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How to assess social impact?

Executive Factsheet

In recent years, there has been a growing recognition of the need to assess the outcomes of social impact initiatives. Even though companies have increased their efforts, many still struggle to find a suitable approach to social impact assessment.

Download the PDF: How to assess social impact?

 

Social impact assessment

According to recent global surveys, more than 70% of over 33,000 respondents agree that companies can take actions that both increase profits and enhance the economic and social conditions in which they operate.* Moreover, in 2017, about three-quarters of about 4,900 surveyed firms integrated non-financial data (related to their social and environmental initiatives) in their annual reporting.** Yet, even though firms are becoming increasingly involved in helping to tackle societal issues, how to best assess the impact of their action still remains an unanswered question. 


Picking the right approach

Different actors, including development banks and agencies, non-profit foundations and organizations, social investment organizations, accounting and consulting firms, corporate initiatives, reporting coalitions, and academic institutions, use a large variety of social impact assessment approaches. Despite this diversity, two main types of approaches may be distinguished:

  • The “social outcome” approach focuses on the positive social outcomes of organizations (rather than financial benefits). It considers social impact as ends in and of themselves.
  • The “business value” approach is concerned with how social impact can contribute to financial objectives. It views social impact as a means to a financial end. 

 

Assessing social impact

Unfortunately, commonly agreed impact assessment standards are currently missing.  Different actors use different method and techniques for measuring and tracking impact. Each organization has to find its own way of assessing impact that fits its specific goals and capabilities. 


Practical challenges

Assessing social impact can be challenging for several reasons: 

  • Domain and control: usually, the main effects of social impact assessment take place outside of the organization which complicates controlling efforts;
  • Measurability: social impacts are often difficult to quantify;
  • Externalities: many times, externalities are not accounted for. 


Strategic recommendations

Distinct recommendations may help to improve social impact assessment:

1st STAGE: Setting/revising the goal(s) of social initiatives

  • Check assumptions: Rather than presuming that social challenges and initiatives will perform as anticipated, follow-up to check the assumptions that your impact efforts rely upon.
  • Do not focus on too narrow objectives: Rather than getting focused on narrow initiatives, aim at addressing consensual objectives among your stakeholders.

 

2nd STAGE. Planning the assessment

  • Invest in assessment: Rather than regarding social impact measurement as too difficult to tackle, remember that financial measurement is difficult too, and requires rigorous training, extensive protocols, and dedicated personnel to do well.
  • Compare contexts before measuring impact: Rather than rolling out measures too widely at once, ensure that your measures are reliable across different entities and contexts.

 

3rd STAGE. Improving the assessment

  • Constantly improve your impact assessment: Rather than leave leaving the many potential benefits of upgrading your impact assessment approach on the table, take impact measurement seriously. Seek to continuously improve your impact assessment.
  • Map and engage the impact value chain: Rather than overlooking the distinctions between different parts of the impact value chain, actively map and engage the impact value chain for troubleshooting problems as well as building up a strategic vision.
  • Do not over-rely on quantitative metrics: Rather than becoming too data-driven too soon by relying heavily on limited quantitative data, make room for collecting qualitative feedback from your teams and beneficiaries.


4th STAGE. Strategic use of social initiatives

  • Do not focus exclusively on either benefits or risks: Rather than focusing only on positive or negative aspects that your initiative addresses, pay attention both to benefits and risks. 
  • Search to extend the benefits: Do not only assume that some business benefit is probably occurring, but instead,  actively measure the benefits resulting from the impact efforts. In measuring your business benefits, be flexible about the payoff horizon; it takes time to materialize.
  • Leverage goodwill for increased business and social impact: Rather than keeping your impact initiatives secret, make sure that the right audiences get to know about your contributions.

 

*Source: The 2019 Edelman Trust Barometer.
**Source: The KPMG Survey of Corporate Responsibility Reporting 2017. 

 

REFERENCE

Durand, R., Rodgers, Z., & Lee, S. (2019). Social Impact Assessment Strategy Report. S&O Institute HEC Paris