New Metrics

The Evolution of Social Impact Metrics:
Where Math and Computer Science Meet the Humanities

The usefulness of advanced data analytics — Big Data, small data and everything in between — is converging with the needs of corporate sustainability, and this is creating new opportunities for companies pursuing ambitious sustainability goals.

By Candice McLeod | Published 11 years ago | About a 5 minute read

Organizations are now able to leverage increasingly affordable computing power to track, and therefore improve, the accuracy and effectiveness of a number of different types of operational programs at the granular level, work out new ways of seeing existing impact data and evaluate product and service offerings, among other applications.

So far environmental metrics have been dominating rapidly-evolving sustainability analytics, but what about measuring the social impacts of an organization?

At the New Metrics of Sustainable Business Conference in 2012, Jacobine Das Gupta-Mannak of DSM wisely pointed out that it took about 20 years to reach reasonable consensus on environmental life cycle assessment standards. Meanwhile, only in the last few years has attention been seriously directed to measuring social impact, rendering it a fairly fledgling type of endeavor. And this is not surprising — it is relatively simpler to track environmental targets, since the quantities involved are, for the most part, tangible and immediately quantifiable (though some aspects of ecosystem services and biodiversity are proving quite tricky). Social impacts, on the other hand, are not as easily observable.

So, how do you translate social value into metrics? Here are three starting points:

Develop Internal Standards

It is expected to be years, perhaps even decades, before universal social impact metrics are in place, and some argue that well-defined ‘standard’ metrics within such an extensive and varied field don’t make much sense. The trouble is that measuring social impact is not only about counting quantities, but also about assessing qualities, i.e. furthering a social mission. Think for a second about the difference between determining the number of people reached through an initiative versus the impact on the people reached because of that initiative (and then the indirect ‘spill-over’ impact on their social networks, if you want to jump to an advanced level).

And yet, defining, collecting and analyzing data thoughtfully can be vital to identifying challenges and opportunities, tracking progress, and yes, maximizing the dollar return for a given program or business model extension. One set of standards that has been gaining in popularity in some circles, notably investors, is the Impact Reporting and Investment Standards (IRIS). At the same time, many experts believe that at this stage companies would find it most useful to create their own metrics based on what is crucial to their mission, while allowing room for gradual improvement. Such an approach enables development of in-house expertise which can later be leveraged in influencing industry-, country- or even world-wide standards.

For example, Walmart has recently started using the custom metrics-based services of SB Innovation Open 2013 finalist LaborVoices, which utilizes mobile technology to solve human rights issues within global supply chains and depends on aggregating a wealth of data to operate efficiently. The process for gathering said data includes sending factory workers regular and targeted surveys on a regular basis, which are then used to evaluate a wide range of topics to pinpoint unfavorable labor practices. Since building their initial platform in 2010, LaborVoices has released several iterations, to ensure that the data being collected and analyzed can effectively reduce poor labor practices within supply chains.

Create Shared Value by Aligning Mission and Innovation

Creating social value does not have to be on tradeoff terms with creating financial value. One can mitigate or even eliminate tradeoffs by aligning social innovation goals with the overall company mission. Once this alignment is achieved, developing metrics tends to become less of a puzzle.

As the Director of Strategy and Impact at Root Capital, Mike McCreless, notes, “Business models with fewer frictions between social and financial goals will face a smoother path to scale in both dimensions.”

A neat motiongraphic by the Shared Value Initiative illustrates that principle very well with examples from Nestle, GE and InterContinental. Harvard Business Review contributors, among others, have been converted for a long time and provide regular insights on both strategy and tactics around successful creation of shared value.

Don’t operate in a silo

In a recent UBS report on sustainable investing, Dinah Koehler of Deloitte Research comments that a particularly challenging area of developing social impact metrics is the lack of internal collaboration when identifying what accomplished goals should look like. A key concern she outlines has to do with a situation in which the CFO and the CSO pointing to different criteria for success. Effective internal engagement, along with the resulting integrated thinking, is therefore a necessity when determining how to measure social impact in the context of a broader sustainability strategy.

“This is an interdisciplinary challenge and people are needed from a variety of backgrounds to evaluate environmental and social assets more holistically,” Koehler says.

- Tara Collison, Sr. Manager, Strategic Planning, Corporate Affairs, Cisco

- Courtney Martin, Finance Specialist, Corporate Affairs Group, Intel

- Greg Hills, Managing Director, Shared Value Initiative

- Jessica Grillo, Chief Livelihoods Analyst, Evaluation & Research, Rainforest Alliance

- Jason Saul, Founder & CEO, Mission Measurement

- Witold Henisz, Deloitte & Touche Professor of Management, The Wharton School