How to Identify a Company’s Major Impacts– and Manage Them

By David S, Grayson

How to Identify a Company’s Major Impacts– and Manage Them

A steady flow of surveys over recent months from management consultancies such as Accenture, BCG, KPMG, and McKinsey are all showing a majority management opinion that sustainability matters to business. One in particular, the latest annual survey of 4,000 managers in 113 countries by MITS loan Management Review and Boston Consulting Group, shows the proportion of managers who say they think that ‘sustainability’ is a key to competitive success has risen from 55% in 2010 to 67% last year. This is consistent with our own 2011 Doughty Centre report with Business in the Community, “The business case for responsible business” which suggested seven broad areas of potential business benefit such as employee engagement, innovation, and improved operational effectiveness. We are clear, however, that these benefits don’t just happen. Sustainability requires consistent, hard work over time. Corporate responsibility–the responsibility a business has for its social, environmental and economic impacts– requires a company to understand just what these impacts are.

Historically, this has been problematic because: Scoping and managing impacts was not seen as the responsibility of business [1]The tools and processes for identifying those impacts barely existed [1]And only a few managers in some pioneer businesses knew how and why to use such tools as did exist Interestingly, this appears to be an area where the practice has been ahead of the theory. Academic literature on scoping business impacts–beyond the scoping of environmental impacts–is sparse. How to scope a firm’s material social and economic impacts, or how to look at the totality of corporate impacts, needs more rigorous, academic study. Identifying and prioritizing the management of impacts is an essential pre-condition for companies to improve. Without this, businesses are increasingly at financial and reputational risk; will lack the data subsequently to be able to measure and report, for example, to the Global Compactor against the Global Reporting Initiative (GRI); and certainly will not be able to reap the benefits of systemically finding new business opportunities from sustainability. One of the vanguard companies in managing social, environmental and economic impacts is Unilever.

As the old adage goes, success has many parents and failure is an orphan. Many people share the credit for developing Unilever’s methodology–but one of those is Mandy Cormack, who served as Vice President for Corporate Responsibility and worked for many years with Niall Fitz Gerald and Morris Tabaksblat on Unilever’s approach to corporate responsibility. Mandy has been involved with the Doughty Centre from its inception, and I was delighted when in 2011 she became one of our visiting fellows. We like our visiting faculty to be active participants in the Centre, contributing in ways which suit the mandus, and which play to their strengths. It was logical, therefore, to invite Mandy to reflect both on her Unilever experience and subsequently as an adviser to other firms–and to draw on the insights of other, leading corporate responsibility practitioners–to develop this guide.

The Doughty Centre team have thoroughly enjoyed working with Mandy on this project, are delighted with the result and thank Mandy for her dedication and commitment to the project. As with our previous six How-to guides, the intention is to blend relevant scholarship with the latest good practice, and to synthesise this for busy managers. This guide fills a gap–not just in our own how-to advice to Masters students and for our executive education–but in the advice generally available about how to embed sustainability. Whether you are just starting out, have already covered the basics, or are one of the still small number of companies that have already started to identify and scope social environmental and economic impacts systematically, this guide offers practical advice and insights. The key message is that practice makes better, so just do it!

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