20140527 measuring social impact as a need for csr

Measuring Social Impact as a need for CSR

Gonzalo Sales Genovés

Madrid, MAYO 2014

Autor: Gonzalo Sales Genovés 1


NOTICE: This document was produced by Gonzalo Sales Genoves to be used by those who want to advance in the task of making a fairer world. Please, respect the sources of information and the author reference, not to protect any copyright, but to respect the essence and meaning of the document content.

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Environmental & Social Footprints: Two Sides IN the Same Coin

“The true cost of climate change will not be measured in dollars, but in lives and human potential. That price is being paid already”

Diana Liverman, Professor at Oxford University, Former Director of the Environmental Change Institute

People stood among the ruins of houses destroyed by Typhoon Haiyan in Tacloban, Philippines, a city of about

220,000. NYT

Citarum River - West Java - Indonesia

• “CSR is the voluntary integration by companies of social and environmental concerns in their

business operations and their interaction with their stakeholders". EC Green Paper 2001. In redefining

European Commission introduced the concept "Shared Value".

• “CSR is a voluntary commitment by a company to contribute to sustainable economic development

by working with employees, their families, the local community and society in order to improve the quality

of life." World Business Council for Sustainable Development (WBCSD)

What CSR is

• Philanthropy

• Sustainability

• Ethics

• Community Engagement

• Cause Related Marketing

• Reputation

• Expenses

• Establishing a foundation

What it is not

• Voluntariness: Beyond law enforcement.

• Triple balance: Economic, social &

environmental.

• Stakeholders engagement:

Accountability and transparency in

information.

• Strategic approach: CSR should become

an issue that cuts across all areas.

Key elements

• Good Governance

o Business ethics, anti-corruption and

transparency.

• Human Capital

o Working environment, work & family

balance, health and safety, diversity

management & Human Rights.

• Environment

o Fight against climate change, energy

efficiency & responsible use of natural

resources.

• Society

o Health and consumer safety, product

quality, supply chain & community

investment.

Related Areas

Autor: Gonzalo Sales Genovés

4

• Related to the company's relationship with:

o its employees (eradication of forced labor and child labor, non-discrimination, freedom of

association, health and safety, decent salary and working hours).

o its suppliers, ensuring that their supply chain follow the same principles promoted by the company

responsible.

o the community in which it operates.

SOCIAL

• Based on good corporate governance and information transparency.

• SRI (Socially Responsible Investment).

• Sustainable indexes: DJSI, FTSE4Good, Ethibel, ASPI Eurozone.

FINANCIAL

ENVIRONMENTAL

• Environmental Management System (EMS) allows the organization to know the degree of damage to

the environment caused by its activities, and introduce corrective mechanisms for continuous

improvement.

• Related Aspects :

o Efficient use of natural resources.

o Reduction of greenhouse gas emissions & waste generated.

o Waste management.

o Contribution to the Conservation of Biodiversity.

o Prevention of accidents and spills.

o Respect the landscape.

Triple bottom line (CSR Management)


• Independent Foundation to the company whose programs are not related to the business core. Corporate

Foundation

• 62% of companies integrate sustainability into core business functions.

• 46% of companies have CSR policies and procedures.

• CSR is propelled by the Board of Directors (45%) and CEO (60%).

• CSR is into Communication Department in 74% of cases.

• 39% of companies measure ROI of their CSR efforts.

Integrated

Model

Future

Trends in

CSR

• Acknowledgement of social profile for the Corporate Sector.

• Social outcomes will be the measure for business.

• Sustainability reporting will be essential.

• Employees will be key to the Community Engagement Programs.

• Corporate philanthropy will remain important.

• CSR just "be" if it add value to the company.

• Public Private Partnerships will be a common pattern.

• CSR will mainly focus on supplier relationships.

• Healthcare will be a star for ICT subject.

• CFOs involvement will be key to the survival of CSR.

• Reports on Greenhouse emissions and water consumption will be outstanding.

• Increasing awareness about natural resource scarcity.

• Rankings and ratings will remain important for companies.

• “5 CSR Executive Trends” , Raz Godelnik, 2012” .

• “6 Tendencias crecientes en sustentabildad corporativa”, Ernst & Young y GreenBiz Group

• “Is CSR as We Know It Obsolete?” Paul Klein, 2012

• “State of Sustainable Business Survey 2013“. BSR & Globescan

CSR Organisation & Trends


Accountability

A narrow mapping: 1. Employees 2. Communities 3. Shareholders 4. Creditors 5. Investors 6. Government 7. Customers

A broader mapping: 1. Suppliers 2. Labor unions 3. Government regulatory

agencies 4. Government legislative

bodies 5. Government tax-collecting

agencies 6. Industry trade groups 7. Professional associations 8. NGOs and other advocacy

groups 9. Prospective employees 10. Prospective customers 11. Local communities 12. National communities 13. Public at Large (Global

Community) 14. Competitors 15. Schools 16. Future generations 17. Analysts and Media 18. Alumni (Ex-employees) 19. Research centers 20. …

Corporate Stakeholders Engagement


CSR Key Benefits for Corporations

• Increased confidence of customers and investors / shareholders.

• Competitive advantage for the business as it has a positive influence on the community.

• Employee satisfaction and attracting talent.

• Loyalty of customers, partners and investors / shareholders and improved reputation.

• Innovation and adaptation to changes in management systems to increase

competitiveness.

• Corporate Culture

• Participation and Satisfaction

• Reduce Rotation

• Increase Motivation

• Employer Reputation

• Image / Reputation

• Corporate Communication

• External Relations

• Corporate Marketing

Key Benefits

Internal

External


8

From Corporate Social Responsibility to

Blended/ VALUE / Shared


(*) Source: The Big Idea: Creating Shared Value: How to reinvent capitalism – and unleash a wave of innovation and growth. By Michael E. Porter and Mark R. Kramer

Shared Value: Policies and practices that enhance the competitiveness of a company while improving social and

economic conditions of the communities in which it operates

Corporate Social Responsibility

Value: “Doing Good“

• Good Citizenship, Philanthropy, Sustainability.

• Discretionary.

• Separate from profit maximization.

• Agenda externally determined.

• Impact is limited by the corporate impact and CSR

Budget.

Corporate Shared Value

Value: Economic & Social benefits related to

cost

• Joint company and community value creation.

• Integral to competing.

• Essential to profit maximization.

• Agenda is business specific.

• Mobilizes the entire company budget.

In both cases, compliance with laws and ethical standards and reducing harm for corporate activities are assumed

CREATING SHARED VALUE: Redefining capitalism and the role of the

corporation in society *


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Source: Fundación Empresa y Sociedad.

*IMMIGRATION *ELDERLY *LOCAL DEVELOPMENT *DISABILITY

Products & Services

Human Capital

Employment

Networking

Financing

Key Social Challenges

Awareness

Education Employment Services Changemaker

SOCIAL WELFARE IMPROVEMENT

SOCIAL VALUE

BU

SIN

ES

S V

ALU

E

Best Corporate Resources

New Products &

Services

Human Capital

Improvement

Risk reduction & new

opportunities

Achievements

Resources Optimized

Best Result in Company

Best Result in Society

BU

SIN

ES

S I

MP

RO

VE

ME

NT

Creating Value = Business Perspective + Social Perspective


11

Return on capital

New markets

Growth

Innovation & new products

Composition of business portfolio

CSR VALUE FAMEWORK

Growth

Return On

Investment

Risk Management

Reputational Risk

Regulatory Risk

Operational Risk

Operational efficiency

Optimized Supply Chain

Human Capital Development

Access to New

Markets

Innovation & New

Products

Social Positioning

Overview of CSR Value Framework

©“rsc2”. Fundación Seres-McKinsey


Social Impact


o Impact is how we manage to decrease the incidence of a problem thanks to our intervention.

o The main objective of impact assessment is to determine whether a particular program or action has had an

impact, and quantify the extent of that impact.

WHAT

o Thank to the rise of CSR, there is a growing involvement of the company in social issues.

o The company not only creates economic and financial value , it also creates social value.

o Measuring socio-economic impact is necessary to maintain companies license to operate, improving

business, enabling environment, strengthening their value chains, and fueling product and service

innovation.

o On the contrary , most NGOs have not worried about measuring their impact until recently. Within

NGO’s Annual Reports you can find figures about investment but not the end result of that investment.

o The economic and financial value reflected in the balance sheet and the income statement , but the social

value is not reflected in any state of the company.

o If we want to describe all the value created by the company , it is necessary to have a method that

allows us to measure and reflect the social value.

WHY

HOW o Impact assessment estimates the effectiveness of the program by comparing the results obtained by those

who participated in the program against those who did not. (“Pharma Test”).

Social Impact


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Measuring Social Impact



MEASURING BUSINESS VALUE :

o Traditional Conception: Business Value = Value Enterprise Financial Officer.

o Problem with this conception :

the company is not isolated but interacts with Stakeholders The definition does not include social and environmental aspects .

o Current measures of value are INCOMPLETE : Financial Accounting reflects ONLY Economic and Financial Value .

o New measures are necessary to describe ALL VALUE creating a company.

o It is MANDATORY to consider the Stakeholders with whom the company interacts .

The TOOLS available today are incredibly diverse:

o It is necessary to identify the most suitable tools within a complex landscape of socio-economic impact

measurement framework.

o I focus exclusively on socio-economic impact. Tools for measuring environmental impact are already relatively well-

established.


Business Benefits Of Measuring Social Impact

BUSINESS IS A MAJOR DRIVER OF SOCIO-ECONOMIC IMPACT . SOCIOECONOMIC IMPACT IS A MAJOR PREDICTOR OF BUSINESS SUCCESS

o By creating jobs, training workers, building physical infrastructure, procuring raw materials, transferring technology,

paying taxes, and expanding access to products and services ranging from food and healthcare to energy and

information technology, companies affect people’s assets, capabilities, opportunities, and standards of living.

o By measuring their socio-economic impact, companies can reduce cost and risk and create new business opportunities

(social license to operate).

BUSINESS IMPROVES SOCIETY

o Measuring socio-economic impact can help companies show communities, policymakers, government authorities, and

other stakeholders that their activities create net benefits for the economies and societies in which they operate.

STRENGTHENING VALUE CHAINS

o Measuring socio-economic impact can help companies predict the loyalty, performance, stability, and capacity for

growth of suppliers, distributors, and retail partners – identifying vulnerabilities and opportunities to address them.

FUELING PRODUCT AND SERVICE INNOVATION

o Measuring socio-economic impact can help companies understand the needs, aspirations, resources, and incentives of

their customers – enabling them to develop winning new products and services and improve existing offerings


Different Methodologies

to Measure Social Impact


Social Impact Evaluation • A growing number of tools are available to help companies measure their socio-economic impact.

• It Is difficult for companies to compare and choose among all of them.

# Name of the tool Value to business

1 Base of the Pyramid Impact Assessment

Framework

Understand and measure how your business influences different

dimensions of poverty on your customers, local distributors and surrounding

communities

2 GEMI Metrics Navigator Identify environmental and social performance indicators to measure and prioritize issues for management response

3 Impact Measurement Framework Identify relevant socio-economic indicators to measure impact in four specific sectors

4 Impact Reporting and Investment Standards Select standard indicators to use within your overarching impact measurement framework

5 MDG Scan Estimate the number of people your company is affecting in ways related to the Millennium Development Goals

6 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

7 Poverty Footprint Understand your company’s impact on poverty, working in collaboration with a development NGO

8 Progress out of Poverty Index Calculate the percentage of customers, suppliers, and other populations of

interest that live below the poverty line

9 Socio-Economic Assessment Toolbox Measure and manage the local impacts of site level operations

10 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


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Social Impact Evaluation Autor: Gonzalo Sales

Genovés

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How Corporates are (trying to)



London Benchmarking Group (LBG)


London Benchmarking Group (LBG)

• CONTRIBUTIONS COULD BE MANDATORY OR VOLUNTARY:

o Mandatory contributions are those donations or social

cultural projects required by law or contract.

o A contribution is voluntary when:

There is no legal or contractual obligation for the

company.

The contribution funds non profit activities.

• BENEFITS:

o Multiplier effect or leverage: An additional resource

attracted to a project as a direct result of the initiative or

participation of the company.

o Benefit to the community: Describe specific achievements

made with the project.

o Benefit to the company: Improvement of reputation and

image, pride and motivation, relations with certain

stakeholders.

* The charitable donations are not considered as a benefit for

the company.

• PROJECTS CLASSIFICATION:

o Location

o Company

o Subject focus:

Education and young people

Health

Economic Development

Environment

• TYPE OF CONTRIBUTION:

o Cash: total cash amount donated.

o Time: paid staff time spent in community activities.

o In-kind: products, equipment, facilities and other company

resources.

• MOTIVATION FOR CONTRIBUTION:

o Charitable donations (welfare assistance).

o Commercial initiatives (to promote company business).

o Community investment (sustained involvement in

community issues).

Art and culture

Social Welfare

Emergency Relief

Others

Today, It is a model to classify and manage corporate community projects as a group


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LBG: Beyond Classification

Tomorrow, It should be a model to measure the impact of corporate community

investment

Today

In P

rog

ress

Tom

orr

ow


LBG Today: Classification & Quantification

ABOUT PROJECT/PROGRAM

Contribution/ Activity number

1. Activity name/description

2. Name of partner/ beneficiary organisation

2a. Number of partner / beneficiary organisation

3. Date from

4. Date to

5. Business unit/ department responsible

6. Geographic location

7. Motivation for contribution • Charitable donations • Commercial initiatives • Community investment

8. Subject Focus of contribution-LBG categories.

What did the company invest in the project?

Input data entered?

What has the project achieved for the company and the community

Information on results?

ABOUT INPUTS

Cash 9. Value of cash contributions

Time

10. Number of staff involved in company time

11. Total hours volunteered in company time

12. Value of staff time contributed - enter full amount

In-kind

13. Detail of in-kind contributions

14. Value of in-kind contributions - enter full amount

15. Total value of contributions - this will calculate automatically - do not delete from this column


16. Have you measured any results of this project? If 'YES' please detail them on this sheet

If 'No' then click to return ▼

LBG In Progress: Social Outputs & Impacts

SOCIAL OUTPUTS AND IMPACTS

17. Leverage

17a. Employees - payroll giving

17b. Employees - other contributions

17c. Customers

17d. Other external partners

17e. Other sources

18. Beneficiaries 18a. Number of direct beneficiaries

18b.Beneficiary Group (if applicable)

Of the total beneficiaries, how many…

18c. Experienced a positive change in their behaviour or attitude as a result of your support

18d.Developed new skills or an increase in their personal effectiveness

18e. Experienced a direct positive impact on their quality of life as a result of your support

18f. Please describe the specific benefits people have experienced

What benefit has the beneficiary organisation been able to report?

19b. were able to provide new services / products

19c. improved their management systems (e.g. IT, HR, finance)

19d. were able to spend more time with clients

19e. could employ more staff / take on more volunteers

19f. could train their staff / volunteers

19g. benefited from cash savings

19h. were able to lobby for legislative change

19i. increased their profile Autor: Gonzalo Sales Genovés

26

ENVIRONMENTAL OUTPUTS AND IMPACTS

20a. Did the project return any environmental impacts?

20b. helped to protect and/or replant tree stocks

20c. protected endangered species

20d. improved or conserved seas/ rivers/ fisheries

20e. helped conserve land/ protected sites

20f. decreased waste to landfill

20g. reduced greenhouse gas emissions

20h. Did the project engage people on environmental issues/activity

20i. increased levels of recycling

20j. improved people's energy efficiency

20k. reduced people's water usage

20l. Number of trees planted

20m. Amount of land protected/ conserved (ha)

20n. Number of people engaged in environmental activity

LBG In Progress: Environmental Outputs & Impacts


BUSINESS OUTPUTS AND IMPACTS

21. How many employees…

Number of employees taking part. Data copied from inputs sheet

21a. Improved their job-related skills

21b. Improve their personal effectiveness (e.g. more confident)

21c. Make a positive change in behaviour / attitude

22. Other business benefits. Has the activity …

22a. Increased employee satisfaction

22b. Improved retention

22c. Generated positive press coverage

22d. Improved the company's relationship with government / regulators or other bodies

22e. Raised the profile of the company and/or a particular brand?

22f. Raised customer awareness

23. Any other outputs and/or impacts acheived

LBG In Progress: Business Outputs & Impacts


Social Return On Investment (SROI)


Social Return On Investment (SROI) WHAT IS SOCIAL RETURN ON INVESTMENT (SROI)?

• It is a framework for measuring and accounting for this much broader concept of value;

o it seeks to reduce inequality and environmental degradation and improve wellbeing by incorporating social,

environmental and economic costs and benefits.

• SROI measures change (impact) in ways that are relevant to the people or organizations that experience or

contribute to it.

• This enables a ratio of benefits to costs to be calculated (for example, a ratio of 3:1 indicates that an investment of

£1 delivers £3 of social value).

• SROI is about value, rather than money. Money is simply a common unit and as such is a useful and widely accepted

way of conveying value.

• It is much more than just a number. It is a story about change, on which to base decisions, that includes case

studies and qualitative, quantitative and financial information.

• An SROI analysis can take many different forms:

o It can encompass the social value generated by an entire organization, or focus on just one specific aspect of

the organization's work.

o It can be carried out largely as an in-house exercise or, alternatively, can be led by an external researcher.

TYPES:

• Evaluative, which is conducted retrospectively and based on actual outcomes that have already taken place.

• Forecast, which predicts how much social value will be created if the activities meet their intended outcomes.


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SROI: Principles & Stages

PRINCIPLES

1. Involve stakeholders.

2. Understand what changes.

3. Value the things that matter.

4. Only include what is

material.

5. Do not over-claim.

6. Be transparent.

7. Verify the result.

STAGES

1. Establishing scope and identifying key stakeholders.

o Knowing what your SROI analysis will cover, who will be involved and how.

2. Mapping outcomes.

o Engaging your stakeholders is the way to develop an impact map, which shows

the relationship between inputs, outputs and outcomes.

3. Evidencing outcomes and giving them a value.

o Finding data show whether outcomes have happened and then valuing them.

4. Establishing Real impact.

o Having collected evidence on outcomes and monetized them, you can identify

aspects that would have happened anyway or are a result of other factors.

5. Calculating the SROI.

o This stage involves adding up all the benefits, subtracting any negatives and

comparing the result to the investment. This is also where the sensitivity of the

results can be tested.

6. Reporting, using and embedding.

o It’s vital to involve stakeholders and sharing findings and embedding good

outcomes processes and verification of the report. Autor: Gonzalo Sales Genovés 31

How SROI can Help Corporates

HELPING CSR MANAGERS

• as a tool for strategic planning and improving;

• for communicating impact and attracting investment from “Big Fishes”;

• for making investment decisions;

• as a help guide that managers can use to decide when/where they should spend time and

money.

HELPING OUR IMPROVE SERVICES BY:

• helping us understand and maximize the social value an activity creates;

• helping us target appropriate resources at managing unexpected outcomes, both positive

and negative;

• identifying common ground between what we want to achieve and what ours stakeholders

want to achieve;

• creating a formal dialogue with stakeholders that enables them be involved in service

design.


Proposal for SROI measurement

• FEASIBLE APPLICATION OF METHOD SROI IN CORPORATES:

o Defining the scope of the study to social projects.

o Ability to apply the method in other areas of the company.

o Preparation of analysis using impact creation chain.

Inputs Activities Outcomes Goal setting

Modify the objective to achieve the

desired impact

Mesurable products from

Ferrovial activities

Developed by Ferrovial

Resources provided to the

project by Ferrovial

Changes

Changes in social systems

IMPACTS

SROI allows us to have a BUSINESS VALUE CONCEPT BROADER AND COMPREHENSIVE, incorporating social value to the decision making process of the company.

SROI ANALYSIS OF CORPORATE ACTIVITY =

MEASURE ITS SOCIAL ACTIVITY. • Social Impact:

o for every € 1 you spend on the project, € 2.15 creates social value: tax increase for the town/city lower health care costs quality of workers' life increased ...,

• CORPORATE combines financial sustainability for their projects,

and social value (in a ratio of 1: 2,15).


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• nef (the new economics foundation) has conducted a

re-evaluation of the case for a 3rd runway at

Heathrow airport based in a SROI analysis.

• This study finds that the costs of the Runway 3 proposal

outweigh the benefits by at least £5 billion.

• In light of its analysis and in view of the formidable

targets for reducing greenhouse gas emissions its

conclusion is that expanding Heathrow cannot be

justified.

“Heathrow: three options for the third runway”

By Jorge Gil (15/10/2013)

https://blog.ferrovial.com/es/2013/10/heathrow-tres-opciones-tercera-pista/

Why Social Return On Investment (SROI) is the most suitable tool to measure Social Impact? (I) Autor: Gonzalo Sales Genovés

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Public Services (Social Value) Act 2012. CHAPTER 3

An Act to require public authorities to have regard to economic, social and environmental well-being in connection with public services contracts; and for

connected purposes. [8th March 2012]

What is the Act?

• The Act, for the first time, places a duty on public bodies to consider social value ahead of a procurement.

• The Act applies to the provision of services, or the provision of services together with the purchase or hire of goods or the carrying out of works.

• The wording of the Act states that...

o The authority must consider— (a)how what is proposed to be procured might improve the

economic, social and environmental well-being of the relevant area, and

(b)how, in conducting the process of procurement, it might act with a view to securing that improvement.

• It also opens the door for consultation with stakeholders to better

understand social value and improve service specifications, the Act states...

What does social value mean under the Act?

• The wording of the act states.. “the authority must consider.. only matters that are relevant to what is proposed to be procured and, in doing so, must consider the extent to which it is proportionate in all the circumstances to take those matters into account.”

Why Social Return On Investment (SROI) is the most suitable tool to measure Social Impact? (II)


Why Social Return On Investment (SROI) is the most suitable tool to measure Social Impact? (III)


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20140527 measuring social impact as a need for csr

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