Last reviewed 20 August 2019

What is social impact, and how can your business demonstrate that it has a positive role to play? Laura King identifies four steps organisations can take towards creating a strong social impact.

It goes without saying that without communities and individuals, businesses would not exist. Whether in the role of employees, consumers or investors, businesses need people if they are to grow and thrive. However, despite this, many companies limit their focus to revenue generation, and as such, do not fully account for the dependency and impact that their operation has on society.

Widening the company’s focus to include issues such as social responsibility is not always an easy, or obvious, move. However, society is increasingly beginning to demand that companies start to look at their wider impact; from the scrutiny of top executives’ salaries, to surveys clearly highlighting that many of today’s young people do not believe that growth and having a positive social impact need to be mutually exclusive, there are clear trends coercing all industries towards more socially-responsible business models.

What is social impact?

Social impact is not just about a project or programme that “does good”. It’s a wider definition that includes all the effects that a business has on individuals or communities.

The impact businesses have is felt at a number of levels. Internally, social impact is often related to employment issues such as decent working conditions, diversity in hiring and career progression, and paying a fair wage. Looking slightly wider, it includes how the business interacts with the communities in which they operate. Do they employ people locally? Are they a good neighbour?

Further afield, it means looking at supply chains, programmes or projects, both in the UK and overseas, and making sure that those supply chains are also ethical and just. For example, are services or products bought using fair labour practices?

A business’ social impact will also include its philanthropic activities. Some companies will have social good at their core, for example if they are already creating something that has a positive impact, or if their business intrinsically addresses a social issue. However, philanthropy for most companies will be approached from the perspective that they will use their profits or position to create some kind of external benefit.

Some dos and don’ts

When reviewing the social impact of the company there are a few dos and don’ts:

Do:

  • ensure that social impact is intrinsic to the company’s values — it is much harder to tackle if it is a bolt-on as it won’t have the same priority as core functions

  • make sure you are pursuing social good for the right reasons — any programme needs to be adopted wholeheartedly and in a genuine attempt to make things better

  • ensure that any major business decision includes an evaluation of social impact.

Don’t:

  • pursue community projects with the aim of creating revenue — any monetary gain is a bonus, but it should not be the driving force behind what is being done

  • adopt values that aren’t backed by action: in this arena, actions truly speak louder than words.

Four tips to creating strong social impact

1. Understand your social impact

As an employer, neighbour, supplier of goods and services, and purchaser, evaluate the impact your activities have on people and society. Understanding the impact will mean that it can be managed — this will reduce the effect of any negative impacts, as well as allowing you to make the most of areas where you are making a positive change.

Consider asking the following questions:

  • What are the longer-term impacts of our activities?

  • Which people or communities are affected by our activities — what are their characteristics, what is the area of impact, and what social measures are needed?

  • Do we need to communicate with local communities or stakeholders?

  • Where do we not have visibility — are there any unknown impacts from our activities?

  • What do we need to measure? How do we need to report?

2. Know what the business can offer

Your business will have unique assets (such as skill sets, knowledge or materials) that put it in a perfect position to solve a particular social problem. Use these assets to develop any company philanthropic activities or ventures.

If inspiration is needed, it is worth looking at the UN’s Sustainable Development Goals. These provide a ready-made framework for tackling some of the world’s most urgent social issues. The UN has called on businesses to use these goals to do their bit — so identify some that are relevant, and consider what the business could do towards them.

3. Assign resources and a core team

To truly make a difference, the organisation will need to put some level of resource into understanding and acting on its social impacts. A team will need to be assembled, someone will need overall responsibility, and it is likely that some capital input will be needed.

When assembling a team, try to get input from across the company, but especially focus on departments that are part of the company’s core activities. This will mean that the social impact team will have a clear insight into the business’ actions and where change is needed.

Also try to foster an environment whereby people openly talk about the impact their activities are having and aren’t afraid to question practices or suggest better alternatives.

4. Set goals, measure outcomes

Setting goals and measuring the impact that is being made will allow the company to manage the programme of work that is being adopted. Not only will this demonstrate how investment into social impact is progressing, it will also help improve and better prioritise efforts.

To do this you first need to be clear about your objectives, and then decide on programmes under each of those objectives. You must determine the key measurements to track, what mechanisms will be used to track them, and have clear protocols in place for collecting, analysing and reporting on the data.

By doing this, the organisation will have clear metrics to work from which can then be reported and communicated. Furthermore, if reviewing social impact is a new venture, collecting metrics will also start the organisation on the path towards measuring the long-term benefits and costs of its social impact through methods such as Social Return on Investment (SROI).

Summary

  • Social impact is the effect that the business has on communities and individuals. It includes internal considerations, as well as how the company impacts on its neighbours and those in its supply chain.

  • Having a positive impact needs to be a core part of the company’s values if it is to be truly successful — the full benefits are rarely seen if it is just considered a “bolt-on” to day-to-day activities.

  • Changes in attitudes mean that more and more customers and employees are looking to companies to demonstrate their impact.

  • To improve social impact, first understand the impact the company has, decide on a programme of work, and then ensure that any initiatives are backed by enough resources. The programme of work needs to have clear targets which are measured and reported on.

  • When looking at philanthropic activities, consider what unique assets the company has, and how these can be best used.