20140527 measuring social impact as a need for csr

Measuring Social Impact as a
need for CSR
Gonzalo Sales Genovés
Madrid, MAYO 2014
Autor: Gonzalo Sales Genovés 1

NOTICE: This document was produced by Gonzalo
Sales Genoves to be used by those who want to
advance in the task of making a fairer world.
Please, respect the sources of information and the
author reference, not to protect any copyright, but
to respect the essence and meaning of the
document content.
Thank you very much in advance

Environmental & Social Footprints:
Two Sides IN the Same Coin
“The true cost of climate change will not be measured in dollars, but in lives and
human potential. That price is being paid already”
Diana Liverman, Professor at Oxford University, Former Director of the Environmental Change Institute
People stood among the ruins of houses destroyed by
Typhoon Haiyan in Tacloban, Philippines, a city of about
220,000. NYT
Citarum River - West Java - Indonesia

• “CSR is the voluntary integration by companies of social and environmental concerns in their
business operations and their interaction with their stakeholders". EC Green Paper 2001. In redefining
European Commission introduced the concept "Shared Value".
• “CSR is a voluntary commitment by a company to contribute to sustainable economic development
by working with employees, their families, the local community and society in order to improve the quality
of life." World Business Council for Sustainable Development (WBCSD)
What CSR is
• Philanthropy
• Sustainability
• Ethics
• Community Engagement
• Cause Related Marketing
• Reputation
• Expenses
• Establishing a foundation
What it is not
• Voluntariness: Beyond law enforcement.
• Triple balance: Economic, social &
environmental.
• Stakeholders engagement:
Accountability and transparency in
information.
• Strategic approach: CSR should become
an issue that cuts across all areas.
Key elements
• Good Governance
o Business ethics, anti-corruption and
transparency.
• Human Capital
o Working environment, work & family
balance, health and safety, diversity
management & Human Rights.
• Environment
o Fight against climate change, energy
efficiency & responsible use of natural
resources.
• Society
o Health and consumer safety, product
quality, supply chain & community
investment.
Related Areas
Autor: Gonzalo Sales Genovés
4

• Related to the company's relationship with:
o its employees (eradication of forced labor and child labor, non-discrimination, freedom of
association, health and safety, decent salary and working hours).
o its suppliers, ensuring that their supply chain follow the same principles promoted by the company
responsible.
o the community in which it operates.
SOCIAL
• Based on good corporate governance and information transparency.
• SRI (Socially Responsible Investment).
• Sustainable indexes: DJSI, FTSE4Good, Ethibel, ASPI Eurozone.
FINANCIAL
ENVIRONMENTAL
• Environmental Management System (EMS) allows the organization to know the degree of damage to
the environment caused by its activities, and introduce corrective mechanisms for continuous
improvement.
• Related Aspects :
o Efficient use of natural resources.
o Reduction of greenhouse gas emissions & waste generated.
o Waste management.
o Contribution to the Conservation of Biodiversity.
o Prevention of accidents and spills.
o Respect the landscape.
Triple bottom line (CSR Management)

• Independent Foundation to the company whose programs are not related to the business core.
Corporate
Foundation
• 62% of companies integrate sustainability into core business functions.
• 46% of companies have CSR policies and procedures.
• CSR is propelled by the Board of Directors (45%) and CEO (60%).
• CSR is into Communication Department in 74% of cases.
• 39% of companies measure ROI of their CSR efforts.
Integrated
Model
Future
Trends in
CSR
• Acknowledgement of social profile for the Corporate Sector.
• Social outcomes will be the measure for business.
• Sustainability reporting will be essential.
• Employees will be key to the Community Engagement Programs.
• Corporate philanthropy will remain important.
• CSR just "be" if it add value to the company.
• Public Private Partnerships will be a common pattern.
• CSR will mainly focus on supplier relationships.
• Healthcare will be a star for ICT subject.
• CFOs involvement will be key to the survival of CSR.
• Reports on Greenhouse emissions and water consumption will be outstanding.
• Increasing awareness about natural resource scarcity.
• Rankings and ratings will remain important for companies.
• “5 CSR Executive Trends” , Raz
Godelnik, 2012” .
• “6 Tendencias crecientes en
sustentabildad corporativa”, Ernst &
Young y GreenBiz Group
• “Is CSR as We Know It Obsolete?” Paul
Klein, 2012
• “State of Sustainable Business Survey
2013“. BSR & Globescan
CSR Organisation & Trends

Accountability
A narrow mapping:
1. Employees
2. Communities
3. Shareholders
4. Creditors
5. Investors
6. Government
7. Customers
A broader mapping:
1. Suppliers
2. Labor unions
3. Government regulatory
agencies
4. Government legislative
bodies
5. Government tax-collecting
agencies
6. Industry trade groups
7. Professional associations
8. NGOs and other advocacy
groups
9. Prospective employees
10. Prospective customers
11. Local communities
12. National communities
13. Public at Large (Global
Community)
14. Competitors
15. Schools
16. Future generations
17. Analysts and Media
18. Alumni (Ex-employees)
19. Research centers
20. …
Corporate Stakeholders Engagement

CSR Key Benefits for Corporations
• Increased confidence of customers and investors / shareholders.
• Competitive advantage for the business as it has a positive influence on the community.
• Employee satisfaction and attracting talent.
• Loyalty of customers, partners and investors / shareholders and improved reputation.
• Innovation and adaptation to changes in management systems to increase
competitiveness.
• Corporate Culture
• Participation and Satisfaction
• Reduce Rotation
• Increase Motivation
• Employer Reputation
• Image / Reputation
• Corporate Communication
• External Relations
• Corporate Marketing
Key Benefits
Internal
External
8

From Corporate Social Responsibility
to
Blended/ VALUE / Shared

(*) Source: The Big Idea: Creating Shared Value: How to reinvent capitalism – and unleash a wave of innovation and growth. By Michael E. Porter and Mark R. Kramer
Shared Value:
Policies and practices that enhance the competitiveness of a company while improving social and
economic conditions of the communities in which it operates
Corporate Social Responsibility
Value: “Doing Good“
• Good Citizenship, Philanthropy, Sustainability.
• Discretionary.
• Separate from profit maximization.
• Agenda externally determined.
• Impact is limited by the corporate impact and CSR
Budget.
Corporate Shared Value
Value: Economic & Social benefits related to
cost
• Joint company and community value creation.
• Integral to competing.
• Essential to profit maximization.
• Agenda is business specific.
• Mobilizes the entire company budget.
In both cases, compliance with laws and ethical standards and reducing harm for corporate activities are assumed
CREATING SHARED VALUE:
Redefining capitalism and the role of the
corporation in society *
10

Source: Fundación Empresa y Sociedad.
*IMMIGRATION *ELDERLY *LOCAL DEVELOPMENT
*DISABILITY
Products &
Services
Human Capital
Employment
Networking
Financing
Key Social
Challenges
Awareness
Education
Employment
Services Changemaker
SOCIAL WELFARE IMPROVEMENT
SOCIAL VALUE
BUSINESSVALUE
Best
Corporate
Resources
New
Products &
Services
Human
Capital
Improvement
Risk reduction
& new
opportunities
Achievements
Resources
Optimized
Best
Result in
Company
Best
Result in
Society
BUSINESSIMPROVEMENT
Creating Value = Business Perspective + Social Perspective
Autor: Gonzalo Sales
Genovés 11

Return
on capital
New
markets
Growth
Innovation &
new products
Composition
of business
portfolio
CSR VALUE
FAMEWORK
Growth
Return
On
Investment
Risk
Management
Reputational
Risk
Regulatory
Risk
Operational
Risk
Operational
efficiency
Optimized
Supply Chain
Human Capital
Development
Access to
New
Markets
Innovation
& New
Products
Social
Positioning
Overview of CSR Value Framework
©“rsc2”. Fundación Seres-McKinsey

Social Impact

o Impact is how we manage to decrease the incidence of a problem thanks to our intervention.
o The main objective of impact assessment is to determine whether a particular program or action has had an
impact, and quantify the extent of that impact.
WHAT
o Thank to the rise of CSR, there is a growing involvement of the company in social issues.
o The company not only creates economic and financial value , it also creates social value.
o Measuring socio-economic impact is necessary to maintain companies license to operate, improving
business, enabling environment, strengthening their value chains, and fueling product and service
innovation.
o On the contrary , most NGOs have not worried about measuring their impact until recently. Within
NGO’s Annual Reports you can find figures about investment but not the end result of that investment.
o The economic and financial value reflected in the balance sheet and the income statement , but the social
value is not reflected in any state of the company.
o If we want to describe all the value created by the company , it is necessary to have a method that
allows us to measure and reflect the social value.
WHY
HOW o Impact assessment estimates the effectiveness of the program by comparing the results obtained by those
who participated in the program against those who did not. (“Pharma Test”).
Social Impact
Genovés
14

Measuring
Social Impact

Measuring Social Impact
MEASURING BUSINESS VALUE :
o Traditional Conception: Business Value = Value Enterprise Financial Officer.
o Problem with this conception :
 the company is not isolated but interacts with Stakeholders
 The definition does not include social and environmental aspects .
o Current measures of value are INCOMPLETE : Financial Accounting reflects ONLY Economic and Financial Value .
o New measures are necessary to describe ALL VALUE creating a company.
o It is MANDATORY to consider the Stakeholders with whom the company interacts .
The TOOLS available today are incredibly diverse:
o It is necessary to identify the most suitable tools within a complex landscape of socio-economic impact
measurement framework.
o I focus exclusively on socio-economic impact. Tools for measuring environmental impact are already relatively well-
established.

Business Benefits Of Measuring Social Impact
BUSINESS IS A MAJOR DRIVER OF SOCIO-ECONOMIC IMPACT . SOCIOECONOMIC
IMPACT IS A MAJOR PREDICTOR OF BUSINESS SUCCESS
o By creating jobs, training workers, building physical infrastructure, procuring raw materials, transferring technology,
paying taxes, and expanding access to products and services ranging from food and healthcare to energy and
information technology, companies affect people’s assets, capabilities, opportunities, and standards of living.
o By measuring their socio-economic impact, companies can reduce cost and risk and create new business opportunities
(social license to operate).
BUSINESS IMPROVES SOCIETY
o Measuring socio-economic impact can help companies show communities, policymakers, government authorities, and
other stakeholders that their activities create net benefits for the economies and societies in which they operate.
STRENGTHENING VALUE CHAINS
o Measuring socio-economic impact can help companies predict the loyalty, performance, stability, and capacity for
growth of suppliers, distributors, and retail partners – identifying vulnerabilities and opportunities to address them.
FUELING PRODUCT AND SERVICE INNOVATION
o Measuring socio-economic impact can help companies understand the needs, aspirations, resources, and incentives of
their customers – enabling them to develop winning new products and services and improve existing offerings

Different
Methodologies
to
Measure Social Impact

Social Impact Evaluation
• A growing number of tools are available to help companies measure their socio-economic impact.
• It Is difficult for companies to compare and choose among all of them.
# Name of the tool Value to business
1
Base of the Pyramid Impact Assessment
Framework
Understand and measure how your business influences different
dimensions of poverty on your customers, local distributors and surrounding
communities
2 GEMI Metrics Navigator
Identify environmental and social performance indicators to measure and
prioritize issues for management response
3 Impact Measurement Framework
Identify relevant socio-economic indicators to measure impact in four
specific sectors
4 Impact Reporting and Investment Standards
Select standard indicators to use within your overarching impact
measurement framework
5 MDG Scan
Estimate the number of people your company is affecting in ways related
to the Millennium Development Goals
6 Measuring Impact Framework
Define the scope of your assessment, identify socio-economic impact
indicators for measurement, assess the results, and prioritize issues for
management response
7 Poverty Footprint
Understand your company’s impact on poverty, working in collaboration
with a development NGO
8 Progress out of Poverty Index
Calculate the percentage of customers, suppliers, and other populations of
interest that live below the poverty line
9 Socio-Economic Assessment Toolbox Measure and manage the local impacts of site level operations
10 Input-Output Modeling
Calculate the total number of jobs supported and economic value added by
your company and its supply chain on a particular national economy
Genovés
19

Social Impact Evaluation
Genovés
20

How Corporates are
(trying to)
Measuring Social Impact

London Benchmarking Group (LBG)

London Benchmarking Group (LBG)
• CONTRIBUTIONS COULD BE MANDATORY OR VOLUNTARY:
o Mandatory contributions are those donations or social
cultural projects required by law or contract.
o A contribution is voluntary when:
 There is no legal or contractual obligation for the
company.
 The contribution funds non profit activities.
• BENEFITS:
o Multiplier effect or leverage: An additional resource
attracted to a project as a direct result of the initiative or
participation of the company.
o Benefit to the community: Describe specific achievements
made with the project.
o Benefit to the company: Improvement of reputation and
image, pride and motivation, relations with certain
stakeholders.
* The charitable donations are not considered as a benefit for
the company.
• PROJECTS CLASSIFICATION:
o Location
o Company
o Subject focus:
 Education and young people
 Health
 Economic Development
 Environment
• TYPE OF CONTRIBUTION:
o Cash: total cash amount donated.
o Time: paid staff time spent in community activities.
o In-kind: products, equipment, facilities and other company
resources.
• MOTIVATION FOR CONTRIBUTION:
o Charitable donations (welfare assistance).
o Commercial initiatives (to promote company business).
o Community investment (sustained involvement in
community issues).
 Art and culture
 Social Welfare
 Emergency Relief
 Others
Today, It is a model to classify and manage corporate community projects as a group
23

LBG: Beyond Classification
Tomorrow, It should be a model to measure the impact of corporate community
investment
Today
InProgress
Tomorrow

LBG Today: Classification & Quantification
ABOUT PROJECT/PROGRAM
Contribution/ Activity number
1. Activity name/description
2. Name of partner/ beneficiary organisation
2a. Number of partner / beneficiary organisation
3. Date from
4. Date to
5. Business unit/ department responsible
6. Geographic location
7. Motivation for contribution
• Charitable donations
• Commercial initiatives
• Community investment
8. Subject Focus of contribution-LBG categories.
What did the company invest in the project?
Input data entered?
What has the project achieved for the company and
the community
Information on results?
ABOUT INPUTS
Cash 9. Value of cash contributions
Time
10. Number of staff involved in company
time
11. Total hours volunteered in company
time
12. Value of staff time contributed - enter
full amount
In-kind
13. Detail of in-kind contributions
14. Value of in-kind contributions - enter
full amount
15. Total value of contributions - this will calculate automatically -
do not delete from this column
25

16. Have you measured any results of this project? If
'YES' please detail them on this sheet
If 'No' then click to return ▼
LBG In Progress: Social Outputs & Impacts
SOCIAL OUTPUTS AND IMPACTS
17. Leverage
17a. Employees - payroll giving
17b. Employees - other contributions
17c. Customers
17d. Other external partners
17e. Other sources
18. Beneficiaries
18a. Number of direct beneficiaries
18b.Beneficiary Group (if applicable)
Of the total
beneficiaries,
how many…
18c. Experienced a positive change in their behaviour or attitude as a result of your support
18d.Developed new skills or an increase in their personal effectiveness
18e. Experienced a direct positive impact on their quality of life as a result of your support
18f. Please describe the specific benefits people have experienced
What benefit has
the beneficiary
organisation
been able to
report?
19b. were able to provide new services / products
19c. improved their management systems (e.g. IT, HR, finance)
19d. were able to spend more time with clients
19e. could employ more staff / take on more volunteers
19f. could train their staff / volunteers
19g. benefited from cash savings
19h. were able to lobby for legislative change
19i. increased their profileAutor: Gonzalo Sales
Genovés
26

ENVIRONMENTAL OUTPUTS AND IMPACTS
20a. Did the project return any environmental impacts?
20b. helped to protect and/or replant tree stocks
20c. protected endangered species
20d. improved or conserved seas/ rivers/ fisheries
20e. helped conserve land/ protected sites
20f. decreased waste to landfill
20g. reduced greenhouse gas emissions
20h. Did the project engage people on environmental issues/activity
20i. increased levels of recycling
20j. improved people's energy efficiency
20k. reduced people's water usage
20l. Number of trees planted
20m. Amount of land protected/ conserved (ha)
20n. Number of people engaged in environmental activity
LBG In Progress: Environmental Outputs & Impacts

BUSINESS OUTPUTS AND IMPACTS
21. How many
employees…
Number of employees taking part. Data copied from inputs sheet
21a. Improved their job-related skills
21b. Improve their personal effectiveness (e.g. more confident)
21c. Make a positive change in behaviour / attitude
22. Other business
benefits. Has the
activity …
22a. Increased employee satisfaction
22b. Improved retention
22c. Generated positive press coverage
22d. Improved the company's relationship with government /
regulators or other bodies
22e. Raised the profile of the company and/or a particular brand?
22f. Raised customer awareness
23. Any other outputs and/or impacts acheived
LBG In Progress: Business Outputs & Impacts

Social Return On
Investment (SROI)

Social Return On Investment (SROI)
WHAT IS SOCIAL RETURN ON INVESTMENT (SROI)?
• It is a framework for measuring and accounting for this much broader concept of value;
o it seeks to reduce inequality and environmental degradation and improve wellbeing by incorporating social,
environmental and economic costs and benefits.
• SROI measures change (impact) in ways that are relevant to the people or organizations that experience or
contribute to it.
• This enables a ratio of benefits to costs to be calculated (for example, a ratio of 3:1 indicates that an investment of
£1 delivers £3 of social value).
• SROI is about value, rather than money. Money is simply a common unit and as such is a useful and widely accepted
way of conveying value.
• It is much more than just a number. It is a story about change, on which to base decisions, that includes case
studies and qualitative, quantitative and financial information.
• An SROI analysis can take many different forms:
o It can encompass the social value generated by an entire organization, or focus on just one specific aspect of
the organization's work.
o It can be carried out largely as an in-house exercise or, alternatively, can be led by an external researcher.
TYPES:
• Evaluative, which is conducted retrospectively and based on actual outcomes that have already taken place.
• Forecast, which predicts how much social value will be created if the activities meet their intended outcomes.
30

SROI: Principles & Stages
PRINCIPLES
1. Involve stakeholders.
2. Understand what changes.
3. Value the things that matter.
4. Only include what is
material.
5. Do not over-claim.
6. Be transparent.
7. Verify the result.
STAGES
1. Establishing scope and identifying key stakeholders.
o Knowing what your SROI analysis will cover, who will be involved and how.
2. Mapping outcomes.
o Engaging your stakeholders is the way to develop an impact map, which shows
the relationship between inputs, outputs and outcomes.
3. Evidencing outcomes and giving them a value.
o Finding data show whether outcomes have happened and then valuing them.
4. Establishing Real impact.
o Having collected evidence on outcomes and monetized them, you can identify
aspects that would have happened anyway or are a result of other factors.
5. Calculating the SROI.
o This stage involves adding up all the benefits, subtracting any negatives and
comparing the result to the investment. This is also where the sensitivity of the
results can be tested.
6. Reporting, using and embedding.
o It’s vital to involve stakeholders and sharing findings and embedding good
outcomes processes and verification of the report.

How SROI can Help Corporates
HELPING CSR MANAGERS
• as a tool for strategic planning and improving;
• for communicating impact and attracting investment from “Big Fishes”;
• for making investment decisions;
• as a help guide that managers can use to decide when/where they should spend time and
money.
HELPING OUR IMPROVE SERVICES BY:
• helping us understand and maximize the social value an activity creates;
• helping us target appropriate resources at managing unexpected outcomes, both positive
and negative;
• identifying common ground between what we want to achieve and what ours stakeholders
want to achieve;
• creating a formal dialogue with stakeholders that enables them be involved in service
design.

Proposal for SROI measurement
• FEASIBLE APPLICATION OF METHOD SROI IN CORPORATES:
o Defining the scope of the study to social projects.
o Ability to apply the method in other areas of the company.
o Preparation of analysis using impact creation chain.
Inputs Activities Outcomes Goal setting
Modify the
objective to
achieve the
desired impact
Mesurable
products from
Ferrovial
activities
Developed by
Ferrovial
Resources
provided to the
project by
Ferrovial
Changes
Changes in social
systems
IMPACTS
SROI allows us to have a BUSINESS
VALUE CONCEPT BROADER AND
COMPREHENSIVE, incorporating
social value to the decision making
process of the company.
SROI ANALYSIS OF CORPORATE ACTIVITY
=
MEASURE ITS SOCIAL ACTIVITY.
• Social Impact:
o for every € 1 you spend on the project, € 2.15 creates social value:
 tax increase for the town/city
 lower health care costs
 quality of workers' life increased ...,
• CORPORATE combines financial sustainability for their projects,
and social value (in a ratio of 1: 2,15).
33

• nef (the new economics foundation) has conducted a
re-evaluation of the case for a 3rd runway at
Heathrow airport based in a SROI analysis.
• This study finds that the costs of the Runway 3 proposal
outweigh the benefits by at least £5 billion.
• In light of its analysis and in view of the formidable
targets for reducing greenhouse gas emissions its
conclusion is that expanding Heathrow cannot be
justified.
“Heathrow: three options for
the third runway”
By Jorge Gil (15/10/2013)
https://blog.ferrovial.com/es/2013/10/he
athrow-tres-opciones-tercera-pista/
Why Social Return On Investment (SROI) is the most suitable tool
to measure Social Impact? (I) Autor: Gonzalo Sales Genovés
34

Public Services (Social Value) Act 2012.
CHAPTER 3
An Act to require public authorities to have regard to
economic, social and environmental well-being in
connection with public services contracts; and for
connected purposes. [8th March 2012]
What is the Act?
• The Act, for the first time, places a duty on public bodies to
consider social value ahead of a procurement.
• The Act applies to the provision of services, or the provision of
services together with the purchase or hire of goods or the
carrying out of works.
• The wording of the Act states that...
o The authority must consider—
(a)how what is proposed to be procured might improve the
economic, social and environmental well-being of the relevant
area, and
(b)how, in conducting the process of procurement, it might
act with a view to securing that improvement.
• It also opens the door for consultation with stakeholders to better
understand social value and improve service specifications, the
Act states...
What does social value mean under the Act?
• The wording of the act states..
“the authority must consider.. only matters that are relevant to what
is proposed to be procured and, in doing so, must consider the
extent to which it is proportionate in all the circumstances to take
those matters into account.”
to measure Social Impact? (II)
35

to measure Social Impact? (III)

Useful?
gonzalosales1@gmail.com

20140527 measuring social impact as a need for csr

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20140527 measuring social impact as a need for csr