Demystifying Impact Measurement and Management for Inclusive Businesses
Rabayl, what does it mean to be the Impact Specialist at Business Call to Action?
I see my role as a coach and guide, working with inclusive businesses to help them better understand and manage the effects they are having on low income populations, whether they are direct or indirect, positive or negative. Most companies I’ve worked with want to measure their impact but need someone to help them figure out what approach is the most appropriate for their purposes.
Starting with the big picture, how is the world doing in working towards “achieving” the SDGs? What evidence do we have of this?
At the UNGA this past September, the message was clear that the world is not doing enough, and at the current pace, we will not achieve the SDGs by 2030. We do not even have the data on an aggregate level that can show us how the needle is moving on each goal. Having said that, we do have more and more governments, investors, and companies realising we need to consolidate our efforts and find convergence in our approaches. UNDP, for example, has just partnered with SAP to create a dashboard that tracks business progress on the SDGs in one place. We must continue to see more players coming together to build on individual efforts if we are to be successful.
What are the tools and techniques being deployed, or under development, that will help us—as a global community working on the SDGs—to understand our collective impact better?
The ecosystem is quite diverse and rich. First, there are those organizations that have developed principles to guide reporting such as the UN Global Compact and International Finance Corporation. There are also organizations developing standards of practice, such as Global Reporting Initiative and SDG Impact, that can be used to aggregate and compare impacts across initiatives and companies. Then, there are organizations like BCtA and Acumen that support companies in using the right methodology for their needs and goals. Lastly, at the forefront, is the Impact Management Project network that is working to instil a common understanding of how we all define impact measurement. So, ideally, these efforts will lead to a global convergence on how we talk about, measure, and compare impact on the SDGs.
At the company level, what does an inclusive business entrepreneur need to know as they consider the impact they aim to achieve? For example, tell us about impact frameworks and evidence-based decision-making.
There has been a shift in thinking, where before we viewed impact measurement as the means to communicate to investors what has already been achieved, to impact management today as a means for businesses to reflect on and improve their performance. To be fair, investors can and do play a bigger role in demanding transparency and directing capital to SDG-enabling enterprises. However, impact management, if done right, is a vehicle for making decisions on what needs to be scaled up, what needs to be shut down, where intended or unintended change is happening, and where risks need to be better managed. Surveying stakeholders directly as a routine practice, for example, is powerful and simple enough for any inclusive business entrepreneur to start doing right away.
At BCtA, we break it down to a four-step process. The first step is to take stock of a company’s readiness and capacity to measure impact. This involves looking at current data, how driven a company is, and what sort of decisions they can make with better evidence. The second step is to develop the theory of change by studying the operations of the company and illustrating how they contribute to outcomes related to the SDGs over time. We also help companies understand the extent of impact they are having using the 5 dimensions of impact (WHAT, WHO, HOW MUCH, CONTRIBUTION and RISK) developed by the Impact Management Project. In the third step we identify the right indicators that can help them collect the evidence that’s missing. Finally, in the last step we guide companies on surveying using approaches such as Lean Data, Poverty Probability Index and others that may be more relevant to the specific business model.
Many companies believe they are having an impact. What can they do to demonstrate it?
The best thing companies can do is to be transparent about the evidence they have as well as the process by which they collect new evidence. In addition, they should also be careful to not overstate impact or attribute long term outcomes to their current business activities. Ultimately there are many factors that contribute to change on the ground, but if companies are consistently and regularly tracking the changes, they can manage it better. In doing so, companies can make the shift to gather feedback from their base of the pyramid stakeholders as a management practice and use impact data to make better decisions that help them continuously improve and grow their inclusive business.
Is there anything you would still like to add?
I want inclusive businesses everywhere to know that they can manage their impact better starting today. There is a preconceived notion that businesses need to reach a certain level of maturity before investing in impact measurement or that the exercise involves a lot of resources, so companies hold off until they have sufficient impact they can ‘prove.’ There are guides and tools available for free that can help even the smallest of social enterprises get started today.
BCtA has built a free, Online Impact Lab that assists companies to develop their impact management framework linked to the SDGs, identify gaps in existing evidence and design a monitoring plan to collect data.