Root Capital grows rural prosperity by investing in agricultural small and growing businesses that provide more robust incomes to small-scale farmers. In return, these farmers provide a reliable supply of high quality, sustainably produced crops to the businesses and ultimately to consumers.
Understanding Our Impact - Our Logic Model
Root Capital’s credit and financial management training enable small and growing businesses (SGBs) to grow and reach more farmers. These SGBs provide farmers higher and more stable incomes by paying them better prices for their crops, improving farm productivity, and providing them steady access to markets. In return, farmers provide a reliable supply of high quality, sustainably produced agricultural product to the businesses, and ultimately to consumers.
Agricultural businesses integrate farmer livelihoods with ecosystem conservation by linking farmers to green markets, providing agronomic assistance on sustainable farm practices, and adopting or helping farmers to adopt clean and appropriate technologies for production and processing.
Root Capital’s impact is best understood on two levels:
The impacts of our lending and financial management training on clients
The impacts of our clients on the incomes (and environmental practices) of the small-scale farmers who supply them
Our impact is greatest when we support clients that are growing rural prosperity, and could not do so without access to finance and/or training from Root Capital.
These graphics illustrate core Root Capital impacts—such as the impact of our finance on our clients’ ability to grow, to reach more farm families and to pay higher prices. While some illustrate impact on individual clients, they are representative of the type of impact we see across our portfolio and are based on both portfolio-wide and individual client data from 2011.
Click on each image to view larger.
How We Measure Impact
We take a two pronged approach to impact assessment: portfolio-wide measurements based on data from the social & environmental due diligence that we conduct with all of our clients, and more in-depth case studies with individual clients.
Mike McCreless, Root Capital's Director of Strategy & Impact, on the The Forum
Social & Environmental Due Diligence
As part of the credit evaluation process for each client, Root Capital’s loan officers use our Social and Environmental Due Diligence Scorecards to evaluate the client’s social and environmental practices, as well as their ability to access alternate sources of finance. These tools include metrics developed by the Impact Reporting and Investment Standards (IRIS) that we report in our Quarterly Performance Reports and Performance Dashboard, but go substantially further in profiling clients' practices.
Our due diligence tools help us to identify businesses that do not meet our bar for social and environmental performance. For clients who do pass our social and environmental screen, the scorecards help us understand how each client’s business, and our support of that business, is expected to create positive impact.
It is not always easy for loan officers to obtain robust information about the social and environmental practices of the agricultural businesses we finance and the smallholders affiliated with them, as loan officers rely on self-reported information from the businesses and have limited visibility into farm-level practices. In light of these challenges, we continue to revise our due diligence tools to improve our approach. Our Social and Environmental Due Diligence Methodology Guide presents our approach to social and environmental due diligence in greater detail.
Finally, our issue brief begins to make the business case for social and environmental due diligence. Conducting due diligence on the social and environmental practices of our clients is not just a way for financial institutions like Root Capital to create impact; due diligence can also create financial benefits that partially or fully offset the costs involved.
In 2011, we began to supplement our portfolio-wide approach with deeper studies of selected clients to evaluate whether and how our clients support farmer livelihoods, and to inform our understanding of what social and environmental practices create tangible, positive impacts. Recognizing that no study of a single client will definitively prove our impact, we also group together studies in the same country and sector to identify common results that were not a function of one enterprise’s unique situation, but likely to be more broadly relevant. Our ultimate goal is to demonstrate that lending and financial training for rural SGBs can transform small-scale farmers’ livelihoods while sustaining the environment upon which we all depend.
Download our most recent impact studies:
Guatemalan Coffee Cooperatives Study (coffee, Guatemala)
COOPCAB case study
Fruiteq case study
Tziscao case study
COOMPROCOM case study
For more information on our approach to measuring impact, read A Roadmap for Impact.