic meters of water recycled or reused for gardening, cubic meters of rainwater harvested, cost of water per cubic meter, equity stake and debt share; and using the metric to measure the water savings impact of the investment.

[0008] A method for measuring health and nutrition impact of an investment is disclosed. The method includes generating a metric based on tons of fruits and vegetables sold, average value of per ton of food, equity stake and debt share; and using the metric to measure the health and nutrition impact of the investment.

[0009] A method for measuring reduced food wastage impact of an investment is disclosed. The method includes generating a metric based on cold chain capacity owned and leased, trucks owned and leased, average truck capacity, portion of food double counted, food wastage avoided due to cold chain, tons of processed food, food wastage avoided due to processing, average value per ton of food, equity stake and debt share; and using the metric to measure the reduced food wastage impact of the investment.

[0010]A method for measuring food safety impact of an investment is disclosed. The method includes generating a metric based on market share of cold chain capacity owned and leased, contamination risk avoided due to cold chain, market share of trucks owned and leased, contamination risk avoided due to cold chain, market share of food tested, contamination risk avoided due to testing, estimated population consuming packed or processed foods, annual average healthcare spending on FBDs, equity stake and debt share; and using the metric to measure the food safety impact of the investment.

[0011] A method for measuring rural community development impact of an investment is disclosed. The method includes generating a metric based on payments made to farmers for purchases of goods, market value of goods, value of equipment sold to farmers, credit extended to farmers, capital expenditure investments in rural areas, CSR spending, equity stake and debt share; and using the metric to measure the rural community development impact of the investment. DETAILED DESCRIPTION

[0012] Methods to measure the impact of investments are described for the following areas: employment; CO2 emissions savings; water savings; improved soil health; rural development; reduced food wastage; health and nutrition; strengthened food safety; and rural community development. In general, impact can be measured using the formula: [impact] = [outcomes] - [attribution, deadweight, displacement]. The social return on investment (SROI), which is the ratio of the impact created to every dollar invested, can thus be calculated using the formula: [impact per invested dollar] = [impact] / [total investment adjusted to current values]. These formulas can be utilized within a method to provide a technical solution to the practical problem of taking actions that improve impact per invested dollar. Further embodiments relating to each of the above specific practical uses are described in detail below.

[0013] Employment Method

[0014] The employment metric can measure the value to the people who receive employment because of an investment. This metric quantifies the additional income earned by the employees, after considering the income they would otherwise have received. This metric can be configured to measure the investment impact on a specific target group, such as employment of rural and female employees.

[0015] The employment impact per year can be measured as the (total employee spend per year - spend on urban employees - 25% ^c spend on male rural and low income employees - 17.5% ^c spend on female rural and low income employees) ^c (% equity stake and % debt share). In an exemplary embodiment, for an invested amount of about US $6,878,543, the impact can be US$.03 per USD.

[0016] As noted in the aforementioned employment impact, attribution of the employment impact can be apportioned via a portion of equity stake and share of debt an investment fund possesses in companies that invest the stake, which is reflective of the investment fund’s influence on the companies’ activities and resulting impact vis-a-vis other stakeholders in the company.

[0017] In an exemplary embodiment, the rural and low-income workers can be defined as workers employed outside Tier 1 and Tier 2 cities, and can be on average expected to earn four times less than an urban dweller. As such, a discount factor (e.g. 25%) can be applied on the employee spend for employees in the rural and low-income communities to account for the incremental impact created. A discount factor equal to the equity stake in the investee can also be applied to more accurately account for the incremental value creation that occurred as a result of the investments.

[0018] Because the average agricultural daily wage rate for women can be lower than (e.g. 70% of) the men’s wages, a discount factor (e.g. 70%) can be applied on the discount for low-income male workers. That is, a discount of 17.5% can be applied on the employee spend for low-income female workers in the impact calculation.

[0019] To account for deadweight, the employee spend on urban employees can be deducted from the impact figure, and discount factors can be applied on the employee spend on rural and low income employees. This results in a conservative estimate of the impact figure as the additional positive outcomes experienced by the people with a good employment opportunity - including but not limited to improved psychological well-being, new skills and knowledge, and stronger career prospects - have not been included in this calculation.

[0020] CO2 Emissions Savings Method

[0021] This metric measures the value to the environment and the nation in terms of CO2 emission savings earned by building and using cogeneration (cogen) and solar plants and equipment compared to the conventional coal-fired counterpart. This metric aggregates the environmental and economic damages avoided and the added financial benefit to the nation through the sale of saved carbon on emission trading schemes.

[0022] The amount of CO2 emissions saved by cogeneration and solar plants compared to a regular coal-fired plant can be derived from research studies that take into account the lifecycle CO2 emissions of the different sources of electricity, including the construction of the plant, its operation and maintenance, and the electricity generation (fuel combustion) process.

[0023] The CO2 emission savings impact per year can be measured as the [(Additional installed capacity of cogen plants ^c % CO2 emissions savings of cogen plants) + (Additional installed capacity of solar plants and equipment ^c % CO2 emissions savings of solar plants)] ^c (Social costs + Trade value per ton of CO2) ^c (% equity stake and % debt share). The equity stake and debt share in this formula reflect the apportionment of an investment, as previously described. In an exemplary embodiment, for an invested amount of about US$ 37,353, the impact can be US$0.0002 per USD.

[0024] The social cost of each additional ton of CO2 emitted is estimated to be US$37 according to research studies, calculated on the basis of decreased agricultural yields, harm to human health, and lower worker productivity due to climate change. The value per ton of C02 traded is estimated to be US$20 per ton, based on the mid-case C02 price forecast made on existing emissions trading systems.

[0025] Separately accounting for displacement for solar plants and equipment in this metric is not required as the CO2 emissions produced in building solar plants or equipment is already taken into consideration when calculating the difference in lifecycle emissions. For cogen plants, as there are no reliable estimates of the amount of CO2 produced in building a cogeneration unit or heat recovery system, the displacement component is not accounted for. However, this is not expected to be large and does not affect the impact figures significantly.

[0026] Improved Soil Health Method

[0027] This metric measures the value to the environment and the nation in terms of improved soil health by the soil testing activities and their resulting recommendations and implementations to the tested land holdings. The metric quantifies the incremental crop value as a result of extended soil fertility and improved health due to the soil testing services and resulting improvements in land management.

[0028] The improved soil health impact per year can be measured as (Acres of soil tested - Healthy soil - Severely damaged soil) ^c Extension of soil life in years ^c Crop value per acre per year ^c (% equity stake and % debt share). The equity stake and debt share in this formula reflect the apportionment of an investment, as previously described. In an exemplary embodiment, for an invested amount of about US$ 111 ,972,674, the impact can be US$0.48 per USD.

[0029] The improved soil health impact per year is based on research that an estimated 30% of arable land is in very good health and 58% of arable land is severely damaged and would not return to a healthy state in the short term via agricultural management efforts. Thus, it is estimated that 12% of arable land are in the mild or early stages of degradation and can be easily reclaimed with proper agricultural management practices given the right information about the soil’s nutrient levels.

[0030] The outcome of implementing recommendations arising from soil testing can extend at least some proportion of damaged soil by one year. This is the value used to estimate the average life extension of the land sampled for testing.

G003P Water Savings Method

[0032] Sources of water savings can include: water savings as a result of drip irrigation technology applied (which uses up to 70% less water as compared to flood irrigation), rainwater harvesting activities, and water reuse and recycling efforts. The water saving metric quantifies the cost savings earned from the water that is saved, and measures the value to the environment in terms of water savings earned by the technology utilized and activities engaged.

[0033] The water savings impact per year can be measured as [(Meters of drip irrigation sold ^c Average annual water savings per meter lateral) + (Cubic meters of water recycled or reused for gardening) + (Cubic meters of rainwater harvested)] ^c Cost of water per cubic meter ^c (% equity stake and % debt share). The equity stake and debt share in this formula reflect the apportionment of an investment, as previously described. In an exemplary embodiment, for an invested amount of about US$46,774,588, the impact can be US$0.20 per USD.

[0034] Health & Nutrition Method

[0035] This metric measures the value added to the nation in terms of healthy fruits and vegetables sold to people due to investments, and measures the monetary value of the food that is sold. The metric simplifies the impact calculation to an aggregate of the market value of the healthy foods that are sold as a baseline proxy of the social impact of providing quality food to people.

[0036] The health & nutrition impact per year can be measured as (Tons of fruits and vegetables sold ^c average value of per ton of food) ^c (% equity stake and % debt share). The equity stake and debt share in this formula reflect the apportionment, as previously described. In an exemplary embodiment, for an invested amount of about US$206,434, the impact can be US$0.0009 per USD.

[0037] Reduced Food Wastage Method

[0038] This metric measures the value added in terms of food wastage avoided/food supply added due to the investment. There are two primary methods used in preserving the food - cold chain technology and food processing. This metric measures the monetary value of the food that is preserved via both methods.

[0039] The reduced food wastage impact per year can be measured as [((Cold chain capacity owned and leased + (trucks (e.g. reefer trucks) owned and leased ^c Average truck capacity) - Portion of food double counted) ^c % food wastage avoided due to cold chain) + (Tons of processed food ^c % food wastage avoided due to processing)] ^c Average value per ton of food ^c (% equity stake and % debt share). [0040] The equity stake and debt share in this formula reflect the apportionment of an investment, as previously described. In an exemplary embodiment, for an invested amount of about US$2,162,413, the impact can be US$0.01 per USD. G00411 Strengthened Food Safety Method

[0042] This metric measures the value added to the consumers in terms of the avoided illnesses or deaths relating to foodborne diseases as a result of the investments that strengthen food safety. There are two primary activities involved in reducing consumers’ exposure to contaminated food - cold chain technology and testing of processed foods. This metric measures the monetary value of the food that is preserved via both the activities.

[0043] The strengthened food safety impact per year can be measured as [(Market share of cold chain capacity owned and leased ^c % contamination risk avoided due to cold chain) + (Market share of trucks (e.g. reefer trucks) owned and leased ^c % contamination risk avoided due to cold chain)) + (Market share of food tested ^c % contamination risk avoided due to testing)] ^c estimated population consuming packed or processed foods ^c Annual average healthcare spending on foodborne diseases FBDs ^c (% equity stake and % debt share).

[0044] The equity stake and debt share in this formula reflect the apportionment of an investment, as previously described. In an exemplary embodiment, for an invested amount of about US$225,461,717, the impact can be US$0.97 per USD. [0045] Rural Community Development Method

[0046] This metric measures the value added to the rural community and the people’s lives because of the companies’ operations and expenditures, made possible by the investment. The metric quantifies the added income earned or credit obtained by the farmers, the additional capital expenditure investments in the rural areas, and the added corporate social responsibility (CSR) spending made by the companies.

[0047] Payments as part of the rural community development investments can be made to farmers via the facilitation of farming contracts, where investment companies would pay the farmer either the current market price or the pre-agreed price. The additional value add to the farmers can be measured as about half of the total payments made.

[0048] The rural community development impact per year can be measured as [(Payments made to farmers for purchases of goods - market value of goods +

Value of equipment sold to farmers + Credit extended to farmers + Capital expenditure investments in rural areas + CSR spending)] ^c (% equity stake and % debt share).

[0049] The equity stake and debt share in this formula reflect the apportionment of an investment, as previously described. To account for deadweight, a generous estimate of the income the farmers would have otherwise received from the sale of similar goods at the market can be deducted from the impact figure. This does not take into account the additional value-add of the income stability and increased profits that contract farming provides to the farmers. In an exemplary embodiment, for an invested amount of about US$74,313,167, the impact can be US$0.32 per USD.

[0050] The additional positive outcomes arising from the rural community development efforts - such as improved individual and community well-being and stronger farming businesses - are also not included in the impact calculation, providing a conservative impact figure.

[0051] A person having ordinary skill in the art would appreciate that embodiments of the disclosed methods (e.g. employment; CO2 emissions savings; water savings; improved soil health; rural development; reduced food wastage; health and nutrition; strengthened food safety; and rural community development methods) can be practiced with various computer system configurations, including multi-core multiprocessor systems, minicomputers, mainframe computers, computers linked or clustered with distributed functions, as well as pervasive or miniature computers that can be embedded into virtually any device. For instance, one or more of the disclosed modules can be a hardware processor device with an associated memory. [0052] A hardware processor device as discussed herein can be a single hardware processor, a plurality of hardware processors, or combinations thereof. Hardware processor devices can have one or more processor “cores.” The term “non- transitory computer readable medium” as discussed herein is used to generally refer to tangible media such as a memory device.

[0053] Data stored in the exemplary computing device (e.g., in the memory) can be stored on any type of suitable computer readable media, such as optical storage (e.g., a compact disc, digital versatile disc, Blu-ray disc, etc.), magnetic tape storage (e.g., a hard disk drive), or solid-state drive. An operating system can be stored in the memory.

[0054] The data can be configured in any type of suitable database configuration, such as a relational database, a structured query language (SQL) database, a distributed database, an object database, etc. Suitable configurations and storage types will be apparent to persons having skill in the relevant art.

[0055] The exemplary computing device can also include a communications interface. The communications interface can be configured to allow software and data to be transferred between the computing device and external devices. Exemplary communications interfaces can include a modem, a network interface (e.g.,, an Ethernet card), a communications port, a PCMCIA slot and card, etc.

[0056] Software and data transferred via the communications interface can be in the form of signals, which can be electronic, electromagnetic, optical, or other signals as will be apparent to persons having skill in the relevant art. The signals can travel via a communications path, which can be configured to carry the signals and can be implemented using wire, cable, fiber optics, a phone line, a cellular phone link, a radio frequency link, etc.

[0057] Memory semiconductors (e.g., DRAMs, etc.) can be means for providing software to the computing device. Computer programs (e.g., computer control logic) can be stored in the memory. Computer programs can also be received via the communications interface. Such computer programs, when executed, can enable computing device to implement the present methods as discussed herein. In particular, the computer programs stored on a non-transitory computer-readable medium, when executed, can enable hardware processor device to implement the methods discussed herein. Accordingly, such computer programs can represent controllers of the computing device.

[0058] Where the present disclosure is implemented using software, the software can be stored in a computer program product or non-transitory computer readable medium and loaded into the computing device using a removable storage drive or communications interface. In an exemplary embodiment, any computing device disclosed herein can also include a display interface that outputs display signals to a display unit, e.g., LCD screen, plasma screen, LED screen, DLP screen, CRT screen.

[0059] It will be appreciated by those skilled in the art that the present disclosure can be embodied in other specific forms without departing from the spirit or essential characteristics thereof. The presently disclosed embodiments are therefore considered in all respects to be illustrative and not restricted. The scope of the disclosure is indicated by the appended claims rather than the foregoing description and all changes that come within the meaning and range and equivalence thereof are intended to be embraced therein.

Claims

WHAT IS CLAIMED IS:

1. A method for measuring employment impact of an investment, the method comprising: generating a metric based on total employee spend per year, spend on urban employees, spend on male rural and low income employees, spend on female rural and low income employees, equity stake and debt share; and using the metric to measure the employment impact of the investment.

2. A method for measuring CO2 emissions savings of an investment, the method comprising: generating a metric based on additional installed capacity of cogen plants,

CO2 emissions savings of cogen plants, additional installed capacity of solar plants and equipment, CO2 emissions savings of solar plants, social costs, trade value per ton of CO2, equity stake and debt share; and using the metric to measure the CO2 emissions savings of the investment.

3. A method for measuring soil health impact of an investment, the method comprising: generating a metric based on acres of soil tested, healthy soil, severely damaged soil, extension of soil life in years, crop value per acre per year, equity stake and debt share; and using the metric to measure the soil health impact of the investment.

4. A method for measuring water savings impact of an investment, the method comprising: generating a metric based on meters of drip irrigation sold, average annual water savings per meter lateral, cubic meters of water recycled or reused for gardening, cubic meters of rainwater harvested, cost of water per cubic meter, equity stake and debt share; and using the metric to measure the water savings impact of the investment.

5. A method for measuring health and nutrition impact of an investment, the method comprising: generating a metric based on tons of fruits and vegetables sold, average value of per ton of food, equity stake and debt share; and using the metric to measure the health and nutrition impact of the investment.

6. A method for measuring reduced food wastage impact of an investment, the method comprising: generating a metric based on cold chain capacity owned and leased, trucks owned and leased, average truck capacity, portion of food double counted, food wastage avoided due to cold chain, tons of processed food, food wastage avoided due to processing, average value per ton of food, equity stake and debt share; and using the metric to measure the reduced food wastage impact of the investment.

7. A method for measuring food safety impact of an investment, the method comprising: generating a metric based on market share of cold chain capacity owned and leased, contamination risk avoided due to cold chain, market share of trucks owned and leased, contamination risk avoided due to cold chain, market share of food tested, contamination risk avoided due to testing, estimated population consuming packed or processed foods, annual average healthcare spending on FBDs, equity stake and debt share; and using the metric to measure the food safety impact of the investment.

8. A method for measuring rural community development impact of an investment, the method comprising: generating a metric based on payments made to farmers for purchases of goods, market value of goods, value of equipment sold to farmers, credit extended to farmers, capital expenditure investments in rural areas, CSR spending, equity stake and debt share; and using the metric to measure the rural community development impact of the investment.