Why impact investing matters

Leaps by Bayer
3 min readOct 28, 2022

Leaps by Bayer, the impact investing arm of Bayer, commits to realizing paradigm-shifts in life sciences. We are an impact fund in its truest sense — targeting positive solutions for ten key agriculture and healthcare challenges facing humanity, which we call “Leaps”.

Our Leaps range from e.g.: preventing and curing cancer (Leap 04), to developing a sustainable protein supply (Leap 08), and many other huge challenges facing humanity. Our primary focus is driving breakthrough science that can achieve our ten Leaps, and we believe that by creating great impact on humanity, financial value will follow. When assessing existing impact measurement frameworks, we realized that none was suited to assess potential future impact in a credible, quantifiable, and comparable way. That’s why, in 2017, Leaps began a collaboration with the Happiness Research Institute, an independent think tank working to incorporate the science of happiness into decision-making and public policy.

Why happiness? Why wellbeing?

Empirical metrics often fall short when measuring human emotion and wellbeing. Wellbeing is often associated with prosperity, but we understand wellbeing as a universal priority. Over the last ten years, the world is getting richer — but are we also getting happier? The two don’t necessarily go hand in hand, but we feel both are important — and we’re not alone in this belief. The New Zealand government, for example, has begun to incorporate metrics like the Happiness Index alongside traditional metrics of prosperity such as per-capita GDP to gauge societal progress.

Our approach to measuring impact is based on the same underlying methodology as the approach used in New Zealand. Our latest report with the Happiness Research Institute examines how much wellbeing we could create by solving each one of our ten Leaps. Just as financial VCs focus on certain sectors with the highest potential financial return, our established framework allows us to focus on the highest potential wellbeing return.

So how does it work?

The latest report is our second published with the Happiness Research Institute. The first, published in 2019, introduced a framework called “Wellbeing Adjusted Life Years” (WALY) to quantify how investments can improve people’s wellbeing. The framework measures how a person’s wellbeing and quality of life are affected by events like personal or peer group illnesses, or drought in their communities. By comparing the self-reported wellbeing of an affected group to a control group, assessing what is driving happiness or unhappiness, WALYs can understand and quantify the potential impact of investment decisions.

For example, we found that ending organ shortages in Europe would have the same impact on happiness as giving a job to every unemployed person in the US. This approach encompasses both direct and indirect effects — for example, when thinking of cutting agricultural emissions, one may immediately consider how this benefits future generations and those impacted by rising sea levels, but it could also indirectly ease political tensions and reduce world hunger — all factors covered by the WALY framework. Furthermore, if we were able to enhance modern agriculture and dramatically reduce its carbon emissions, it will, at first have an immediate impact on human wellbeing through a reduction in air pollution, but it will also drive more indirect, long-term impact — such as stopping emissions-induced weather variability and natural disasters resulting from climate change.

What’s next?

It’s challenging to account for these complex effects on human welfare, but I am optimistic that developing systematic, empirical frameworks makes our investment decision-making much stronger. WALY helps us estimate the human impact of potential investments, track the performance of our portfolio companies, and measure the total impact of our Leaps investments over time.

The next step is applying the measurement framework to our portfolio and assessing to what extent our investments will improve global happiness. I, for one, am optimistic and look forward to others joining the discussion around impact investing.



Leaps by Bayer

Leaps by Bayer invests in paradigm-shifting advances in the life sciences — breakthroughs that could change the world for the better. https://leaps.bayer.com/