Social impact management foundation for impact-driven growth
Social impact management is a growth strategy that prioritizes impact measurement and continuous learning to optimize an organization's social and environmental impact. In today's world, where consumers are increasingly conscious of social and ecological issues, impact management has become a crucial aspect of any organization's strategy. At its core, impact management involves understanding an organization's social and environmental impact and leveraging that knowledge to make informed decisions.
However, impact management comes with its own set of challenges. Measuring impact can be complex, and there is often a need for clarity on what to measure and how to measure it. Additionally, achieving effective impact management requires buy-in from all levels of the organization, from top executives to frontline employees.
At Sopact, we understand these challenges, so we have developed an Sopact Sense that simplifies and streamlines impact management. Our SAAS-based software provides a user-friendly platform to measure, manage, and optimize your organization's social and environmental impact. Our software gives you access to a library of impact strategies, training resources, and real-life examples, making it effortless to embark on your impact journey. So, why wait? Watch our impact strategy video and start your path toward impact management success today!
Importance of Social Impact Management:
Impact management is essential for several reasons. Impact management helps investors understand their investments' social and environmental impact and align them with their impact goals. For enterprises, impact management helps them understand the impact of their operations and products and take steps to minimize negative impact and maximize positive impact. Companies can contribute to sustainable development and mitigate risks and opportunities by considering their impact on business decisions. Additionally, as society and investors become more conscious of the impact of the companies, impact management is becoming an essential aspect for companies to showcase their commitment and progress toward sustainability. This can attract new customers and investors and increase the trust of the existing ones.
What is Impact Measurement and Management?
Social Impact Management defines the positive and negative effects of enterprises' and investors' actions on people and the planet. Then it determines ways to mitigate the negative and maximize the positive impact.
There is a growing need to improve both Impact Measurement and Impact Management. Because most organizations are still figuring out how to measure impact, impact management remains essential. It can help:
- From counting "what" happens to understand "why" things happen
- Understanding how the "why" informs "what "is essential to measure
- Collaboration amongst stakeholders to select indicators appropriate to inform your decision-making
Social impact management involves proactively managing and maximizing the positive social and environmental impact of a business, nonprofit, or organization. It involves setting goals and targets for impact, implementing strategies to achieve those goals, and regularly measuring and reporting progress. Impact measurement consists of quantifying and evaluating the impact of a particular program or intervention. Program reporting is the process of communicating the results and impact of a program to stakeholders. Finally, storytelling is a way of expressing the impact of an organization through a compelling narrative. Understanding these four concepts' differences is crucial for effectively managing and communicating your organization's social impact.
As interest in impact measurement and management (IMM) grows, we increasingly need to determine how asset managers view IMM's role in their internal strategy. Researchers and impact practitioners familiar with impact management projects (IMPs) believe that fund managers need to address the true purpose of IMPs.
In a recent podcast from Wharton, Katherine Klein interviews Maoz (Michael) Brown, head of research for the Wharton Social Impact Initiative; Michael exposes common misconceptions about impact management and reporting from impact investors. Listening to this podcast, Ana Pimenta, Impact Manager Social Capital Foundation, recently commented that it is worth understanding.
I have been asking for a long time: Where are investors/fund managers measuring outcomes and setting impact targets/goals?
"According to The State of Impact Measurement and Management Practices (GIIN, 2020), 78% of respondents seek to understand outcomes, and about 80% set impact targets. My experience in the field and as a researcher tells me a different story. In my opinion, this is due to a lack of impact knowledge (understanding well what impact means, the difference between an output and an outcome, assuming some sectors will be (of course!) impactful, an intentionality that is not adequately considered, etc.) and the lower priority given to impact results (when compared with financial results)."
If we are serious about impact management, we must clarify the tools' approaches. So, let's start with four common objectives and create a proper understanding of the impact management landscape. The purpose of this article is to get these terms straight.
Program Reporting, Storytelling, and
Comparing Impact Measurement & Management Software
In the world of impact measurement and management (IMM), many software platforms claim to be IMM platforms, but in reality, most are program reporting, storytelling, and partial impact measurement platforms. At Sopact, we are the only platform fitting into the proper IMM quadrant. So what is IMM? End-to-end social impact management focuses on measuring, managing, and optimizing an organization's social and environmental impact. It is no longer a once-a-year exercise performed by socially driven organizations. Instead, effective social impact management requires organizations to be digitally savvy and data-driven for scaling and maximizing the impact of their products and services. At Sopact, our SAAS-based software provides a simple, user-friendly way to measure, manage, and optimize your organization's social and environmental impact.
Impact rating measures an enterprise's ability to achieve its goals. Companies are evaluated based on pre-set questions aligned with SDGs, ESG, and individual metrics. While impact rating and impact differ, many tools and rating agencies are evolving. Therefore, treating this information as one data point is appropriate, but measuring social and environmental impact is complex.
Program Reporting, Storytelling, and Visualization
Program reporting focuses on output metrics and not outcomes. It is often a way for asset managers and enterprises to report portfolio results. While this approach helps determine which enterprise to invest in, it should be distinct from social performance improvement.
Impact measurement focuses on commonly accepted evaluation techniques such as social return on investments, outcome-based data reporting, and randomized control trials. It requires systematic data collection from stakeholders and can highlight areas where improvements are needed.
At Sopact, we provide an end-to-end impact management solution
that includes impact measurement, rating, program reporting, and storytelling. As a result, we help organizations make better decisions, improve their social and environmental impact, and succeed in impact management.
Impact Measurement and Management
Impact measurement and management are helpful for enterprises interested in improving product-market fit, services-market fit,
and program-market fit. It is a valuable tool for achieving faster growth and success. This approach often requires collecting data from stakeholders (direct and indirect). This approach provides a constant understanding of program needs, ensuring the investment focuses on the right demographics, outcome, contribution, scale/depth of impact, and impact risk.
IMM is often beneficial to an enterprise that believes in a data-driven approach to ensure faster success. However, achieving the most accurate results requires continuous data from multiple sources. Therefore, organizations use an impact experiment-based policy to achieve the most effective results. The figure below explains how you can start this process by connecting existing data to dashboards, identifying gaps, and focusing on key outcomes to improve outcomes continuously.
Comprehensive social and business data intelligence is the foundation to achieve impact measurement and management. Therefore, in addition to impact measurement, you will need to focus on the following to achieve effective results from IMM.
- You can focus on the primary outcome.
- Unify internal and external data to understand the "impact evidence."
- Make sure all data sources are connected all the time (real-time)
- Dashboard Always combined with data sources
Impact analytics focuses on comparisons, benchmarking, scoring, and aligning with the "five dimensions of impact" from the Impact Management Project.
Impact Measurement and management today
Impact investing has grown to $1.2 trillion worldwide, yet there needs to be more evidence of impact measurement in the industry. This is despite evidence from international development agencies that at least 5% of the budget should be dedicated to Measurement and Evaluation. Many organizations collect data for compliance but need the tools to aggregate it comprehensively. The belief that impact measurement is expensive is a common misconception. There are now affordable technologies available that can reduce the cost of measurement, but organizations are not taking advantage of them due to a lack of knowledge and resources. Cloud-based platform vendors such as Salesforce offer their technology for free to the social sector, but most organizations need more resources to leverage it successfully. Impact measurement should come from the same source as the funding, and organizations that are interested in moving the needle should have the ability to understand the collective impact.
What is the material?
What will affect or be affected by the activities of an organization's intervention, and what will affect that organization's overall performance? These are the material elements to be aware of.
How significant are the effects?
Thinking about the extent to which a program or intervention is expected to have specific outcomes, it can be helpful to map the significance of those outcomes for the communities/beneficiaries involved.
Who is affected?
There should be a clear understanding of a) who the different stakeholders are for any program, activity, or intervention and b) how the execution of those activities is intended to affect those individuals or groups.
What would happen anyway?
Crucial and often overlooked is that if your organization or intervention didn't exist, something would have happened anyway. Your impact needs to be assessed against that scenario to understand the depth of the impact you created.
what are the risks?
Understanding the risks enables you to put in place processes to mitigate those risks and, therefore, be pretty prepared should such scenarios occur. This protects you and also the impact you seek to create for your beneficiaries.
Impact Management Project
An impact management project is a systematic approach to identifying, assessing, managing, and reporting the social and environmental impact of a specific investment or business operation. The steps in an impact management project typically include setting goals and objectives, collecting and analyzing data, monitoring, and reporting on progress, and making adjustments as needed. C. Examples: An example of an impact management project in the investment context might be a renewable energy project that is tracking the reduction in greenhouse gas emissions resulting from the project. An example in the enterprise context might be a company implementing a program to reduce its water usage and reporting on the resulting savings. Impact Management project defines five dimensions of impact for each of its effects on people or the planet: intended and unintended, positive and negative. For each effect, the level of performance is evaluated for all five dimensions.
The real challenge is that the investor should use a data-driven approach to assess impact. This is where Sopact suite provides a flexible foundation of cross-reference services that allow the evaluator to assess results based on external and internal data.
What are the 5 Dimensions of Impact?
- HOW MUCH
Integrating Investor’s Impact Matrix
As investors gather better asset-based evaluation, the next task is to map their existing portfolio and then, over time, transition that portfolio to be impactful in the way that best suits their intentions and constraints.
The ultimate goal is to define a portfolio that maps all the assets that help communicate two essential questions:
- Impact allocation for a portfolio communicates composition by instruments and sector composition and defines the impact metrics of a portfolio. Such impact metrics can help communicate a real impact footprint. For example, €220 billion portfolio of a pension fund may achieve a much lower impact (because it focuses on avoiding negative impact) compared to the $10M portfolio of a family foundation focused on creating a solution(s).
- Impact investors are now asking to provide evidence of how their capital creates an impact or how they benefit from the stated impact. This has often been a challenging subject as impact investors' outcomes are often not aligned with an investee. Usually, they do not speak the same impact language (e.g., defined outcomes) and often do not trust results/data collected from an investee.
The Global Impact Investing Network (GIIN) A. Overview of GIIN: The Global Impact Investing Network (GIIN) is a not-for-profit organization that seeks to increase the effectiveness of impact investing by providing investors with the tools and resources they need to make informed investment decisions. B. Alignment of Impact Management from Investor Perspective: The GIIN provides a framework for investors to assess their investments' impact and understand how those investments align with their impact goals. C. Role of GIIN in Impact Management: The GIIN offers resources such as the IRIS+ catalog and the IMP framework, widely used in the impact investing industry as a standard for measuring and reporting impact. D. Alignment of IRIS+, IMP, and SDG: IRIS+ is a catalog of standardized performance metrics and reports that can be used to assess the impact of investments, the IMP framework provides guidelines for impact management and reporting, and the SDGs (Sustainable Development Goals) are a set of global goals for sustainable development adopted by the United Nations. GIIN aligns its standards and frameworks with these international standards so that Impact investments can be in line.
Challenges of GIIN Impact Measurement Framework
A. Challenges for enterprises in using IRIS+: One potential challenge for enterprises in using IRIS+ is that the framework may need to fully capture the unique impact of the enterprise's operations or products. Additionally, the cost and resources required to collect and report on data according to IRIS+ standards may be significant for some enterprises. B. Potential improvements to IRIS+: One potential improvement to IRIS+ would be to better tailor the framework to the specific needs and operations of different types of enterprises. Another potential improvement would be to make the data collection and reporting process less resource-intensive for enterprises.
Sopact IMM aligns investors and enterprise.
At Sopact, our IMM solutions are the best-suited solutions for organizations looking to improve their social and environmental impact. Our Sopact Sense is unique in that it focuses on aligning an investor-centric IMM framework with an enterprise-centric IMM framework.
Our full-service advanced platform includes the Sopact survey, which can collect stakeholder data in various situations, including remote (offline), online, WhatsApp, SMS, and QR code, and through scheduling and tracking stakeholder progress through a longitudinal approach. In addition, our Impact Cloud provides a data warehouse-like approach to aggregate data from multiple sources, including XLS, Google Spreadsheet, Salesforce, Sopact Survey, and other survey platforms, in real-time through a data pipeline.
Our platform is intelligently integrated with world-class business intelligence platforms, allowing for advanced data analytics and data science. This means that organizations can make data-driven decisions to improve their social and environmental impact while our platform takes care of the data collection and analysis.
Our Sopact Sense combined with our full-service advanced platform, provides a collaborative, self-driven, and customizable approach that helps organizations align with investor and enterprise-centric frameworks, making it easier to measure, manage, and optimize their impact.
Sustainable Development Goals
The Sustainable Development Goals are a set of 17 objectives announced by the United Nations in 2015. The goals aim to spur global collaboration, mobilize capital, and catalyze new solutions to the world's most pressing problems.
The Goals enable organizations of all types to frame their impact in these categories and measure progress using the UN's comprehensive indicators list.
For example, SDG 7: Affordable and Clean Energy has 5 general targets and 6 indicators. The target is more of a global goal (e.g., "By 2030, double the global rate of improvement in energy efficiency"), while indicators can be measured on an organizational level by funders and their assets (e.g., Indicator 7.1.1 is the proportion of the population with access to electricity.)
The most used impact investing metric, IRIS, is a standardized system originally conceived by the Rockefeller Foundation, Acumen, and B Lab. They were built upon dozens of existing standards from a variety of sectors. Today, there are about 400 metrics in the IRIS catalog, which can be accessed for free. An example of an IRIS metric can be seen in the image below.
The Global Reporting Initiative (GRI) developed the world's first standards for sustainability reporting. Organizations use these standards to guide the information they disclose regarding social, environmental, and economic impacts. It also includes a set of principles to structure that reporting process further.
The GRI has a comprehensive resource center to help organizations use the GRI as a reporting framework. This includes a document detailing how to link the GRI standards with the SDGs. For a document detailing connecting GRI with IRIS metrics, click here.
Recently, we heard Sara Olsen do this talk, and her ideas resonated. They were as follows...."
Demand for social value accounting (mainly driven by impact investors needing to be able to account for those returns) has led to the emergence of frameworks that can support that journey and help us get closer to a consensus about how to do that.
We're not just talking about those early frameworks -- ESG, Venture Philanthropy, Social Impact Bonds, etc. which tend to be targets of criticism even while those critics overlook the inertia those frameworks have built to help us further refine impact management and creation.
We're discussing frameworks developed by organizations like Social Value International (SVI) and the Impact Management Project. Both have developed frameworks that support the actionable implementation of impact strategy, from design to reporting.
Impact Management Project
The Impact Management Project emerged to address those calls for more transparent impact management and measurement structures. Their primary directive is just what those critics call for consensus.
At this moment, they have successfully convened under their platform more than 2,000 organizations (including Social Value International and Sopact) to share best practices and debate technical topics to get closer to a broader consensus on accounting for social value.
So, in what areas has some consensus been reached? First, a significant milestone was reached when member organizations worldwide agreed on the Five Dimensions of Impact.
You'll notice that the SVI Principles developed before the Five Dimensions are aligned with these five impact measurement areas. For example, Value Things That Matter is aligned to the What and Who dimensions. Many of the Values encompass multiple Dimensions, demonstrating that SVI's framework is an excellent place to implement impact measurement using the Five Dimensions.
So, what else is needed to go from consensus to action?
Practitioners need to have access to the right tools. There's one in particular that can serve the needs of those practitioners from end to end. But before sharing that tool, let's examine the buy-in element from vital internal stakeholders because that will always be key before adopting any new tool.
We'll start with SVI. Founded in 2008, the organization has consistently developed clear frameworks to promote social value accounting across sectors. Specifically, they led the Social Return On Investment methodology, or SROI, which employs financial proxies to quantify social values (outcomes). In addition, they offer training and even accreditation, further promoting the movement toward standardization of certain practices. Also, SVI developed the Seven Principles of Social Value.
Social Value Principles" refer to a set of guiding principles developed by Social Value UK, a network that advocates for and helps organizations to measure, manage and maximize the social value they create. These principles are:
- Involve stakeholders: Organizations should involve stakeholders in defining and measuring social value. This means engaging with people affected by the organization's activities, including employees, customers, suppliers, and communities.
- Understand what changes: Organizations should understand the changes taking place in the lives of people and communities due to their activities. This involves identifying the social, environmental, and economic outcomes that are being created.
- Value the things that matter: Organizations should value the outcomes that matter to people and communities. This means looking beyond financial value and considering social, environmental, and economic factors.
- Only include what is material: Organizations should only include outcomes that are material to their activities and significantly impact people and communities. This means focusing on outcomes that are important to stakeholders and that the organization can influence.
- Do not over-claim: Organizations should not over-claim the social value they create. This means being transparent about the limitations of their activities and avoiding making exaggerated claims about their impact.
- Be transparent: Organizations should define, measure, and report on social value. This means sharing information about their methodology and assumptions and being open to feedback and challenge.
- Verify the result: Organizations should verify the social value they create through independent assurance. This means having their social value reports audited or verified by a third party to ensure accurate and reliable information.
These principles guide organizations in creating and measuring social value, improving their impact on people and communities, and building a more sustainable and equitable society.
In conclusion, impact management has become essential to any organization's strategy, as consumers are increasingly aware of social and environmental issues. At Sopact, we provide a comprehensive, end-to-end IMM solution that helps organizations measure, manage, and optimize their social and environmental impact. Our Sopact Sense app is unique in that it focuses on aligning an investor-centric IMM framework with an enterprise-centric IMM framework. Our full-service advanced platform provides a collaborative, self-driven, and customizable approach to impact management.
Effective impact management requires organizations to be digitally savvy and data-driven. Our platform helps organizations achieve this by providing a data pipeline that collects data from various sources, including our Sopact survey. Organizations can make data-driven decisions to improve their social and environmental impact.
We are committed to helping organizations succeed in impact management by providing a comprehensive, end-to-end collaborative, self-driven, and customizable solution. Whether you are an investor or an enterprise, our platform can help you measure, manage, and optimize your social and environmental impact and make a positive difference in the world.
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