Social Impact Measurement - What's in it for Corporates?
12 November 2013 at 10:09 pm
The corporate sector needs to understand and communicate the social value they create or destroy to stakeholders who are taking increasing levels of interest in a corporate’s social impact, writes Anna Scott, a Founding member of the Social Impact Measurement Network Australia.
There has been a phenomenal increase in the field of measuring social impact or social value, across all sectors of society. We hear discussions about social outcomes, evidence based decision making, social impact and see well-attended conferences on social impact and social outcomes – why the burgeoning interest in this area and what interest does the Corporate or business sector have in measuring social impact?
There are many people and organisations across society working on trying to solve our “wicked” social problems. The Not for Profit (NFP) sector (or “For Purpose” sector) is focusing on understanding and measuring their social impact in response to a number of drivers, too many to mention here. However, measuring social impact enables them to demonstrate “value” in the marketplace and explain to stakeholders the difference they make from the programs and services they provide. This in turn, can strengthen their cause for securing more funding but the real kernel is, using the information from the measurement process to enable them to understand what they are doing well and not so well, so they can create more effective programs and services.
The corporate sector also needs to understand and communicate the social value they create or destroy. Through their ripple effect on society, corporations have a comparatively larger circle of stakeholders who are taking increasing levels of interest in the corporation’s social impact. Long established movements such as Corporate Philanthropy, Corporate Community Investment (CCI), Corporate Responsibility (CR) or Corporate Social Responsibility (CSR) help provide among other things, the ability for corporations to secure and retain their “social licence to operate”.
The explosion of social media, coupled with community, citizen and Non Government Organisation activism has the potential to see that “social licence to operate” disappear overnight. These drivers also demand that corporates report transparently on their social impact or social value to their many stakeholders including shareholders.
The move from Company Annual Reports to Sustainability Reports and now Integrated Reporting frameworks brings the opportunity for the discussion of “impact measurement” – social and environmental, from CR and Sustainability Departments into the Boardroom discussion.
It starts conversations about the role of business in society and the impact of business on society … now that’s got to be a good thing. The newly released GRI G4 Guidelines also calls for reporting of material impacts in the broadest context of a company’s whole chain, beyond its traditional corporate boundaries. Locally, the Australian Stock Exchange (ASX), Corporate Governance Council (ASX Council) recently recommended that entities listed on the ASX disclose environmental and social sustainability risks to investors.
Other initiatives such as Creating Shared Value (CSV) focus on the broader role or purpose of business in society and how they can contribute to solving our social and environmental problems. With the emergence of CSV we are also seeing the development of new measurement tools and frameworks to capture the social value or social impact created, so it can be reported alongside the business or financial value.
This is where the need to measure social impact comes full circle. For years the third sector has been trying to account for the value (the social value) they create through carrying out their mission, their purpose, as profit and the redistribution of it, is not their main purpose. As well as needing to explain their social and environmental impact, corporates are now wading in waters of carving out a purpose beyond making profit, some call it ethical profit, or profit with purpose.
So now we find corporates too, trying to account for the value they create – the social and environmental value – beyond traditional financial value and reporting. They are treading the same path of trying to understand, measure and communicate this non-financial value, an area which the NFP sector has been grappling with for a much longer time. So ultimately, the need for social impact measurement for the business sector is a “blend” of measuring their internal and external social impacts, as well as measuring the creation of social value which some are pursuing as a business strategy (a social purpose), alongside their profit purpose.
The increasing social finance market means impact investors too are seeking information on the social or non-financial value generated from their capital investments. One of the challenges identified in a recent report for impact investing “Impact Australia – investing for social and economic benefit” was improving measurement and developing an Australian impact investment measurement framework drawing on global systems. This challenge highlights the challenges experienced by many – with so many tools, frameworks and methodologies available for the measurement of social impact, which one should be used?
I have deliberately not mentioned specific methodologies in the field of social impact measurement as it depends on principles and what one is trying to achieve but I do suggest, stop talking, start measuring and give it a go. Start small, grow your experience, learn from others and share information and ideas.
About the author:
Anna Scott is a member of the Founding Council of the Social Impact Measurement Network Australia and has worked as an environmental and social sustainability practitioner across the corporate, government and Not for Profit sectors over the last 20 years. She is a Principal of Orbis Environmental and helps organisations to create and define their broader societal purpose and measure their social and environmental impact.
The Social Impact Measurement Network Australia (SIMNA) has been established to help individuals and organisations across all sectors to navigate this emerging and rapidly increasing discipline of measuring social impact. SIMNA is a knowledge sharing network. To find out more and to contact the SIMNA Chapter in each State please email firstname.lastname@example.org