Fixing Impact Investing’s Data Problem

Impact investing has always promised more than returns. It aims to generate measurable social and environmental progress alongside financial performance. Yet despite 1.1 trillion dollars now under management, the field faces a persistent challenge: spotty, inconsistent data.

Most investors agree on what they want to achieve: cleaner energy, fairer supply chains, stronger communities. What is often missing is the clarity to prove it. The problem is not a lack of intent. It is a lack of precision. Data gaps make it hard to track what matters, compare results, or communicate impact with confidence.

For investors, this is more than a reporting issue. It is a strategic one.

Why Data Gaps Matter

Impact investing depends on evidence. Without it, capital cannot flow efficiently to what works best. When measurement is inconsistent, the entire ecosystem from asset owners to portfolio companies loses the ability to benchmark performance or identify risk.

The Global Impact Investing Network found that more than 90 percent of practitioners struggle to capture meaningful data about their portfolio impacts. Most acknowledge the problem but still rely on self-reported, qualitative narratives that vary widely between funds and sectors.

Inconsistent data can have real consequences:

• Limited comparability: LPs cannot easily evaluate impact performance across funds.

• Slower fundraising: GPs spend more time explaining methodologies and less time demonstrating results.

• Reduced credibility: Investors risk being perceived as greenwashing when metrics do not hold up under scrutiny.

As sustainability regulation expands, weak data no longer simply delays progress. It can jeopardize access to capital.

The Hidden Cost of Spotty Measurement

Measurement is often viewed as a cost center, but weak systems are far more expensive in the long run. When impact data is incomplete or outdated, investors overestimate or underestimate the outcomes of their strategies.

Three issues stand out:

1. Misaligned incentives: Portfolio companies optimize for what is easy to measure, not what is most meaningful.

2. Fragmented standards: Dozens of frameworks compete for attention, from IRIS Plus to GRI to the UN SDGs, with no single global baseline.

3. Short feedback loops: Investors struggle to see how operational changes translate into long-term impact.

Better measurement does more than fix these problems. It creates opportunity.

The Unexpected Benefits of Better Data

Recent academic research shows that robust measurement systems do more than satisfy compliance. They make teams more effective.

1. Shared language
Reliable data gives investors, fund managers, and portfolio executives a common foundation for communication. It helps clarify goals and align incentives across every stage of the investment cycle.

2. Smarter classification
Clear metrics make it possible to categorize investments consistently. Funds can distinguish between impact-driven strategies and those that simply integrate ESG factors, helping investors compare like for like.

3. Stronger legitimacy
Credible measurement sustains the field’s reputation. Transparent reporting demonstrates accountability to LPs and the public, ensuring that impact investing remains a serious, evidence-based discipline rather than a marketing label.

These advantages make data quality not just a back-office concern but a competitive differentiator.

How to Strengthen Impact Measurement

Improving data quality starts with process, not software. The best frameworks combine human insight with quantitative rigor.

1. Combine qualitative and quantitative data
Numbers capture scope, but not meaning. Pair metrics with narratives, case studies, and stakeholder feedback to contextualize results.

2. Build multidisciplinary teams
Impact measurement cannot live solely in finance or compliance. Hire or partner with experts in climate science, social policy, and behavioral research to interpret data accurately.

3. Normalize transparency around failure
Progress requires learning from what does not work. Sharing setbacks publicly fosters industry-wide improvement and signals maturity.

4. Create open learning loops
Encourage collaboration between funds and sectors. Shared data standards and benchmarking systems raise overall industry credibility.

A New Standard for Accountability

As capital flows into sustainability and social impact, expectations are rising fast. Regulators, LPs, and the public all want proof that impact is more than intent. That proof begins with consistent data and transparent methodologies.

High-quality measurement strengthens more than compliance. It builds trust, improves decision-making, and ultimately directs capital to what creates real value. In a market now defined by accountability, data is not a side product of investing. It is the foundation.

Turning Data Into an Advantage

At Merivia.ai, we help fund managers transform fragmented impact data into clarity. The platform connects metrics across funds and frameworks, verifies accuracy, and links every insight back to evidence. Investors can query portfolios in natural language, track progress across themes, and generate transparent reports instantly.

Good data turns measurement from a burden into a source of conviction. With Merivia, impact investors can finally prove what they have always aimed to achieve and build a more transparent market in the process.