How to Measure and Report Social Impact for Business Success

How to Measure and Report Social Impact for Business Success
How to Measure and Report Social Impact for Business Success
Experts from Verizon, Global Reporting Initiative, and Stewardship Asia Centre Debate the Best Methods to Measure, and Reasons to Report, Social Impact

Prepare yourself for some business-speak bingo. If you are familiar with phrases ‘profit with purpose’ and ‘do good by doing well’, then you will no doubt also be au fait with ‘social impact’.

Social impact refers to the positive influence a company’s socially responsible practices and policies have on employees, society and the environment.

The S in ESG, Social covers all the ways companies interact with their employees and the communities in which they operate, from prioritising employee wellbeing to championing DEI, from supporting social causes to developing community initiatives, including Corporate Social Responsibility (CSR). 

A central topic for organisations in recent years, more companies have moved to business models that incorporate CSR and other Social practices into their plans and metrics. 

And much like environmental impact, social impact needs to be positive, measurable, and reported. 

So how can it be measured accurately, and how can it possibly be quantified and qualified while avoiding accusations of ‘washing’ in its many forms?

Rajeev Peshawaria is the CEO of Temasek Holdings’ non-profit Stewardship Asia Centre in Singapore and Founder President of the Leadership Energy Consulting (LEC) Company in Seattle. Previously, he was Chief Learning Officer at The Coca-Cola Company and Morgan Stanley, while also holding senior positions at American Express, HSBC and Goldman Sachs. He has also recently published the book Sustainable Sustainability – Why ESG Is Not Enough

When it comes to measurement and reporting on social impact, Peshawaria draws on that extensive experience to take a pessimistic approach.

“I am not a huge fan of the ‘measurement mania’ that has gripped the ESG space these days,” he tells Sustainability magazine. “This is because measurement and reporting requirements are being misused and green washing and social washing are rampant. 

“‘What gets measured, gets done’, they say, but often forget that over-emphasising measurement leads to bad behaviour. It’s quite simple – if I’m a CEO and my bonus is linked to some ESG markers, it is highly likely that I will be tempted to show numbers that make me look good regardless of the actual impact. We see a lot of this happening these days.”

Peshawaria shares an anecdote of a director of a global company with a great track record in creating positive social impact saying to him – “for us social impact is not about CSR, it is a growth imperative. For over 150 years, we have seen that the more we do for society, the more our shareholders benefit in the long term. Social impact measurement is difficult and subjective. While we try our best to measure and track, we do more and measure less.”

Rose Stuckey Kirk is Chief CSR Officer at US wireless network giant Verizon and seems to have an opposing view when it comes to the need for extensive measurement.

Kirk says Verizon maintains a firm grip on tracking the goals set for the initiatives that are part of its responsible business plan, Citizen Verizon.

“We integrated measurement and analytics for each programme when we started this work 12 years ago,” she says. “We set very specific goals, aligned with the strategy of our business, and that would enable us to use all of Verizon’s assets. 

“We measure against our targets monthly, quarterly, and annually. We are so disciplined about reporting that we created a separate role for someone to do this full-time.”

Kirk adds that quarterly operations reviews are held with the CEO and all of his direct reports twice a year, and Verizon is audited by two third-party companies.

Reporting standards imperative

It’s all very well an organisation measuring social impact, but every company will have its own methods and views on what ‘good’ actually looks like. That’s why it’s imperative to have reporting standards, like those established by Global Reporting Initiative (GRI) – an international body that helps businesses and other organisations (including the EU and Indian Stock Exchange) take responsibility for their impacts, by providing them with the global common language to communicate those impacts.

GRI provides the world's most widely used sustainability reporting standards, with 78% of the world’s 250 largest companies using their guidelines or standards and 68% of the top 100 companies. GRI standards cover topics that range from biodiversity to tax, waste to emissions, diversity and equality to health and safety. 

Renowned as a global expert in corporate sustainability, Carol Adams is Chair of GRI's Global Sustainability Standards Board, and she says these standards are essential to ensure impacts have a less negative and more positive effect.

“The whole process of setting targets and the actions taken to address the targets, that’s all really important,” she says. “So while it is about reporting, it's getting organisations to report on matters that will actually facilitate that transformation to sustainable development.”

Adams says that is especially important for any company when it comes to managing risks and identifying opportunities. 

“That whole process of identifying the most significant impacts involves talking to stakeholders. That builds trust with stakeholders,” she says.

“It's important also for investors because risks to the organisation affect investor returns and also affect relationships and human resources that companies depend on. 

“For example, impacts on your workforce affect your bottom line as well. If you are treating your workforce well, you get more out of them. If you are not paying them what you should be, that brings a negative reputation or implications.”

The impact conundrum

Peshawaria argues that the hardest part of trying to measure the good you are doing as a business is that “one person’s windmill is another person’s bird killer”.

“The hardest part is to define what positive impact really is,” he explains. “For example, doing something good for the environment might create social problems like unemployment in some countries that rely on industries that may be environmentally harmful. 

“Another issue relates to net shareholder returns. Some people are still not convinced that doing good is in the best interest of shareholders. Those with a short-term investment horizon question the efficacy of doing good through business as they believe doing so eats into their returns. Only those with a long-term view see benefit in doing good.”

Verizon has certainly taken that long-term approach, establishing its CSR strategy 12 years ago and “thinking about how to build programmes, embed measurement strategies, and how to show up in the marketplace”.

Kirk says Citizen Verizon is rooted in the company’s long-term approach of building technically rigorous programmes, hiring subject matter experts, leveraging every part of the business, and implementing disciplined measurement month over month, as well as external third-party measurement and validation. 

“We think about measuring the short-term, mid-term and long-term impact that we are having on individuals and society as a whole,” says Kirk.

“Because we have such a disciplined approach, we always understand where we are from a quantitative perspective. From a qualitative perspective, we have the ability to understand the impact we are having through testimonials, first-hand accounts, and other strategies. 

“For example, for Verizon Innovative Learning, we also measure student performance and for our work with small businesses, we analyse if those small businesses are more effective and growing. Meaning, in addition to quantitative, we have qualitative.”

Social impact success

And this is where one of the biggest ‘problems’ around measurement and reporting emerges – what does success look like?

“From a company's point of view, I think this is when they have the whole organisation buy into it, thinking about sustainable development through everything they do,” says GRI’s Adams.

“I call it ‘sustainable development thinking’ that informs strategy and informs the business model, so the products and services are all designed and developed with a view to minimising any negative impact on sustainable development and creating a positive impact that brings long-term success.”

Verizon’s Kirk says success translates to three main things: The progress against the targets it sets, the impact of its programmes on humans and society at large, and how it brings together all of Verizon’s resources to achieve success for the communities it serves – as well as employees, customers, investors, partners and other internal and external stakeholders.

That sounds almost impossible to manage as, we all know, you can’t please all of the people all of the time. Or can you?

Peshawaria believes that only if solutions create win-win-win prosperity (where investors, employees, and society prosper together) will we make meaningful progress.

“What companies get wrong is thinking they need to give up some profit for purpose. No. They need to innovate enough to make win-win-win a reality, and not give up profit at all,” he says. “That’s the leadership challenge of the 21st century, not CSR or charity. 

“I strongly believe CSR is ineffective. Giving up growth or profits to serve society is not sustainable. We need companies that can maximise profits and growth by addressing the very challenges threatening planet Earth and humanity. 

“E and S should be part of execution and strategy, not a side dish, which is often what CSR tends to be.”

It seems Kirk would agree that CSR needs to be a main course, and not an afterthought or accompaniment.

“I believe we need to treat CSR as a profession,” she concludes. “It’s not just about doing good, it’s about having long-term, scalable impact.”

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