Impact management: lessons from the private sector

Saahas Zero Waste is an Indian socio-environmental enterprise working in waste management and resource recovery. Photograph: Cara Schanuel

By: Business Call to Action

For many companies worldwide, measuring success isn’t limited to financial outcomes – social and environmental returns are just as important to understand and manage businesses well.

Companies are increasingly aware of, and contributing to, positive social and environmental impact through their business models. Earlier this year, the size of the impact-investing market was estimated at $715bn – an increase of more than 40% compared with April 2019 when it was $502bn.

For those looking to better understand this impact, effective measurement and management of impact is needed. Afterall, businesses need to know whether the change they are striving to achieve is taking place.

Impact measurement is the process of quantifying the positive and negative effects a company has – either directly or indirectly, intentionally or unintentionally – on people and planet. Impact management goes a step further, whereby companies utilise this data to improve business performance, maximise positive outcomes and minimise negative ones.

How to measure impact?
For inclusive businesses – commercially viable companies enabling low-income communities to transition out of poverty through their value chain – positive impact may be across multiple and diverse areas, such as: access to goods and services for customers; improvements in the standard of living of stakeholders; job and livelihood opportunities; and guaranteed prices and incomes.

To manage the impact of inclusive businesses, it is helpful to have standards and frameworks that are commonly accepted with publicly available tools to facilitate this process.

Business Call to Action (BCtA), a United Nations Development Programme (UNDP) initiative, offers businesses a tool that embeds global standards to measure and manage impact through its online Impact Lab. The lab allows companies to understand linkages between business and the sustainable development goals (SDGs). It was built upon BCtA’s experience of working with companies across the globe – from Africa and the Middle East, to Asia and Latin America – in undertaking impact measurement and management over the last five years.

Tech-enabled tools are helping companies collect evidence to articulate their impact in concrete ways and drive business value. From assessing whether building toilets in schools impacts female students, to how increased agricultural training for hazelnut farmers can help production – impact management and measurement has resulted in deeper understanding of outcomes for companies using the Impact Lab.

For businesses that have gone through the Impact Lab – whether small enterprises or multinationals – the results have ranged from eye-opening to motivational, and, for a few, they’ve been an impetus for adjusting and revising business models.

Bive – a Colombian social enterprise that aims to close the existing health-access gap between rural and urban communities by providing quick and high-quality health services – is one such case. By managing the impact of its initiative to decrease morbidity and premature mortality associated with breast and cervical cancer, and cardiovascular diseases, in low-income rural women, the social enterprise was able to understand better the impact its healthcare services had on low-income clients.

Data gathered by Bive showed that its services reduced the number of days between initial clinical examinations and screening from 90 days (the national average) to 15. It also found that that 60% of women over the age of 50 who used Bive’s services underwent mammography scans, while 68% were subsequently able to conduct breast self-examinations.

“Analysing outcomes in real-time provided valuable information to make timely changes and improvements in the initiative, leading to the accomplishment of social impact goals,” says co-founder Diana Quintero. She adds that quantification of social impact will allow the social enterprise to attract new partners and scale its projects and programmes as well.

At SZW, 99% of employees are integrated into the formal economy Photograph: No Credit

More value for people, planet and business
Impact measurement and management can also help companies already undertaking impact studies to create a formal framework to better articulate contributions to the SDGs and identify areas on which to improve performance.

Take Indian-based Saahas Zero Waste (SZW), which operates in the waste management sector. The company has experience of collecting and reporting on non-financial data as part of regular monitoring of performance indicators – using technology and web-based tools to do so. However, by undertaking an impact measurement and management study with the Impact Lab, SZW was better able to frame intended goals and performance through indicators to its investors and clients – and build a strategy to improve its social and environmental outcomes.

Related: Inclusive innovative insurance: pragmatic solutions for the economically vulnerable

Some of SZW’s long-term environmental goals include restoration of natural resources, a fully formalised waste ecosystem and reduced carbon emissions. Its social impact goals include access to dignified livelihoods, and gender equality for workers in the waste industry, which is often informal, through “reliable salaries, healthcare, pension, insurance benefits, and opportunities to build new skills”, explains SZW regional director Arun Murugesh. The aim is for all transactions to go through formal banking channels to mitigate exploitation.

Through integrating different sources of impact data, SZW found that 98% of waste collected through its customers and partners was converted to resources. Its services are cutting carbon emissions by 37,169 tonnes per year, and 99% of its employees were integrated into the formal economy through financial [bank] accounts.

Moving forward, a framework for managing impact will allow a business such as SZW – one that has impact measurement in place – a better understanding of gaps that can be filled by collecting new data to help further the impact it wants to have on the environment and society.

Using impact management to create better outcomes all around
Sustainable and inclusive businesses that undertake impact management and measurement can use the results in multiple ways going forward. They can assess market gaps and needs, incentives and opportunities. They can develop customer insights to align social missions to needs, and design effective products and services to improve customer engagement. And overall, through market solutions, they can contribute to positive change for economies, societies and the environment they operate in.