A1: Things that we have traditional considered social impacts are increasingly affecting the businesses bottom line. Stakeholders of all kinds (employees, customers, government) are asking business to address their footprint on this planet and its communities of people.
So business will need to only increasingly manage their impacts in this world. Well, in order to manage something it must be measured. I think over the next two decades we will see companies that measure and manage their ESG footprint in this world outperform those that do not.
Hi Luis, we love a bit of writing. Though many of our activities are spoken - today is written as its a great way for many people to contribute. We would love to hear from you too Luis.
A1. There is a clear business case for the mining sector in finding better ways to measure and report its socio-economic contribution to communities. Better measurement can focus company management action on what makes a difference to people, and catalyse investment. It requires creating a shared understanding of what benefits the sector can deliver and how, and has the potential to strengthen relationships with communities and other stakeholders.
I think there is a prior question around clarifying what we mean by social impact â does it include negative social impacts or only positive social impacts? The business case might vary depending on your answer to this, as do the challenges/ gaps in measurement approaches.
Hi everyone - Iâm Justin Perrettson at Novozymes where I Head our Global Engagements work, looking across the business at how key sustainabilty and innovation trends and issues impact our actvities. As part of this Iâm also involved with HelloScience, a collaborative innovation platform that aims to drive real world impacts linked to the SDGs.
A1: Iâll take the chance to be the provocative one! When we say âbusiness caseâ weâre really saying âwhatâs the cost benefit for spending money on understanding our social impactâ. But reframing it a little bit and stepping back, letâs consider that after 40 years of âunleashing the potentialâ of business, capitalism is at risk of eating itself, with even the likes of Larry Fink and the Business Roundtable pushing for the recognition that there is more to life than shareholder primacy. If we recognise that businesses are social constructs that exist on the presumption of their societal benefits, any organisation that doesnât understand their positive impacts is unlikely to be able to justify its existence in the future (beyond shareholder returns). The mounting pressure on corporations should encourage them to articulate and justify their role in society. Similarly, a company that doesnât understand its negative impacts will not be able to mitigate risks or be âfuture fitâ, while its investors will have no understanding of their own risk exposure. From an outsider point of view, if I heard someone asking these questions within a business, I would assume that they have had their head in the sand for the last 10 years and if possible, Iâd want them to see that asking those questions is as sensible as asking âwhy is measuring profit and loss good for business and what is the business case for investing in the finance and accounting department?â
Hi Luis - weâll be doing some video-based and in-person events as well throughout the year. Stay tuned! For now, it would be great to hear your questions and insights in this written discussion.
When it comes to âWhat is social impactâ for me itâs the difference in the world because your organization exists. Both positive and negative. Intended and unintended.
A1: My view is that every product has an impact, irrespective of whether it is specifically targeting positive outcomes or not. If we acknowledge that, the importance and the benefits of measuring social impact becomes clear, because:
⢠What you measure you can control: Robust measurement processes allow us to avoid products and services that have unintended negative outcomes for the communities we operate in
⢠We see impact performance becoming a differentiator and a meaningful new dimension of overall performance for all types of projects
o This can then help overcome barriers to social innovation â In a very simple manner, if you are pitching a product that carries âx and y risk/ return expectationsâ, it might not necessarily meet the required risk-return thresholds for your business. If suddenly you are adding one extra dimension and say this same product has the power to achieve this huge societal impact, then the discussion immediately shifts
⢠Client partnerships or products: You can capture business value from impact data and sell that as product in itself, or as an incentive for clients to join partnerships with you for example
Good question - thatâs a question I am being asked quite often. In my opinion, measuring social impact can fulfil a range of purposes. It can be used as a tool for strategic planning and continuous improvement, for communicating impact and attracting investment, or for making investment decisions. It also enables evidence-based analysis and decision-making for ongoing improvement and demonstrates accountability for progress and outputs of the project or intervention
For our site teams it is in particular important because it can help guide choices where we should spend time and money on. Often we implement programmes as a response to community requests without analyzing in detail which types of interventions have the highest impact - both for the business but also from the communityâs point of view.
As a final point, if people are fighting the good fight internally but hit brick walls on business cases - point them towards the raft of legislation coming out (particularly in Europe - see ECCJ) and try to convince them that the regulatory framework is potentially shifting significantly in the next 10 years. If companies arenât able to articulate their social impact, they will a. not be able to convincingly argue a case against regulation and b. not be ready to provide information in future disclosure requirements when they come out (in part because measuring social impact is not a quick fix but a multi-year project to set up).
(https://corporatejustice.org/eccj-publications/16804-eccj-legal-brief-eu-model-legislation-on-corporate-responsibility-to-respect-human-rights-and-the-environment)
Hi, Careen Abb, Positive Impact Finance Lead at the UNEP Finance Initiative. We work on mainstreming impact analysis and management within financial institutions.
There is growing consensus that impact does not only mean positive social outcomes but also negative harm that must be measured and mitigated and managed.
To Q1. Why is measuring social impact good for business? What is the business case for investing in measuring social impact?
Agree with Rabayl that social impact is a strategic matter for business. From a UNEP FI perspective, weâd go so far as to say that measuring social impact is good for business because without positive social impact there might be no need for business in the first place! We think understanding the businessâ positive and negative social impacts and measuring them is the first step to understanding the place of social impacts in the business model â the more closely linked they are to value creation the stronger the business models â and the bigger the markets out there.
In the context of UNEP FIâs Positive Impact Initiative, we are promoting a holistic approach to impact analysis and measurement â i.e. considering social, economic and environmental impact areas holistically. The underlying thinking is that to make significant progress on the SDGs we need to understand and leverage on the interconnections between the impact areas. Weâre devising a methodology to undertake such holistic impact analysis for financial institutions â as a self-assessment but also vis a vis clients and investee companies.