Understanding and Tracking Social Impacts of Business
2015 was a year of progress. We have a long way to go to understand, track and strengthen the social impact of business. But we are beginning to ask the right questions and shape better tools.
In case you missed them, these are my top highlights of 2015 for building the impact measurement space for inclusive business and impact investment:
1. It sounds too good to be true: gathering high quality data, quickly and inexpensively, and generating findings that are useful for the business as well as for reporting to funders. But that is why I like Acumen’s Lean Data Initiative so much – providing an approach for companies to use technology to rapidly gather client feedback. See this SSIR article, The Power of Lean Data and the Lean Data Field Guide. We have several blogs on the Hub by entrepreneurs adopting the approach, such as Juhudi Kilimo.
2. Shell Foundation and African Enterprise Challenge Fund both invest soft money, and have both published frank and enquiring reports on their portfolio of businesses. They contain some good portfolio data, on revenue, reach, scale and performance. They go further too. Shell Foundation’s Enterprise Solutions for 2030 reflect on the use of concessional finance and routes to scale; AECF’s 2015 report shares reflections by sector plus top tips for a challenge fund. These two led the way this year on challenge funds or pioneer philanthropy.
3. Some solid company level reports on impact are now emerging. The d.light solar home system impact evaluation by IDInsight has just been published. The findings from users of D20g and a control group are not that surprising: customers have more light, higher quality light, spend more on lighting during repayments but less once repaid, and suffer fewer burns, but there are no observable change in productive hours spent or overall health. The report is more significant for its method, applying some considerable rigour (but not an randomised control trial) to a leading BoP business. Another example of decent impact assessment at company level is Assessing the Impacts of Shamba Shape Up led by the University of Reading, exploring how radio series affects agricultural practice and farm income in West Kenya.
4. There has been so much focus on shifting from tracking outputs to outcomes of social business or social investment, that attribution has been hardly discussed. That is beginning to change. Measuring Attribution, a new report by the Donor Committee on Enterprise Development, looks at ways to tackle attribution in market systems programmes, with examples of how others have tried to date.
5. The gulf between social impact assessment in the spheres of public policy and business/investment are huge. But we are beginning to see cross-fertilisation. J-PAL and IPA lead the charge for ‘gold standard’ evaluation using randomised controlled trials to assess impact with attribution. A small but growing share of studies cover goods and services relevant in the inclusive business space - clean cookstoves, private schools, sanitation, agriculture – with more to come. Some test impact (did stoves result in lower indoor air pollution? and some test tools (which outreach or pricing strategy is more effective?). I don’t assume one study provides a conclusive answer for global settings, but the findings make you think. Both organisations are strong on transparency, dissemination and easy to use search functions. See J-PAL publicationshere, and IPA research results here but you can also contact them direct with your questions.
6. What a muddle we are in when we talk about impact at the ‘base of the pyramid’ (BoP). It’s hard to see how we can have common language around social impact when we don’t understand each others’ definitions of BoP. So sorry to include a piece that I co-authored, but I think the Impact Programme Discussion paper on Tracking Reach at the BoP is important in outlining who means what when they say ‘BoP’.
7. The UN Global Compact and Oxfam launched the Poverty Footprint tool at the SDG summit this year. This is not a newcomer to the field, but an updated and user-friendly version of Oxfam’s original poverty footprint. I well remember how influential I found the first poverty footprint, of Unilever’s operations in Indonesia. The challenge has been laid for more companies to adopt this people-centred partnership-based approach to understanding their multiple impacts.
8. There are scores of great blogs on impact in inclusive business and impact investment. I have chosen two that help give perspective to the journey we are on. Firstly, Jed Emerson on the long journey to understanding social return: The Metrics Myth is a refreshing diatribe, plus honest reflection that we probably need another 20 years to get it right. Secondly, a blog that is about the UK social investment market, but speaks to our wider global space. In ‘9% loss on social investment,’ Dan Cory, head of New Philanthropy Capital, reminds us that there is no point judging financial return if we don't understand the social impact. And vice versa. Of all my other favourites above, only AECF and Shell Foundation touch, lightly, on financial performance but if viable business is the route to scale, it is intrinsic to understanding impact.
So what am I looking out for in the year ahead aside from just more progress?
I may be entirely wrong. But so long as we have ongoing transparency, tips, and reflection amongst practitioners we will be in for an interesting 2016.