Claim to make an impact? Now it’s Time to Prove It
Impact - Are you really making a difference?
“Clients often claim impact but report on activities. We show them how to measure the difference they’ve made - and that’s what drives investor and stakeholder confidence and value to the bottom line.”
Why measure impact?
Analysis increasingly shows that companies which seek to make positive impact, and those who adopt responsible and sustainable business practices, are more profitable, manage their risk better, and are increasingly more attractive to investors. Improving social or environmental outcomes is good for people and planet and good business sense by appealing to customers, investors, creditors, and employees. Companies with consistently high ESG performance tended to score 2.6x higher on total shareholder return1.
However, commitments to sustainability and responsible business conduct have become ubiquitous whether by investors, companies, or for-purpose organisations. Recent research shows that more than half of consumers across all markets are sceptical of brands sustainability claims.2 Regulators in the EU, US, and Australia lifting the burden of proof, and financing enforcers to crack down on greenwashing. ASIC has already made an example of energy company, Black Mountain Energy Limited, issuing three infringement notices related to alleged false or misleading sustainability. This importance of monitoring and due diligence in value chains to substantiate impact claims is underscored by the recent BBC investigation into perfume supply chains finding jasmine used by Lancôme and Aerin Beauty's suppliers was picked by minors.
To stand out from the crowd, know if your initiatives are actually making a difference, and to avoid being painted by the greenwashed brush, companies and investors must look to substantiate the claims they make.
But how?
Impact measurement – called by many names including monitoring and evaluation and adaptive programming – is a science has a long history and practices and approaches which are still evolving. For companies or organisations looking to make a start, we’ve summarised some hard-won lessons to make their impact measurement efficient and effective from the outset.
Lesson 1: Answer the ‘so what’ question?
Impact is the change made in the lives of people (or change in the environment). Activities, meetings, funding, training, investments – they are all activities, all inputs, not impacts. If you want to claim impact, you must understand and be able to defensibly report on the difference you have made in the behaviour or the lives of beneficiaries, or indeed in the condition and sustainability of the environment.
Lesson 2: Chart a plausible Path to Impact
Good impact measurement starts with a theory of change. It is a theory about what you think will happen because of your actions. Solid theories are grounded in social norms and behavioural economics, not what you think people ‘should’ do. Make explicit assumption, as necessary, and test them. Good impact measurement learns what works and what doesn’t overtime.
Lesson 3: Establish a ‘fit for purpose’ measurement system.
Investors, companies and for-purpose organisations should look to establish measurement and reporting systems aligned with strategic intent, and, crucially, allocate resources to data collection. Some key principles apply here: Prepare well in advance of reporting requirements. If impact measurement is too simple, it’s not credible. If it’s too complex, your teams won’t do it. Strike the balance. There is no one-size fits all approach.
Lesson 4: Compare your Impact Predictions to Reality
Plans are predictions, so it is important to allow for adaptation. Start early and allow for change in your impact programmes and their measurement. Test your theory, and refine it. Report on the lessons or course corrections as much as the impacts, this drives trust and transparency when done well.
Lesson 4: Tell the Human Impact Story
Lean into story-based impact measurement, or what is known as a ‘most significant change’ approach. Quantitative data complemented by personal stories pack the biggest punch. To inform this approach, organisations should invest in effective engagement at the outset with your stakeholders around the problem being solved. Skip this at your own risk.
Lesson 5: Scale Matters.
Many small things don’t necessarily add up to change. If you really want to make a dent in a social or environment problem, if you really want to move the needle, think large and focused, not small and disparate.
Need Support?
Ithaca Impact’s Impact Measurement Practice is working with governments, investors, companies and for-purpose organizations to help them measure and communicate their impact. For more information contact Practice Lead, Nina Hitchins on nh@ithacaimpact.com
For a step-by-step blueprint to Impact Measurement, book your place at our Impact Measurement Masterclass where we apply these principles to an illustrative company.
1 https://www.accenture.com/us-en/insights/strategy/measuring-sustainability-creating-value
