social and economic impact measurement - business impact on vulnerable communities

8/9/2019 Social and Economic Impact Measurement - Business Impact on Vulnerable Communities

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An Ethical Corporation and LCCGEroundtable debate, 14 July 2010

Pam Muckosy, [email protected]

Social & economic impact of bigbusiness on local communities

WELCOME


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From measurement to management

More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at [email protected]

A marked shift in how companies are approaching thistopic

How and why do companies measure socio-economicimpacts?

A need to look beyond measures and KPIs:

Companies seek to measure what they do in order to

report externally But, increasingly the aim is to understand the external

system in which the company works for bettermanagement of the business


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The study, www.ethicalcorp.com/ impact


Looks at understanding the true impact of business.

In-depth interviews with >30 corporate sustainability,community programme and ethical sourcing managers

Survey of 116 sustainability professionals worldwide

Review of over 60 corporate sustainability reports

Literature review of initial impact research

Analysis of existing tools and processes available tohelp you measure impact

Case studies on companies that have begun to testimpact measurement methods

Conducted by Peter Davis, Isabelle Fredborg & Pam Muckosy


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What drives a companys approach?


How a company approaches this topic is drivenby a number of factors:

What is the companys business? Where does it operate?

What is the company trying to achieve?

Demonstrating accountability? If so, to whom?

May be many different stakeholder groups who arereached in different ways

Seeking to understand its context

So that it can better manage its business


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Do companies measure impact?

(n=116)



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Reasons companies measure impact

(percentages, n=116)


Communicate to stakeholders

Build reputation

Inform community programmes

Other

Secure a license to operate

Encourage infrastructure development

Monitor local activities that may do harm

Increase supply chain effectiveness


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What impacts companies measure

(n=116)


Economic livelihoods for local communityEngagement, volunteering and charity

Job creation

Other

Human rightsLabour equality and rights

Poverty and economic equality

Local infrastructure

Access to basic resources

Tax contributions

Gender equality


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Tying impact to performance or

business strategy? (n=116)



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4 models of socio-economic impact


1. Management of supply chain

What are the impacts of what we buy?

2. External benchmarking against globally-defined standards

GRI the best known

3. Management of fence-line communities What is the local impact of a companys operation

4. Contribution to local economy

Corporate role in a host countrys developmenttrajectory


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#1. Supply chain management


Who?

Large retailers and branded goods companies

Why?

To respond to consumer and media pressure to ensure thatsupply chains do not contain labour, environmental and otherabuses.

How

Questionnaires and audit processes of supplier sites and

factories

Accountability to whom?

Demonstrating to customers that goods and services are abusefree

How its developing Companies increasingly asking all suppliers, not just

manufacturing sites, about their processes

Increasingly a genuine desire to understand value chain


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I .e. Sedex


Exponential rise in the number of companystandards

Often similar in scope but not co-ordinated inapplication

With the result that some factories foundthemselves almost always monitored to slightly

different standards

Sedex seeks to help companies collaborate intheir factory audits

Repository of information

Can still have company-specific questions/ issuesraised

But bulk of information is shared


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#2. External benchmarking


Who? Many companies of all sizes

Why? To respond to the pressures from international NGOs

and others to report and

How

Audit against an externally-generated set ofbenchmark standards designed to allow comparabilitybetween companies.


Primarily aimed at the global CR community How its developing

More intelligent targeting of standards to be relevant toparticular industries


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I .e. GRI


GRI is worlds most widely used sustainabilityreporting framework Seeks to make social reporting as comparable as financial reporting

Comprehensive reporting framework including: Corporate internal processes, for example

Strategy and planning

Report parameters

Governance and engagement

Performance indicators on 6 key issue areas, including: Environment

Human rights

Labour practices

Sector supplements developed To tailor the broad framework more precisely to specific industries Examples include: financial services, mining and metals, financial

services and electric utilities

More being developed


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#3. Managing fence-line

communities


Who? Predominantly extractive firms, or other industries with a

significant local footprint

Why? To understand the inter-relationship of the site and the local

community and environment

To guide corporate managers in behaviours in relation to localpeople

How Detailed assessment process to understand different aspects of

the relationship and to establish relevant benchmark metrics

Accountability to whom? Primarily designed to show accountability to local communities

However, also useful in demonstrating globally a responsibleapproach

How its developing Such assessments increasingly required as part of the due

diligence approach for new projects to get sign off


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I .e. Anglo American SEAT Toolkit


Socio-Economic Assessment Toolbox Designed to allow operations to identify and

manage their social and economic impacts (bothpositive and negative)

Designed as a management tool for Anglos siteoperations in relation to their local communities

4 stage process: Profile operation and local communities

Identify socio-economic impacts and share thatassessment

Develop management responses to each impact

Report results to community

Reporting is relevant only as a communication toolwith communities, not as a benchmarking exercise

or compliance exercise.


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#4. Contribution to local economy


Who? Large companies with significant investments in

particular countries

Why? To understand the role that the company plays in the

society and economy of the host country To guide corporate managers in decision-making

How Detailed analyses, conducted by development

specialists


Demonstrating to customers that goods and servicesare abuse free

How its developing Companies


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I .e. Unilever


Increasingly seeking to understand the partthat its operations play in development

Reports commissioned from developmentspecialists to understand impacts, e.g.: Oxfam on operations in Indonesia

INSEAD study of operations in South Africa

Some key findings of South Africa study: Unilever provides 0.9% of all tax revenues

For each direct Unilever employee, there are 22

further jobs created in the value chain. Thus Unilever represents 0.8% of total

employment in South Africa


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Sample strategic approach: DCED

Standard, www.enterprise-development.org



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A few existing models being

reviewed


LBG

WBCSD Value Accounting

Good for Business

Five types of capital

Accounting for Sustainability

Poverty Footprint of Business


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Ideas raised during the debate


Address other motives such as: responding to investors,differentiation, product impact and innovation

What are the best units for measuring outcomes. $s,

equality? Include case studies on local developing country

companies

Risk is a major motivator

Localisation of strategy is a must

How to work with in partnership with an NGO

Incorporate the role of stakeholder engagement

How can we assess cultural integrity?

What can companies do with their findings? Is a newbusiness model required?

Are there any lessons or is there cross-over withenvironmental impact assessments?


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Social and economic impact


Thank you

The full report w ill be published inSeptember at

www.ethicalcorp.com/ impact

social and economic impact measurement - business impact on vulnerable communities

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