Impact Measurement: a Need not a Want

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Impact Measurement: a Need not a Want

Corporate Citizenship's associate director Mitun Majumdar looks at impact measurement; the shift in business culture and how to overcome challenges
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Wednesday, May 8, 2013 - 12:40pm


Recent years have seen companies have an increased focus on impact measurement. The debate is no longer around whether measuring impact is worthwhile but instead how companies can extend this reporting to other parts of their sustainability programme and how it can be applied to their core business operations.

For many companies, measuring their environmental footprint has been the first venture into quantifying their impact and it is clear why this has been the natural place to start. There are globally recognised standards such as the GHG Protocol which give companies a common and well established framework to use. The nature of environmental data, often drawing on utility data, means it is generally robust and relatively straightforward to collect. There are also tangible business benefits from using this data to drive efficiencies and cost reductions.

Now, many companies are taking impact measurement further to areas where it has traditionally been more complex to measure, for example community investment activities or assessing the economic value they bring to a country or region.

So what has driven this move?

The tougher economic climate in the last few years has put a spotlight on companies. Internally, CR and sustainability departments have seen their community investment budgets under threat with senior leaders demanding to see a return on investment just as they would for other parts of the business. There has also been greater external scrutiny from stakeholders such as governments, regulators and communities who are keen to understand how a company is helping to boost a failing economy by creating jobs, paying taxes and supporting local businesses.

These are not easy questions to answer. However, for companies that undertake the exercise to provide answers to these questions, there are clear rewards. Having the data and evidence to show that your schools programme has raised the literacy skills of 500 school children, that over 50 percent of your sourcing is from local businesses or that you indirectly support an additional 2,000 jobs in the wider economy are powerful facts to engage both internal and external stakeholders.

So how can companies respond to the challenge of measuring the impact they have?

Unfortunately, any company looking for a single universally accepted way to measure their social or economic impact, as they would for carbon reporting, will be disappointed. There are a plethora of frameworks and tools for impact measurement and it can be a difficult landscape to navigate.  A study conducted by Karen Maas, at the Erasmus School of Accounting and Assurance, called Social Impact Measurement: Classification of Methods found around thirty social impact measurement methods.

Through our experience of working with companies to assess their impact across environment, social and economic areas, the following four things are important to consider before you start any impact measurement exercise:

  1. Start with your audiences

Understand your audiences and the key questions they would like answered. For example, a national government will be interested in areas such as total economic value added to an economy, total job creation and taxes paid. A local community will be more interested in how the company supports local employment and local businesses. This will help you to map out the key impact indicators you need to measure, as well as influence the type of final communication you require for different audiences.

  1. Balance the need for accuracy

We know that collecting data can sometimes be time consuming and costly. It is therefore important to leverage existing resources and data, and target areas for primary research. It is also acceptable to use some level of approximation as long as these are based on realistic assumptions. 

  1. Use data effectively to support your impact story

There is no doubt that the right data points can be incredibly powerful in demonstrating the difference you make. However, data alone does not make an effective communication. It needs to be put in context so that readers can understand how your performance compares to others or over time. Some audiences will still be interested in the human angle so case studies and other qualitative information still have a purpose.

  1. Use it to inform decision-making

While data and findings are useful for the purpose of communications, keep in mind the value that they can bring to making better and more informed decisions about your programme or business.

With the benefits of impact measurement being increasingly recognised, it is certainly becoming more of a need than a want for companies.

Mitun Majumdar is an Associate Director at Corporate Citizenship and leads on Impact Measurement services