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Measuring the socio-economic impact of business: The what, why and how
Measuring the socio-economic impact of business: The what, why and how
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Impact
How can I articulate the benefits of measuring the socio-economic impact of my company?
Where can I find a simple, accessible overview of the terminology and theory in this space?
There are so many options! How can I select tools that suit my business’ needs?
These are some of the questions we faced here at the World Business Council for Sustainable Development (WBCSD), raised by our members and partners who are grappling with the challenge of measuring and managing the socio-economic impacts of their companies.
Forward thinking business leaders increasingly understand the value of this practice, both to their businesses, and to the societies in which they operate. They are seeking to use the information gained to generate dialogue with governments and policymakers, to strengthen their operations, and to better engage and serve their customers and communities.
Unfortunately they are faced with a complex challenge – there are hundreds of existing tools and approaches, the majority of which are designed for the international development sector. This means many solutions on offer have different objectives, use technical terminology and theory which is unfamiliar to business managers, and are difficult to apply in a business environment.
Over the past few years, the Development team at WBCSD has been collecting the questions, opinions and experiences of our members. We decided to synthesize these insights into a guide intended as an accessible starting point for companies. We aim to demystify the practice of socio-economic impact measurement, and focus on solutions tailored to business needs.
The resulting guide helps businesses perform three essential tasks:
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Define and articulate the business case for socio-economic impact measurement within their organization, based on four pillars: maintaining the license to operate; improving the business enabling environment; strengthening value chains; and fueling product and service innovation.
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Understand the essentials of impact measurement theory, and communicate effectively with internal and external stakeholders on the subject.
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Navigate the landscape of measurement tools, and identify those that best meet companies’ needs. The guide profiles 10 existing tools for business, analyzed on the basis of functionality, fit for purpose, cost and complexity of implementation, and examples of their application in practice.
Of course, this is just a starting point. The landscape of tools is constantly evolving; therefore the guide is intended to be a living document, which we will continue to update as existing tools are improved and new ones emerge.
As the practice of socio-economic impact management gains momentum, we see two major opportunities for advancement within the business community:
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Integrating socio-economic impact measurement into business performance management and reporting. To achieve this, we need to redesign the scope of corporate strategy and processes across measurement, management, and reporting.
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Using socio-economic impact measurement to drive more effective collaboration between business, government, and civil society. A better understanding of industry perspectives, in particular, can highlight strategic drivers of the socio-economic impacts of companies in a particular sector, geography or environment, and the pathways through which that impact is created. This helps prospective partners understand what companies’ highest-potential impacts are, where they come from, how they unfold, and what can be done in partnership and at scale to mitigate or leverage them.
Socio-economic impact and business success are closely intertwined, but today’s global challenges are too complex and systemic for one organization or sector to tackle alone. If socio-economic impact measurement can be integrated into business performance management and used to drive more effective collaboration, it will be fundamental to scaling up solid solutions to development and sustainability challenges.
WBCSD is keen to accelerate business efforts in this domain, and we look forward to generating discussion and action within the Business Fights Poverty community. How can we tackle this challenge together?
The guide is available for download at www.wbcsd.org/impact.aspx. In addition to the guide, the website features a 3-minute animated video (embedded above) and a slide show summarizing the content and main messages.
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