Corporations around the world continue to heed the call for innovative solutions to the proliferating environmental and social challenges. Nonetheless there goal still remains far from arm’s length. Whilst efforts have been advanced in changing business process and operational models, measuring and reporting the impacts of these transformations has remained discursive. This is not to suggest that no efforts have been made to measure the socio economic impact of businesses, rather to the contrary more and more tools are being developed to this end. Subsequently, it has become difficult to compare and select the most appropriate among them. The tools available today are incredibly diverse. They are based on different assumptions, they offer different functionality, they focus on different types of impact, and they suit different purposes.
Against this backdrop, The World Business Council for Sustainable Development (WBCSD) has launched a guide to support companies’ efforts in tackling the challenge of measuring their socio-economic impacts. The guide is meant to assist companies performs three essential tasks: (1) to define and articulate the business case for socio-economic impact measurement within their organization; (2) to understand the essentials of impact measurement theory and communicate with internal and external stakeholders on the subject, including on the terminology; and (3) to navigate the landscape of measurement tools, and identify those that best meet companies’ needs.
Central to outlook employed in developing the guide was a focus on socio-economic impact. By stressing the link between environmental sustainability and socio-economic impact, especially over time, the tools already established for measuring environmental can be used together with the ones profiled in the guide for a more nuanced approach. It is true that there has been a proliferation of tools meant to help international development organizations, like multilateral and bilateral agencies and civil society groups, measure their socio-economic impacts. While much can usefully be drawn from these tools and adapted for companies, this often requires significant effort for adaptation. It is for this reason that WBSCD has focused on tools that have been developed specifically for business and that, in its view, companies are increasingly interested in.
This has been done with forward thinking businesses in mind– particularly those working with inclusive business models – as they increasingly understand the value behind socio-economic impact assessment of their operations. The guide is geared towards deriving information that companies can use to generate dialogue with partners and policymakers, to strengthen their operations, and to better engage and serve their customers and communities. The guide profiles 10 existing tools tailored to business needs, dissected on the basis of functionality, fit for purpose, cost and complexity of implementation, and examples of their application in practice. The tools and their value to business are summarized below:
Base of the Pyramid Impact Assessment Framework – Understand and measure how your business influences different dimensions of poverty in your customers, local distributors and surrounding communities.
GEMI Metrics Navigator – Identify environmental and social performance indicators to measure and prioritize issues for management response.
Impact Measurement Framework – Identify relevant socio-economic indicators to measure impact in four specific sectors: agribusiness, power, financial services, and information and communication technology.
Impact Reporting and Investment Standards – Select standard indicators to use within your overarching impact measurement framework.
MDG Scan – Estimate the number of people your company is affecting in ways related to the Millennium Development Goals.
Measuring Impact Framework – Define the scope of your assessment, identify socio-economic impact indicators for measurement, assess the results, and prioritize issues for management response.
Poverty Footprint – Understand your company’s impact on poverty, working in collaboration with a development NGO.
Progress out of Poverty Index – Calculate the percentage of customers, suppliers, and other populations of interest that live below the poverty line.
Socio-Economic Assessment – Toolbox Measure and manage the local impacts of site level operations.
Input-Output Modeling – Calculate the total number of jobs supported and economic value added by your company and its supply chain on a particular national economy.
The guide is available for download here – via this link you can also access a 3-minute animated video, a slide show summarizing the content, and case studies.