Measuring Your Organisation's Impact

The tide is turning towards environmental, social, and economic sustainability in the business world. Driven by a combination of stakeholder pressure, regulations like the EU's Corporate Sustainability Reporting Directive (CSRD), and a growing awareness of their impact on the planet and society, companies are looking beyond traditional profit measures.

This means going beyond profit to create a positive impact on the planet and society. But for many organisations, the question remains: how do we measure this impact?

Traditionally, businesses have focused on outputs – the activities they undertake. Did we complete that job training programme? Did we donate to that homeless shelter? While outputs are a starting point, they don't tell the whole story. What truly matters is the outcome – the actual change our actions create in people's lives.

Here's why measuring your organisation's impact is crucial:

• Demonstrate value: Stakeholders, including investors, customers, and employees, increasingly value companies that contribute positively to society. Measuring impact allows you to showcase your commitment to ESG and attract stakeholders who share your values.
• Improve decision-making: By tracking your impact, you gain insights into what's working and what's not. This data can inform future initiatives, helping you allocate resources more effectively and maximise your positive contribution to society.
• Drive innovation: Measuring impact encourages you to think creatively about how your business can address social challenges. This can lead to innovative solutions that benefit both your organisation and society.

Putting Measurement into Practice - Social Impact example

Let's imagine a technology company launches a digital literacy programme for underprivileged communities. Traditionally, they might measure the output as the number of people who participated in the training sessions. However, a more impactful approach would be to track the outcome – the improved digital skills of the participants and how those skills translate to better employment opportunities.

Here's how they could do it:

• Set a SMART goal: Increase the employment rate of participants in the digital literacy programme by X% within a specific timeframe.
• Identify data points: Track participant completion rates for the training programme. Partner with local employment agencies to collect data on the number of programme graduates who secure jobs requiring the newly acquired digital skills.
• Analyse the results: By comparing the programme completion rates with the employment data, the company can quantify the social impact of their initiative. They can then express this impact in a meaningful way, such as "our digital literacy programme has demonstrably improved the employability of X% of participants."

Putting Measurement into Practice - Environmental Impact example

Let's imagine a clothing company implements a new recycling programme for old garments. Traditionally, they might measure the output as the number of tons of clothing collected. However, a more impactful approach would be to track the outcome – the environmental benefit of this recycling programme.

Here's how they could do it:

• Set a SMART goal: Reduce the company's environmental footprint by X% through garment recycling within a specific timeframe.
• Identify data points: Track the weight of garments collected and partner with a textile recycling facility to obtain data on the environmental benefits of their recycling process. This data might include reduced water usage, lower carbon emissions, and less landfill waste compared to traditional garment disposal methods.
• Analyse the results: By comparing the weight of recycled garments to the environmental data provided by the recycling facility, the company can quantify the positive impact of their programme. They can then express this impact in a meaningful way, such as "for every ton of clothing recycled, we save X litres of water and Y kilograms of CO2 emissions."

The above two examples demonstrate how moving beyond outputs and focusing on outcomes allows for a more comprehensive understanding of the impact an organisation is creating.

Impact Measurement Frameworks

Here are several impactful frameworks organisations can consider to move beyond outputs and start measuring real outcomes.

1. Social Accounting and Audit (SAA)

An SAA provides a comprehensive picture of your organisation's social and environmental performance. It goes beyond financial statements, considering factors like employee wellbeing, community engagement, and diversity and inclusion initiatives. The framework allows you to identify your key stakeholders, assess their concerns, and report on your impact in a transparent and accountable manner.

2. Logic Models

Logic models are visual representations of your programme's theory of change. They outline the resources you'll invest (inputs), the activities you'll undertake (outputs), and the intended outcomes for beneficiaries and society at large. By visually mapping your programme, you can identify potential pitfalls, track progress, and demonstrate the logical connection between your actions and the desired social impact.

3. Social Return on Investment (SROI)

SROI goes beyond traditional financial metrics to assess the social value created by your initiatives. It translates social benefits into a common unit, often a monetary value. While not a perfect measure, SROI helps communicate the broader value your organisation creates beyond just profit. It can also be a powerful tool for demonstrating the return on investment for social programmes to funders and stakeholders.

4. The Impact Management Project (IMP)

IMP offers a standardised framework for measuring impact across investments. This framework considers five dimensions - the nature of the impact (environmental, social, economic), who benefits from it, the scale of the change achieved, the organisation's role in creating that change, and any potential negative consequences.

5. The Sustainable Development Goals (SDGs)

The United Nations' SDGs are a set of 17 global goals designed to address critical challenges. Organisations can use the SDGs to align their impact measurement with a broader global agenda, specifically focusing on goals related to poverty, education, and social justice.

Moving from Outputs to Outcomes

Implementing these frameworks requires a shift in mindset, focusing on setting SMART goals for your desired social outcomes. Regularly collect relevant data points, such as participant satisfaction surveys, community engagement metrics, or employment data, to track progress and assess the effectiveness of your initiatives. Involving the affected stakeholders throughout the impact measurement process ensures transparency and alignment with their concerns.