In recent years, the impact of businesses on the environment and society has become a major concern for consumers, investors, and governments. The impact of a company on social and environmental issues goes beyond mere reporting metrics, and requires a complex and important task of impact measurement.
Impact measurement covers different areas, such as avoiding harm or benefiting stakeholders, or contributing to solutions for social and environmental issues. It is essential to assess the achievement of sustainable goals, however, many still do not fully understand how to measure their impact or how to effectively manage it.
What does impact mean?
The definition of impact varies across different international organizations. The most commonly used definition of Impact being the one of the Impact Management Project which uses the same definition as the OECD: positive and negative, primary and secondary long-term effects produced by an intervention, directly or indirectly, intended or unintended.
As for Global Reporting Initiative: ‘impact’ refers to the effect an organization has on the economy, the environment, and/or society, which in turn can indicate its contribution (positive or negative) to sustainable development.
The term ‘impact’ can refer to positive, negative, actual, potential, direct, indirect, short-term, long-term, intended, or unintended impacts.
Principles and concepts
Impact is a concept that is applied both prospectively and retrospectively to actions, programs, activities, and operations. It aims to help organizations, profit and non-profit to predict impacts at an early stage in project strategy, planning, and design; decide whether or not to proceed with a planned course of actions; decide whether to stop, continue, scale up, or adapt an ongoing activity; find ways and means to reduce adverse impacts and increase positive impacts; shape projects to suit the local environment and take into account local communities; and present forecasting and options to decision-makers.
Types of impact
Depending on their motivation on managing impact, organizations’ intentions range from broad commitments to more detailed objectives. These intentions relate to one of three types of impact:
- Avoid harm: At a minimum, organizations can act to avoid harm to their stakeholders. For example, decreasing their carbon footprint or paying an appropriate wage.
- Benefit stakeholders: In addition to acting to avoid harm, organizations can actively benefit stakeholders. For example, proactively upskilling their employees or selling products that support good health or educational outcomes.
- Contribute to solutions: Many organizations can go further — they can use their capabilities to contribute to solutions to pressing social or environmental issues. For example, enabling the underserved populations to achieve good health or hiring and upskilling formerly unemployed individuals.
Categories of impact
Impacts are related to environmental and social issues. Organizations’ impacts will seat within one or both of those two categories:
- Environmental impact: When organizations’ decisions and day-to-day operations affect and influence people’s environment, the natural earth system, and the availability and control over resources.
- Social impact: Social impact regroups all issues that affect people, directly or indirectly.
Organizations can conduct an Environmental Impact Assessment and/or a Social Impact Assessment, that includes the processes of analyzing, monitoring, and managing the intended and unintended environmental and/or social consequences, both positive and negative, of planned interventions (policies, programs, plans, projects).
Example of methodology to assess Environmental Impact: Carbon footprint at a company level, LCA at a product/service level, expert analysis.
Example of methodology to assess Social Impact: Surveys for all potentially affected people, case studies, expert analysis.
Takeaway
In today’s world, companies play a crucial role in shaping our future. While profits remain a top priority for many organizations, the importance of balancing those profits with social and environmental responsibility cannot be overlooked. As consumers become increasingly conscious of the impact that companies have on the world around them, it is imperative that companies respond with a commitment to positive change.
By proactively managing their social and environmental impact, companies can help ensure a more sustainable and equitable future for all. By taking steps to minimize any negative effects of their operations, companies can protect the communities in which they operate and the environment we all share. By maximizing their positive impacts, companies can create value not just for their shareholders, but for their employees, customers, and society as a whole.
Fortunately, there are many tools and resources available to help companies measure and manage their impact. From environmental impact assessments to social impact assessments, companies can gain a comprehensive understanding of their impact and develop strategies to reduce their negative impacts while increasing their positive impacts.
But the work doesn’t stop there. To truly make a difference, companies must not only measure and manage their impact, but also engage with their stakeholders, including employees, customers, and the broader community. By listening to feedback and actively collaborating with stakeholders, companies can identify opportunities for improvement and build trust with those they serve.
In short, managing social and environmental impact is no longer just a nice-to-have; it’s a must-have for any company that wants to succeed in today’s world. By embracing their responsibility and taking action to create positive change, companies can not only improve their own bottom line, but also contribute to a more just and sustainable future for all.
