New, precise and penetrating methods of measuring social impact are driving radical revisions to corporate social investment (CSI) as practised by big business and global investors, according to sustainability consultancy Environmental Resources Management (ERM) Southern Africa.
ERM principal consultant Deon Wessels explains that, globally, traditional CSI is nearing the end of its useful life, and the same is set to happen soon in South Africa. “Local nongovernmental organisations, charities and others engaged in community upliftment must be alert to the shift. “They need to understand the new dynamics created by the United Nation’s (UN’s) Sustainable Development Goals (SDGs) – specifically the focus on social impact.”
SDGs create a framework for government, civil society and private-sector interventions to, at times collectively, combat poverty and improve outcomes in health, education, sanitation and other areas of need. The accent is on measurable gains in 17 focus areas by 2030.
The “key yardstick”, he says, is the long-term social impact (social return on investment) achieved in programmes funded by donors and taxpayers. “In traditional CSI terms, a donor measured input – the capital committed – and output, though output could be defined quite generally. For example, a donor might look at how many bursaries were bestowed,” says Wessels.
However, he points out that the new approach goes deeper and measures outcomes and social impacts. In this example, Wessels says the number of bursars is only a starting point. “Drop-out rates and the number who obtain degrees would be measured, along with the number who obtained professional qualifications and got jobs.”
He notes that a similar measurement could be applied to donations to improve pass rates in subjects such as mathematics and science, as well as other interventions.
ERM has already been commissioned by some local corporates to conduct social impact measurements.
The “good news for local agencies”, says Wessels, is that ERM methodology confirms positive, wide-ranging social impacts, with areas for improvement also being revealed. The methodology suggests improvements where the social return on investment is suboptimal. He explains that, in the bursary example, failure to achieve exam success might be addressed by a small increase in funding to hire mentors for bursars.
To date, no examples of a glaring waste of corporate resources have been found, he says, but the ability of the ERM methodology to provide reassurance on this point is a key factor in a tight economy.
“Businesses want to be certain they get the most bang for their buck,” says Wessels. “This mindset is also apparent in the CSI field, especially as more and more companies align themselves with the UN’s SDGs and seek very specific gains.”
Some multinationals have begun to give timeframes and percentage improvements when listing their sustainability goals.
ERM social impact assessment specialist Clémence McNulty says the shift in emphasis is evident in several quarters. Social impact, she says, is a key yardstick for official bodies like the UK’s Department of International Development, a major corporate like the Dutch bank FMO and large private-equity funds.