Understanding Social Value: An Overview of the Different Approaches that Companies Use, for Measuring Social Impact

Transcription

1 Understanding Social Value: An Overview of the Different Approaches that Companies Use, for Measuring Social Impact Caroline Ashley, Director Inclusive Business Results Carolin Schramm, Monitoring and Evaluation Manager July 2012

2 Starting point which starting point is yours? If it matters, measure it Why should our company track social impacts? If you cannot measure it, maybe it is not there How should we assess impact? What method? What output? What skills? What partners? 2

3 Distinguishing between different approaches for assessing impact Assessing impacts (one-off) Tracking indicators (ongoing) Assessment to prove our impact to others Assessment to guide decision-making and improve impact 3

4 Four approaches used by companies Assessing impacts (one-off) 1. Local assessment: Livelihood impact & stakeholder views Tracking indicators (ongoing) 4. Key Performance Indicators; Scorecard of performance 2. Value Chain mapping, poverty footprint 3. Economic contribution 4

5 Approach 1 Local assessment: Livelihood impact & stakeholder views 5

6 1 Local livelihood assessment Purpose and measurements Purpose: Assess the local level impacts of a project or plant on local communities What gets measured? e.g. flows of income, capacity development, changes in livelihoods, stakeholder views, reasons for success or failure

7 1 Local livelihood assessment Strengths and constraints 7

8 1 Local livelihood assessment Updates and looking ahead Plenty of ad hoc reports, often for CSR but also for operational sites & plants Now more standardised & repeated: e.g. SEAT repeated every 3 years at each Anglo American site Used to inform action Update Looking ahead Remains a diverse category, from CSR projects to formalised roll-out (e.g. Anglo American) Strong momentum in extractives and Environmental and Social Impact Assessments No assurance of quality or usage

9 Approach 2 Poverty Footprint/ Value Chain Footprinting 9

10 2 Poverty Footprint/ Value Chain Footprinting Purpose and measurements Purpose Identify where a business or sector impinges on on poverty and development, quantify impacts and prioritise action. What gets measured? Local, national and corporate information brought together into a big picture covering the entire value chain from material supply to distribution and consumption (Soft drink value chain example below) 10

11 2 Poverty Footprint/ Value Chain Footprinting Strengths and Constraints 11

12 2 Poverty Footprint/ Value Chain Footprinting Updates and looking ahead Oxfam/Unilever report (Indonesia) was ground-breaking. Coke/SAB/Oxfam report now also published. Forthcoming: Oxfam with retailer; updating method Poverty-focused value chains used in agriculture - to upgrade, certify, ensure sustainability in supply chain. Update First usage of value chain footprint to measure poverty impacts pre and post intervention: all-inclusive hotel resort (demonstrated 16% boost in local gains after 6 months). Looking ahead Well used in agribusiness but only a few others.?? Company appetite for this - more ambitious, but insightful to drive change.

13 Approach 3 Economic Contribution 13

14 3 Economic Contribution Purpose and measurements Purpose: Identify total contribution to the national economy including multipliers + social impacts What gets measured? Economic contribution to GDP. Inter-sectoral & economy-wide impact of production, distribution and retail Scope and high-level result: analysis of Standard Chartered Indonesia 14

15 3 Economic Contribution Strengths and Constraints 15

16 3 Economic Contribution Updates and looking ahead Growing uptake: Unilever (South Africa, Indonesia), Standard Chartered (Ghana, Indonesia), Coke (Italy, Tanzania, South Africa), SABMiller (Ghana, Uganda, Honduras), Newmont (Ghana) Useful to prove value But is it being used to identify and promote change? Update Looking ahead A growing number of reports, illustrating substantial economic contributions How are they used internally? Are benchmarks emerging? Is anyone comparing the sets of results?

17 Approach 4 Tracking Indicators 17

18 4 Tracking indicators Purpose and measurements Purpose: Repeated monitoring of key indicators of socio-economic impact H&S Compl. Eco Issues Employ Equity 100% 80% 60% 40% 20% 0% Supplier Total Total BEE/E Aff. Procure What gets measured? A range of key indicators of corporate performance. Coverage depends entirely on choice of (a few) indicators Supplier Score CSI HR Practice BCEA Labour Compl. 18

19 4 Tracking indicators 4 - Strengths and Constraints 19

20 4 Tracking indicators Updates and looking ahead Uptake of IRIS indicators a standardised list, used for Impact Investment. Promoted by funds. IRIS indicators enable comparison across projects, Update and over time. Companies are developing internal social Key Performance Indicators (KPIs) to combine social results with commercial metrics Looking ahead Take-off of IRIS indicators standardised metrics. Will IRIS indicators be internalised or just used for reporting to investors? How many companies will internalise KPIs that combine social & commercial results and guide delivery?

21 Increasing focus on KPIs experiences from BIF Company Examples Company Country Sector Universal Malawi Agriculture Drivers for KPI development Operational Performance Farmer activity, supply chain sustainability Prepare for impact investment Company Country Sector Afrinut Malawi Agriculture Achievement of social mission/ investor goals Supply chain quantity & quality Company Country Sector JITA Bangladesh Retail Adapt how KPIs incentivise staff Prevent targets driving silo working, or over-focus on sales and margins Main challenge: farmer data, need for external data 21

22 Making use of results tracking Useful for proving Approach Useful for improving Public reporting Headline figures, shares to the poor Headline figures, plenty of zeros Demonstrate credentials to impact investors 1. Local assessment 2. Poverty footprint/ Value Chain Map 3. Economic contribution 4. Tracking indicators Stakeholder views identify actions Points of high impact and high potential change Areas of high impact, comparisons with others Incorporate into internal mgt. & course correction 22

23 Thank you For further information, go to: Practitioner Hub on inclusive business: Join the Inclusive Business Impacts Network: Read the Framework Paper on Approaches to Assessing Business Impacts on Development (2009) Read the Spotlight on Understanding and Enhancing the impact of business on development a comparison of different approaches used by companies Contact: Caroline Ashley, caroline@carolineashley.net, Carolin Schramm, carolin.c.schramm@uk.pwc.com The Business Innovation Facility (BIF) is a pilot project funded by the UK Department for International Development (DFID). I t is managed for DFID by PricewaterhouseCoopers LLP in alliance with the International Business Leaders Forum and Accenture Development Partnerships. It works in collaboration with Imani Development, Intellecap, Renaissance Consultants Ltd, The Convention on Business Integrity and Challenges Worldwide. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP and the other entities managing BIF (as listed above) do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The views presented in this publication are those of the author(s) and do not necessarily represent the views of BIF, its managers, funders or project partners.