Learning to measure systemic impact: The evolving impact architecture behind Karma Capital's steward-ownership fund

Companies in steward ownership make a deliberate trade. By locking their purpose into their legal structure and decoupling control from capital, they protect themselves against mission drift and extraction. But that same structure shuts them out of most of the traditional capital markets. Conventional venture and private-equity money expects an exit and uncapped returns, and a steward-owned company offers neither by design. The result is a financing gap that has little to do with the quality of these businesses and everything to do with how they are owned.

A small number of investors are trying to close that gap by providing capital that works in harmony with steward ownership rather than against it. Karma Capital is one of them. Yet the moment an investor takes that ambition seriously, a harder question appears. How do you measure and manage systemic impact across a portfolio of very different companies? How deeply is steward ownership really anchored in each of them, and does that structure widen what a company can achieve for the communities and systems it serves, or sometimes constrain it? And how do you say, honestly, what your own capital contributed to the change, when you deliberately hold no voting control over the companies you finance?

leonardo worked with Karma Capital to work through all three. Over the course of the engagement, we designed three interlocking instruments for Karma Capital's steward-ownership fund:

1. A systemic Impact Framework for the whole portfolio
2. A Steward Ownership Integrity Score 
3. An Investor Contribution Framework 

Read together, they give Karma Capital an honest, connected view:
What their portfolio companies change in the world, how deeply steward ownership is anchored in each of them and whether that structure actually widens their potential for impact, and what its own capital can credibly claim to have contributed, and what it cannot.

These frameworks are work in progress, shared mid-development rather than as a finished method, because the most useful version will be built with the companies it describes, and further developed with other actors working in the same field.

Making systemic impact tangible and manageable without overburdening the companies we back is a question with no ready-made answer. Working with leonardo moved us a long way, not through a standard model, but by developing together what actually fits our position as an investor in steward-owned companies. What we valued most was working with someone who brought real expertise and thought with us rather than for us.

Frederik Lorenz, IMM Manager at Karma Capital

The partner: Karma Capital

Karma Capital works on systemic investing, using capital as a resource to help shift the systems that produce large societal problems rather than aiming to maximise the financial return. The organisation grew out of an investment holding founded in 2018 by Sebastian Klein, and took its current shape in 2023, when the sale of Blinkist, a company he had co-founded, led him to give away roughly 90 percent of his private wealth and dedicate it to public benefit. A substantial part of it became part of the foundation of Karma Capital. He built the organisation together with his co-founders Nikolas Klein and Theresa Böttger as a hybrid: A non-profit entity, endowed with private wealth, carries the field-building work; a for-profit entity held in steward ownership sets up and manages thematic funds. The first of those funds is their steward ownership fund.

Its steward-ownership portfolio spans companies across four investment sectors: social equality, alternative materials, regenerative agriculture and food, and energy efficiency. As different as these businesses are, from fair telephony to circular materials to marine biomass, every one of them is held in steward ownership. Karma Capital is now building its first fund for professional investors  that provides capital designed to work regeneratively on the systems it is embedded in rather than extracting from them.

That ambition set a high bar for measurement and management of impact. A fund that reports systemic impact, and that invites institutional capital to join it, needs evidence that meets the standard of its own claims.

The Challenge: Three questions no existing framework answers 

Karma Capital had a clear thesis and strong conviction. What it needed was an evidence architecture rigorous enough to carry the weight of its claims. Nothing in the measurement field is built for an investor that is at once systemic, invested in steward ownership, and deliberately without control. That left three genuine problems to solve:

• The architecture of measurement. A portfolio running from social equality via alternative materials to regenerative agriculture cannot be captured by one uniform set of impact indicators (KPIs). It needs a tiered structure, with company-specific indicators at the base and higher tiers abstract enough to aggregate across sectors and surface the portfolio's systemic impact as a whole. The harder half is proportionality: Every metric a company is asked to report costs it time and money, so each one has to repay that cost with insight the company itself can use, not just data the fund would like to have.
• Verifying steward ownership. Many companies describe themselves as steward-owned, but the legal reality ranges from a line in a mission statement to ownership rules that genuinely cannot be reversed. The measurement had to identify where on that range a company actually sits.
• Connecting ownership to impact. Karma Capital’s core conviction is a bold one: that the way a company is owned is itself a lever for how much good it can do in the world. Evidencing this is the most ambitious part of the work. It meant building a way to trace how deepening steward ownership widens a company’s capacity for impact, and doing so while staying honest about what the fund’s own capital and support contributed to that change.

The Approach: Three connected instruments

Most impact measurement fails because it tries to answer everything with one instrument and ends up answering nothing well. So we separated three questions that are usually tangled together. What does the company do in the world? How is it owned? What did the investor actually contribute? Keeping them distinct is the move that matters, because a company can create real impact while its ownership quietly drifts, or deepen its structure while its investor overstates a role it never played. Held apart, each question gets an honest answer. Read together, they describe a company and its investor as a system. 

Two things shape how we use these instruments. First, the measurement is not only for Karma Capital. As much as it lets us report to fund investors, it is meant to help each company see and steer its own systemic impact, and to let us learn, together with the portfolio, not about it, what the capital sets in motion across the system. Second, that makes the companies participants rather than data sources. We define much of what gets measured together with them, and the framework below is still being tested and refined in that dialogue. 

1. A systemic Impact Framework: What the companies do

‍We mapped the portfolio onto a Doughnut Economics lens, locating each company against the social foundation and the ecological ceiling, and grouped them into four impact clusters. On top of that lens sits a three-tier KPI logic that climbs from the immediate to the systemic. HolyPoly, which turns plastic waste into recyclate that manufacturers can use in serial production, shows how one company moves through all three:

• Tier 1 - The direct output:  The immediate, countable result of the activity. For HolyPoly the tonnes of virgin fossil plastic displaced by recyclate in serial production.
• Tier 2 - The deeper outcome: How deep and durable that output is. For HolyPoly the share of the products developed that are themselves fully recyclable at end-of-life, so the effect compounds rather than ending as one more object in the waste stream
• Tier 3 - The systemic impact:   Whether it shifts the wider system. Measured two ways for HolyPoly: the number of manufacturers bringing a product made from 100% recyclate into serial production for the first time, and a qualitative read on whether recyclate-in-serial-production is starting to count as normal in their segment rather than a niche experiment.

The same logic applies to every company in the portfolio. Tier 1 asks what a company directly produces, Tier 2 how deep and lasting that effect is, and Tier 3 whether it shifts the system around it. The confidence behind each tier differs. Tier 1 is countable and verifiable with indicators anchored to recognised standards such as the IRIS+ catalogue wherever a match exists, so the base of the system speaks a language other impact investors already use. Tier 3 works with signals, judgement, and partial evidence.

Those tiers describe one company. To see the whole portfolio, the fund aggregates Tier 1 metrics across companies, where the outputs are countable and share defined units. “Fossil materials substituted” is one such figure: HolyPoly's recyclate in serial production, Wildplastic's recovered plastic replacing virgin material, and Proservation's crop-husk packaging displacing polystyrene add up to one count of fossil material the portfolio would keep out of the economy. 

The higher tiers are deliberately kept out of these totals, because summing very different systemic claims would produce a number that looks neat but means little, so systemic impact stays reported company by company. These indicators are not fixed. 

For most companies the Tier-1 metrics are being defined together with them, so that the number a company reports is also one it can use. Beneath all of it, every company also reports on a shared ESG and DEI baseline, covering pay equity, diversity, and emissions, so the portfolio can be judged on the fundamentals as well as on its systemic impact.

2. The Steward Ownership Integrity Score: How the company is owned‍

This instrument measures something most impact frameworks ignore: the structural irreversibility of steward ownership. Its guiding principle is observable over reported. We score what is verifiable in the articles of association, the shareholder agreements, and the commercial register, not what appears in investor communications.

Every dimension uses the same four-step progression. Stage 0 is none, with no mechanism beyond a conventional company. Stage 1 is intent, where the commitment is declared but not legally binding. Stage 2 is contractual, where it is anchored in the articles or a shareholder agreement but the shareholders could still reverse it. Stage 3 is structural, where reversal would require dissolving an independent protective structure such as a foundation or a veto share. The decisive test between Stage 2 and Stage 3 is a single, checkable question: can the shareholders alone undo the protection? If yes, it is contractual. If not, it is structural.

The same logic runs across five dimensions: Purpose lock, control alignment, capital alignment, stakeholder governance, and succession resilience -  from how well the mission is protected against drift to whether the structure survives the founders. 

Purpose lock shows the principle: At Stage 1 the mission is only declared, at Stage 3 removing its protection would mean dissolving an independent structure such as a foundation or a veto share, something the owners cannot do alone.  

The five dimensions are averaged with equal weight. We chose not to weigh some more heavily than others, because there is no evidence yet for which dimensions matter most, and guessing would build a bias into the score.

Steward ownership is a precondition, not a growth metric. Karma Capital requires a sufficient level of structural integrity before they invest, and they help secure it. Over the life of the investment the score works less as a rising curve and more as a check that the integrity holds rather than quietly eroding. What that secured structure creates is capacity: The room, the long horizon, and the freedom from extractive pressure to make decisions a conventionally owned company could not. Whether that capacity is then used and turns into measurable impact is the open question, and it is explored over time by a combination of the steward ownership score, founder interviews and the impact framework alongside it.

We plausibilise this over two horizons rather than proving it. From the first year, annual founder interviews capture the concrete decisions steward ownership made possible, and the moments it got in the way. Over the longer term, the record shows whether integrity holds and whether the capacity it protects shows up in the Tier-1 results. A patient look at whether the move together. The interviews explain how the mechanism works; the long-run data show whether the pattern holds across the portfolio. Together they make the thesis testable without claiming more than the evidence supports.

3. The Investor Contribution Framework: How the investor contributes‍

Grounded in current research on how investors actually create impact, this framework starts from Karma Capital’s real position. Holding information and economic rights but no votes, it cannot use the contribution channel the research evidences most strongly, influence through ownership stake and voting. So we built it around the mechanisms that genuinely fit, each weighted by its Investor Impact Potential:

• Capital provision: Steward-ownership-compatible capital for companies the conventional market excludes, plus financing design (return caps, non-extractive structures) that protects steward ownership rather than eroding it.
• Non-financial resources: Governance advice, systemic measurement support, and network access. We call this invitation-based influence. A conventional investor leans on votes, board seats, or the threat of exit; Karma Capital has none of these, and wants none, since taking control would contradict the ownership model it backs. Its influence works only where the company welcomes it, which makes it weaker as leverage but often deeper in effect, because a company that adopts a change by conviction tends to keep it in a way a pressured one does not. The trade is that Karma Capital has to earn the invitation, through trust and through advice that is genuinely useful, and has no recourse with a company that simply says no.
• Field building: demonstrating that steward-ownership investing works and setting an early standard for it, which carries more weight here than the literature assumes, because in a market with only a handful of active funds, any one pioneer measurably shapes it.

Mechanism Mapping then records, per company per year, which mechanisms Karma Capital used and how intensively, with observable outputs attached. What the framework deliberately refuses to produce is a single attribution figure. We avoid putting a precise number on how much of a company’s impact is down to Karma Capital, because no such number can be honestly calculated.

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"Systemic investing needs systemic measurement, and that means a genuinely holistic system with several moving parts, because what Karma Capital is trying to understand about its impact is too multi-dimensional for any single metric to carry. Building something that holds that complexity, while still being useful to the companies rather than a burden on them, is a crucial aspect of a functioning IMM system. Karma Capital is a pioneer in systemic investing, and we are confident this work will be genuinely valuable for them and their portfolio companies, and we hope it can be a blueprint for systemic IMM more broadly. We are looking forward to developing it further with them and their portfolio."

Manuel Müller, Senior IMM Consultant at leonardo

The Way Forward

The architecture is in place, but it is not finished. The next phase is building it out with the portfolio companies and putting the instruments to work. That means implementing the framework with each company, refining it against how they actually operate, and running the first real rounds of data collection, both the Steward Ownership Integrity Score and the investor contribution. Part of that refinement might be deciding what not to measure, as some things lose their quality when you try to turn them into a figure. An impact framework that ignores this ends up costing the companies more than it gives them. Early data will not prove the thesis on its own, but it starts the record that, over time, shows whether the integrity we secure at the outset holds, and whether the capacity it protects turns into impact.

The point of all this is consistency. Karma Capital already invests systemically, through patient capital that asks for neither an exit nor unlimited returns, in companies built to serve a purpose rather than to be drained of value. Managing and learning from its impact the same way is what makes that consistent : How a company changes the system around it, how ownership shapes that, and what an investor genuinely adds. In bringing its measurement in line with how it invests, and sharing the methods openly, Karma Capital can help shape what systemic impact investing looks like in practice.

We're sharing this on purpose as a work in process, and we want to end with the questions we're still sitting rather than a tidy conclusion:

• How can impact measurement and management be resourced sustainably in organisations with limited capacity?
• How do you decide what to measure and what to leave deliberately unmeasured?
• What would an impact report built for complexity actually look like (useful, focused, honest about its limits) and how can a report make learning and feedback loops visible?

If you're working on the same questions - as an investor, a company, or impact manager - we'd like to hear how you'd answer them.

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