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WE KNOW THAT DOING GOOD IN SOCIETY CAN BE GOOD FOR BUSINESS, BUT HOW DO YOU MEASURE IT? AND HOW […]
WE KNOW THAT DOING GOOD IN SOCIETY CAN BE GOOD FOR BUSINESS, BUT HOW DO YOU MEASURE IT? AND HOW CAN AI HELP MEASURE SOCIAL IMPACT?
As more and more businesses are seeking to do good, and the agenda is moving from the E (environment) to the S (social) in their ESGs*, measuring their SOCIAL IMPACT as part of their sustainability agenda is becoming a key factor.
From local communities to the global community, every business has an impact on society, good or bad. But how do you measure it? And how can purpose also deliver profit for the business? As the economist Milton Friedman once said, “If you can’t measure it, how can you improve it?”
And at present it’s random and in many cases, not measured at all. There is also no universally adopted methodology.
Internally, different divisions have different values and seek different outcomes – one example is marketing and CSR, which both have different agendas.
Social Impact Reporting (SIR) allows a business to measure its successes, while also gaining valuable insights. But it also reveals weaknesses and opportunities.
The days of spending money on good causes for philanthropic reasons alone are no longer on the agenda, progressively purpose needs to be measured against profit. And CEOs are looking at every aspect of spending as the world tightens its belt.
Many brands already give to charities, support food banks, and local initiatives but there is often no cohesive strategy or unified measure. CONNECT2’s research into the major supermarkets revealed that up to 6 different departments can be involved in giving back to society, yet there is little joined-up thinking. That may have been ok 10 years ago, but not today.
Brands need a unified strategy when it comes to the S in ESGs and that also requires measurability.
NEW THINKING ON THE BLOCK
“The laws of physics don’t change. In science, we seek certainty. By contrast, the laws of markets change all the time, because the world changes constantly, making it unpredictable.”
CONNECT2, a specialist in helping brands connect with real communities is working in partnership with global financial and business evaluation consultants BXG to develop a new methodology for measuring social impact or what they call ‘Purpose 2 Profit.’
They are currently targeting the retail sector, which in their opinion is “missing a million-dollar opportunity to turn doing good in society into good business,” says MD Jeremy Taylor.
Many retailers are already heavily involved with social issues and local causes but it’s often a disconnected strategy – up to 6 silos all doing their thing – and they fail to tell their story. The opportunity to win hearts and minds improves acquisition, loyalty and improves a brand’s equity and reputation. It also helps when recruiting staff, people want to work for ‘good’ companies, especially GenZ.
While many management consultants are scrambling to gain an extra revenue stream from offering SIR, coming from a more linear accountancy background limits their ability to see the bigger picture. “You need to understand both hearts and minds,“ comments Marcus Warry, who is a co-founder of MySocialImpact, and looking to extend their services into East Africa. “Many brands out here have a very different attitude towards society and community and want to see that they are making a real difference to people’s lives. In the West brands think social media likes are a measure, which is so shallow.” MySocialImpact claims that what differentiates it from the old school methodology of social impact reporting is the balance of narrative reporting and numeric evaluation, “hearts and minds”. “You can’t put a number on a smile,” commented Warry.
While SIR is not new, charities, councils and government departments have been doing it for decades, for many businesses it is new territory that requires new thinking because it needs to be relevant to the bottom line as well as the company’s value (CSR, ESGs).
THINKING BEYOND THE OBVIOUS
Traditionally companies have taken a more philanthropic approach, giving to charities and local causes, and since the pandemic, food banks have become popular. But research from CONNECT2 shows that consumers want to see companies be more innovative in the way they do good in society and local communities. This also throws up new challenges to how you measure the social impact, especially when ideas are novel. Warry says while is a challenge for traditional methodology he believes AI will be key to delivering a 360 perspective.
THE VALUE OF SIR
The 3 primary factors (there are others) you need to consider when looking at Social Impact Reporting are:
• BRAND EQUITY & REPUTATION (Marketing, PR)
What you do and how you engage with society defines your reputation and your brand. Progressively, consumers, partners, investors and staff want to deal with companies that do good. This is not exclusive to any age group. Measuring that helps reassure stakeholders but also inputs into business strategies.
• RETURN ON PURPOSE (Social Return on Investment (SROI) – financial gain)
While many companies see giving to society for philanthropic reasons, progressively companies are looking for a ‘return on purpose (RoP) to evaluate the financial benefit – how doing good is actually good for the business and the bottom line.
• SOCIAL VALUE (CSR, ESG , GRI – reporting)
How do you measure your social impact against your CSR and ESG agenda and targets? How do you know if your strategy is delivering? SIR allows a company to put a measure on it and helps them increase effectiveness year on year. It also integrates into the Global Reporting Initiative (GRI).
While many companies will carry on without giving much thought to how they engage with society (the laggards), for those that do (the agile adapters and innovators) it can create a cost effective way of gaining a competitive edge, but to also improve on the good they do in society.
I’ll leave you with the wisdom of Marc Benioff, CEO of Salesforce.
“What really defines ‘success’ in today’s business world?
Is it just about growth, profits and market dominance?
Or is it about what good we do for our people and the planet?
Should we aim for profit or to be prophets?”
To find out more about Social Impact Reporting contact me via LinkedIn.
Or email me firstname.lastname@example.org or call me 07778 056686 (no sales calls).
Defining Social Purpose.
Improving Social Impact.
Measuring Social Values.