Two Sigma Impact – a mission-driven private equity firm – announced the closing of its inaugural Impact Fund. And Two Sigma Impact received a total of $677 million in capital commitments to the fund and its managed co-investments.
The firm is aiming to bring scientific rigor to impact investing and to use data science and technology resources to drive superior financial returns by unlocking human potential. And the successful fundraising received support from a range of institutional investors, including pension funds, endowments, foundations, and family offices, along with capital from the Two Sigma Impact team and Two Sigma leadership.
Plus Two Sigma Impact invests in human capital-centric businesses where employees are critical to the delivery of a service or product. The fund has made 6 investments in companies spanning healthcare, consumer, education & training, and business services, partnering with management teams that are aligned with its focus on job quality and workforce issues. As of April 1, 2023, the fund has invested approximately $370 million.
Two Sigma Impact has concurrently launched the Good Job Score Assessment Tool (the GJS Assessment Tool), which is an instrument designed to assess job quality in a quantitative manner. And the GJS Assessment Tool evaluates job quality and worker satisfaction through the administration of a 12-item questionnaire across what Two Sigma Impact has defined as the four key dimensions of a Good Job: Leadership, Purpose, Growth and Fairness. Two Sigma Impact is now working with its companies to administer the GJS Assessment Tool across its portfolio and will seek to use it while evaluating prospective new investments.
The GJS Assessment Tool provides a standardized, statistically reliable, and scalable score that measures job quality and offers insight into how employees rate their jobs across Two Sigma Impact’s four core dimensions of a good job. And a company’s Good Job Score is calculated on a scale of 1 (low) to 5 (high), including an overall score and sub-scores across the four dimensions.
To create initial benchmark data, the tool was administered to over 5,800 workers at over 60 companies across industries. And preliminary analysis indicates that a company’s Good Job Score is positively associated with other employee engagement metrics and has a moderate positive correlation with current financial fundamentals like free cash flow-to-sales ratio, current ratio, and profit margins.
Two Sigma Impact built the GJS Assessment Tool alongside Two Sigma’s Sustainability Science team – which offers data science expertise for ESG and social impact efforts. And it was developed through rigorous research, data analysis, and methodologies, aiming to ensure it is unbiased across employee demographics and characteristics, valid across multiple sectors, and that deploying it and tracking progress over time can be as easy as possible. Plus it is publicly available at no cost to other companies seeking to measure job quality over time within their own organizations.
KEY QUOTES:
“We are extremely grateful for the support from our investors in our inaugural Impact Fund. This successful fundraise underscores their conviction in Two Sigma’s differentiated approach to impact investing through our focus on job quality and drawing on our firm’s deep expertise in data science and technology. Through our research and our engagement with like-minded organizations, we realized there was no true definition of a good job and that existing employee satisfaction surveys were too focused on what companies want – greater productivity – rather than what workers want – good jobs. We believe the Good Job Score has the potential to be the core voice-of-worker metric for measuring and benchmarking job quality.”
– Warren Valdmanis, a Partner at Two Sigma Impact
“Over the last three years, we have been investing against our thesis that job quality and employee engagement is highly connected and collinear with business performance. Our GJS Assessment Tool amplifies the voice of the worker, giving companies insight into where employees believe their company can improve job quality, create better jobs, increase employee satisfaction, and ultimately unlock greater value for investors. We hope by sharing the GJS Assessment Tool broadly, we will raise awareness of job quality as a significant driver of value creation at companies.”
– Ann Ruble, Operating Partner at Two Sigma Impact
