Everyone wants to know that they are making a difference. But that doesn’t mean that everyone should spend their time measuring and reporting on it.
So what is the best way to prove your social impact?
It is a complex global company, but Shell plc publishes a 70-page sustainability report alongside a 228-page annual report. Along with that comes a 56-page strategic report. Taken together, that is more than Sense and Sensibility by Jane Austen, published new every year.
The Blockley Village Shop and Café in Gloucestershire has a very short annual report with financial figures for members. For most, if they want to know how it is doing, they can see when they drop by for their shopping or coffee. It was set up in 2008 when villagers learned that their last remaining shop and Post Office was about to close. The difference that it makes is visible – there is a local shop and facility and it is actively used.
The difference between the two is not simply that of scale, but it is also that of the needs of the audience. With Shell, much of the information is down to regulatory requirements, so that people who are distant to the company, such as investors, can reach an informed view. With Blockley Village Shop, the people who need to know are members and users of the business, so they have a more informed view to start with.
So the starting point for measuring social impact is an understanding of what your audience needs. Start with your members. A good co-op works on a good flow of information, allowing members to engage in the life of the business. What is it that they need to know?
If there are funders or other investors, again, what is it that they need to know? It turns out, by the way, that when it comes to research that funders are among the least critical of stakeholders in a social venture – they seem to want to believe that their money has made a difference. If the purpose of measuring is genuinely to learn, then it is best to focus on where the organisation most needs to learn in order to improve, rather than picking a box that funders can be told they then can tick.
There are a number of tools that come in and out of fashion when it comes to measuring social impact. I was responsible in the late 1990s for bringing one technique to the UK, Social Return on Investment (SROI). A recent survey cited this as the best known social impact tool and the strength of it is a rigorous focus on specifying what impact you are trying to make.
But to be honest, it hasn’t developed in the way that I had hoped. Rather than an easy to use approach, with simple benchmarks to draw down for comparison, it has become a tool sold by consultants with their time a necessary expense in its completion and results subject to what one commentator has called ‘SROI inflation’ over time.
The same survey suggested that only 2% of social ventures find impact measurement easy. Turning to consultants is understandable, but it is better to keep it simple and do it in-house – using external benchmarks where these can help to make sense of the numbers you produce.
There can be also a benefit for larger enterprises in having an external auditor, to keep a degree of objectivity and act as a source of independent assurance. But if there is a rigorous challenge and stakeholder input in the process, that can do much of the same. What difference does Shell make? Or Blockley Village Shop?
There is an argument that village shops keep house prices in a village higher because people want to live there. That would be an impressive impact if true, but I suspect there is little benefit in bringing in estate agents to argue over the counterfactuals.
In a democratic enterprise, members, where they are active and engaged, will tend to know what is true or not and the real purpose of impact reporting is simple. It is to help make that so.