Last week, Acumen launched its Energy Impact Report, a comprehensive look at the impact of our 10 years of investing in off-grid energy. The detailed, customer-centric data within this report is a first for us and, we believe, for impact investing as a whole.
At Acumen, our impact work starts with listening to customers. We ask them questions to identify whether they have experienced changes, and which changes are most important. From there we have a picture of what matters to them, or what we refer to as depth of impact. Our team spent the last year speaking with 5,500 off-grid energy customers across 11 countries using Acumen’s approach to impact measurement, Lean Data.
Based on what we learned through our research over the years, we developed more than 18 core indicators — from customer income levels to changes in quality of life — to understand how our energy companies are impacting the lives of the poor.
We wanted to share a bit more on just how these indicators came to be and what they really mean.
Breadth, Poverty Focus & Depth of Impact
Acumen’s framework for assessing impact focuses on breadth, poverty focus, and depth of impact. We define our success by how well our investments enable the poor to transform their lives.
Breadth. Breadth, or the number of people our investments reach, is one of the easier areas of impact to measure. All of our companies track how many cookstoves they’ve sold, how many customers they’ve connected to their mini-grid, or how many customers are buying their solar home systems.
Poverty Focus. Because Acumen exists to tackle the challenges of poverty, it’s always been important to us to know if our investments are reaching low-income families living below international poverty lines.
Depth. We need to capture the depth of impact to fully understand how a family benefits from lighting up their home with a solar home system, or cooking with an improved cookstove. When you report just on products sold or lives impacted, you don’t get a full understanding of impact or the nuance between different products, services, and business models.
Digging Deeper into Depth of Impact
By asking different kinds of questions and creating a real dialogue with low-income customers using Lean Data, we have been able to reframe impact based on what customers tell us they value most. Taking what we’ve heard, we came up with more meaningful depth of impact indicators. Here are some examples:
Quality of life. To understand how valuable or transformative customers felt their new energy product or service was, we asked them if their quality of life had changed since their purchase. We then asked customers to explain their answers. As they provided more details — sharing how they saved money, felt safer, or valued the convenience of lighting their home with the switch of a button — we were able to see the importance of the other indicators we had, and this enabled us to learn more about what low-income customers valued and why. In their own words.
Spending. Because our companies are serving low-income customers, it’s important we understand how their energy purchases impact household finances. We looked at two main indicators: energy spending and income generation.
- Energy spending: We asked customers about how much they typically spent weekly on energy as a household to assess changes in spending over the first year of purchase.
- Income generation: We asked customers if they used their products or services to improve their livelihood and, if so, how it contributed to household income.
From these conversations, we found that many households are spending more on energy after their purchase. But we’re not comparing like for like because they now have improved energy access. What’s important is the long-term potential because families are often spending more in the initial years after purchase while they pay to own their solar home system in instalments. We’re committed to bringing improved energy access to those living off-grid but want to do so in a thoughtful way; we are working with our companies on affordability and protecting against the risk of over-indebtedness.
Usage & Behaviour. We are also very interested in how customers are using their products and services. For instance, does the purchase of a solar lantern or home system change time spent studying by children? Does a purchase of a clean, more efficient cookstove decrease time spent cooking? If we know how customers are using our companies’ products, there are opportunities to design, develop, and deliver products and services that meet customer needs better.
Environmental impact. While low-income off-grid families may not focus on the environmental impact of moving from polluting kerosene lamps to clean solar energy, we wanted to determine the effect our energy companies might have on climate change by helping to avert the use of these lamps and therefore air pollution. We looked to see if there was a change in how a household used different types of kerosene lamps before and after access to a company’s energy product or service. We then used estimates for carbon emissions to calculate annual household emissions averted, looking at the top two climate warmers: carbon dioxide and black carbon.
Customer Experience, Feedback & Satisfaction. From what we’re learning, we believe it’s becoming more and more important for early-stage businesses to understand customer experience, feedback, and satisfaction. Why? Because if a company is not providing a service that customers value, then it will struggle to reach scale and increase its breadth.
We included indicators, such as value of money, the Net Promoter Score® (NPS) and challenges experienced, to help us provide our companies with customer insights critical to their sustainability. We asked questions to see if customers felt they were getting good value for their money. We also used the NPS, a tried and test method used the world over, to hear how happy or unhappy customers were and how loyal they were to the company. We measured NPS by asking customers to rate their likelihood to recommend the product to a friend or family member. But we didn’t stop there.
For example, we saw a connection between NPS ratings and ease of use, particularly for less-educated, lower-income families. We asked customers whether they had experienced any challenges using their new energy product. This is important for uptake, adoption, and referrals, affecting both impact and business outcomes. After all, if customers cannot use their product to best effect they won’t experience the maximum benefits — and they probably won’t be very happy either!
What’s Next
What’s been most exciting in putting together our Energy Impact Report is seeing the interconnectivity between so many of our indicators. From this work, we’ve built a core set of indicators that are applicable not only in energy but all sectors. So now we’re able to look across these impact indicators and Acumen’s entire portfolio of companies to make informed decisions about our investing. Our hope is that more impact investors will see the value of measuring what matter most to customers and use those insights for action.
This piece is a part of a series that delves deeper into the results of Acumen’s Energy Impact Report. Get the full report here.
