The silent trap of criteria turning into objectives: a challenge for impact finance

Speaking about impact finance today means navigating an ocean of good intentions. Philanthropists, investors, companies, and public decision-makers all display indicators, dashboards, numerical commitments. “Reduce emissions by 30% by 2030,” “Achieve gender parity in leadership bodies,” “Increase the recycling rate to 90%.”

These criteria are indispensable: they set a course, make it possible to measure progress, to ensure accountability.

But a danger lurks: the one that British economist Charles Goodhart formulated as early as the 1970s: “When a measure becomes a target, it ceases to be a good measure.”

From thermometer to totem

A criterion is, at its origin, nothing more than a thermometer: a tool of observation to verify that action follows the right direction. But when governance, financial incentives, or public recognition crystallize around this number, the thermometer becomes a totem.

And as with any inversion between the world one wishes to measure and the measuring tool, one ends up serving the object rather than the reality it was meant to represent.

In impact finance, this slippage may be all the more problematic since we are speaking of finance that aims to improve the world. A philanthropic fund may, for example, focus on the number of beneficiaries reached, to the point of funding “large volume” projects with shallow depth of impact. A company may aim for a high ESG score by selecting indicators easy to optimize, while leaving aside structural issues. A public institution may calibrate its subsidies on standardized administrative criteria that in fact exclude innovative but atypical projects.

The mechanics of drift

How can this phenomenon actually take place?

Three main causes can combine and accelerate this slippage:

• Pressure for rapid performance: funders may want visible results, often within short timeframes, incompatible with systemic transformation.

• Standardization of taxonomies: the pursuit of ESG/SDG/EU Green Taxonomy alignment is necessary, but it can lead to freezing criteria designed for evaluation into rigid objectives.

• Lack of iteration in governance: when a criterion is set at the launch of a program and remains unchanged despite evolving contexts, it loses its ability to guide meaningfully.

Perverse effects in every sphere

In philanthropy: the temptation of “naming” and quantified storytelling may push to fund what is photogenic rather than what is transformative.

In impact investing: a portfolio may aim for a precise percentage of SDG alignment, favoring projects that tick boxes on paper but do not truly innovate.

In business: internal ESG objectives may lead to symbolic trade-offs – such as reducing a carbon indicator on a pilot site, while the overall footprint remains unchanged.

In policymaking: public programs may bend to the logic of “compliance” (to European criteria, for example), losing sight of territorial specificities and real community needs.

The AGILE philosophy: putting the criterion back in its place

The AGILE tool, as promoted by the Geneva Foundation for the Future, offers a methodological response to this trap. (You can consult the AGILE tool in the White Paper published by the Foundation.).

Let us, however, take the exercise of applying the 5 approaches Alignment, Governance, Intention, Leadership, and Efficiency, to the AGILE tool itself, simply for the sake of coherence.

With A for Alignment: evaluation criteria must remain aligned with a strategic intention and shared values, and not become ends in themselves.

With G for Governance: governance must include feedback loops that regularly revise the criteria in light of on-the-ground reality.

With I for Intention: intention is the compass; criteria are maps to be updated, not borders to be respected at all costs.

With L for Leadership: responsible leadership knows how to explain why an indicator changes and defend the legitimacy of a revised objective.

And finally, with E for Efficiency: efficiency is not merely about hitting numbers, but about maximizing the ratio between resources used and real transformation.

Breaking free from the “tyranny of the indicator”

Authentic impact finance must be organized to accept that criteria are living, evolving, and sometimes abandoned in favor of others more relevant.

This requires daily courage: the courage to stay constantly up to date, to explain to stakeholders that a falling number is not always a failure, and that an indicator removed and replaced by another is not a regression, but the sign of methodological maturity. Provided, of course, that the reflections and work on this matter are documented, and that exchange seminars with all stakeholders are organized.

Philanthropic coalitions and hybrid funds can thus lead by example by publishing not only their numerical results but also the reasons why certain indicators were modified or replaced.

Toward a culture of critical revision

If we wish to avoid impact finance turning into a mere contest of labels and ratings, we must rehabilitate critical revision:

• Train teams to detect the perverse effects of a criterion turned into an objective.

• Introduce “sentinel indicators” that measure the very relevance of the criteria.

• Promote multi-stakeholder panels to validate and adjust criteria continuously.

• Communicate honestly about the limitations of each measure.

In a world saturated with quantified objectives, relevance cannot be decreed; it must be cultivated.

Impact finance – whether stemming from philanthropy, markets, business, or the State – must remember that its criteria are only means to serve an intention.

The day the means are confused with the ends, the original intention is betrayed, and this opens the door to greenwashing, meaningless standardization, and loss of trust.

To always keep criteria in their place, let us not place them on the altar of objectives, but in the toolbox of change.

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