A recent Ethical Corporation webinar explored how companies can measure their social impact
It’s easy for companies to keep track of how successful they are in hitting environmental goals, as evidenced by the growing popularity of initiatives such as science-based targets and the RE100, where companies commit to renewable energy targets.
But quantifying success in social programmes is a more challenging proposition, as experts from the World Business Council for Sustainable Development, Unilever, FedEx and Nestlé said in a recent Ethical Corporation webinar, “From output to outcomes: how to quantify your social impacts”.
A poll set by the moderator, Ethical Corporation’s managing director Liam Dowd, at the start of the webinar set out the scale of the challenge: asked if they were successfully quantifying the impact of their social investment programmes, 73% of respondents said “no”.
Companies are under enormous pressure to be more articulate about their social performance, said Kitrhona Cerri, manager of social impact at the WBCSD, “but the landscape of conducting social impact [reporting] is challenging to say the least…. There are a lot of tools but they cover a myriad of approaches and scopes, and companies are struggling to find out whether they are fit for purpose, or for their business.”
The WBSD has come up with a Social Capital Protocol, which Cerri described as a “harmonised framework for companies to measure, understand and value their interactions with society”. She said it wasn’t a new approach, but brought together tools that companies have already been using into one coherent framework. “We look at social capital as a stock to nurture and enhance,” Cerri said. “It underpins business’s ability to operate and society’s ability to function effectively.”
This involves a shift in perspective from focusing on project outputs to outcomes for business and society. She said the protocol, which is being piloted with 25 companies, has three distinguishing features: it is rooted in materiality; it helps to identify key decision-makers; and then it helps identify what information those decision-makers need.
“Measuring and valuing social impact is possible. The methodologies are out there. Companies just need to work their way through them.”
Unilever is one of the leading companies in this space, with its Sustainable Living Plan, a blueprint for decoupling its environmental footprint from growth and increasing positive social impact based on 17 of its brands. Truus Huisman, vice president of sustainable business and communications for Europe at Unilever, said when the company introduced the plan in 2010 its first approach was environmental, but in 2014 it began focusing on social impacts based on different pillars, which the company measures and reports on every year.
“Social impact measurement is inherently more complex [than environmental impact],” she said “And there is still a huge amount of work to be done to get the picture of what we are changing on the ground, how are we improving people’s livelihoods.”
But it has seen success, for example in its work on the water and sanitation (Wash) agenda, where it is tackling diarrhoea in collaboration with Unicef and numerous NGOs in India by teaching children how to wash their hands. “It is linked to our Lifebuoy brand and is a clear example of where brands, by living their purpose, can make a huge impact and contribute to better hygiene,” Huisman said.
Providing transparency to all stakeholders, including shareholders, is important so that social impact is not seen as the “icing on the cake”, but part of how a company does business. Unilever does this by linking its social investments back to its business objectives, using a simple four-point framework to show how they contribute to more growth, more trust, lower cost and less risk. It has achieved results, with sustainable living brands such as Lifebuoy and Knorr growing 30% faster than the rest of the business.
Not only does the programme have external impact, it is having an impact on Unilever’s ability to attract and retain staff. “We know that one reason young people want to join us is that we are a business with a clearly defined purpose so we communicate with our employees,” said Huisman. “This a is way to engage our employees and makes everyone very proud.”
Shane O’Connor, communications and global philanthropic programmes advisor for FedEx, said its 17-year collaboration with the charity Safe Kids Worldwide to promote pedestrian safety in 10 countries has been very motivating to the 18,000 employees who are involved as volunteers. This is because the programme has shown measurable social impact, reducing accidents in specific locations such as outside schools and reaching 15 million children.
Fedex has also been working with Embarq, the World Resources Institute’s centre for sustainable transport, to help cities such as Mexico City to improve public transport. Helping to train bus drivers in Mexico City in drive safely techniques contributed to a 30% decrease in crashes. This is more than just philanthrophy, though. “A successful bus rapid transit system means fewer cars on the road so that our vehicles can get around more easily,” said O’Connor. It also means greater productivity in reducing the time it takes for FedEx’s employees to get to work.
Anna Turrell, senior public affairs manager for sustainability at Nestlé, spoke about the company’s work on tackling human rights risks in its supply chain, something it needs to manage on a daily basis as a company that is present in nearly every country on the planet. It has been working in partnership with the Danish Institute for Human Rights and introduced an eight-pillar human rights due diligence programme in 2010, with annual human rights impact assessments pivotal to its strategy. She said Nestlé was one of the first companies to embed the voluntary UN Guiding Principles on Business and Human Rights, which she said were very helpful in developing systematic management approaches to the issues.
In 2015 Nestlé identified 11 salient human rights issues and made a commitment to have an action plan against each of them in place by the end of this year. “Having those action plans will allow us to embed clear management processes to monitor and manage them,” she said. Nestle’s responsible sourcing guidelines has also helped it embed human rights into its day to day operations, while it has identified 12 priority commodities, including cocoa, coffee and palm oil, where it has put metrics and programmes in place to monitor and track its human rights performance.
“We are taking a holistic approach, but at its heart we are ensuring that we embed this into core business thinking and management,” Turrell said.
Asked by Dowd what the biggest challenges were, Turrell said that because social impact was about people “it’s very difficult to assign metrics in a way that you can aggregate and apply across different situations and business areas … the cultural relevance issue is incredibly important.” But she said work in this area would evolve over time. “It’s a learning process for us all.”
Cerri from the WBCSD agreed that there was a steep learning curve. “It’s a journey. Everyone who started piloting the protocol felt they were behind the curve but then realised they are on the same page in terms of the challenges they face.”
She said the big issues are around data and indicators. But in areas such as skills and employment and safety, she said, companies already are using similar KPIs. “It wouldn’t be a huge jump to move to more standardised indicators.”