Impact Measurement
Introduction
There has never been a better time to run an impact-oriented startup. Impact-oriented tech companies raised £2 billion in investment in 2021, and recent studies have highlighted that 82% of consumers choose brands that stand for a greater purpose. Yet, as impact startups join the mainstream, people are increasingly asking whether companies are delivering on their commitments. As founders, how can you measure, manage, and demonstrate your impact in a credible way? And more importantly, what is the value in doing so beyond credibility? This guide is for you if you want to dive deeper into your impact and find practical ways to leverage it to your business’s advantage. Whether you are planning what to measure for the first time or are a seasoned founder looking to improve how you communicate your impact or raise impact investment, this guide is for you.
Before we begin
Why should I manage and measure impact?
What are the benefits of Impact management?
What to ask before I start?
Let's start
First, determine your level of impact using the ABC framework:
Are you actively avoiding harm to people’s well-being or the condition of the natural environment?
No
You should consider minimizing your harm and seeking ways to improve.
An ESG strategy would be a good place to start
Yes
Are you benefiting your stakeholders (employees, customers, suppliers, or the environment)?
No
Your level of Impact is A
You can improve by creating an ESG strategy.
Yes
Does your product or service directly contribute to solutions of global challenges such as equality, well-being or environmental sustainability?
No
Yes
Your level of Impact is A
You can improve by creating an ESG strategy.
Your level of Impact is C
You should consider both an ESG and Impact strategy
About The ABC framework Act to avoid harm - At a minimum, enterprises can Act to avoid harm by identifying where the organisation is causing harm to people’s well-being or the condition of the natural environment and act to minimize or eliminate that harm. For example: A clothing company that historically paid employees at or below minimum wage and had instances of human rights abuse in its supply chain. Its operations were inefficient and carbon intensive versus peers. Two years ago, the company made a commitment to clean up its act. Since then, the company has reported meaningful increases in workforce salary and it is on its way to becoming a living wage employer. Management has taken responsibility for eradicating human rights abuses across all business relationships. This initiative is not yet complete but there has been a marked improvement year-on-year. The company has set targets to reduce its carbon emissions and has made substantial investments in new carbon efficient technologies across its manufacturing plants. Benefit stakeholder - In addition to acting to avoid harm, enterprises can actively benefit stakeholders by improving well-being for one or more group of people and/or the condition of the natural environment For example: A carpet manufacturer that produces carpet tiles through use of environmentally friendly materials and production methods. Through various initiatives, the company has achieved net-zero carbon emissions across its operations. It is celebrated as a leading employer in terms of workforce diversity and well-being. It is the buyer and seller of choice in its industry because of its fair practices. Contribute to solutions - In addition to A and B, level C requires that the organisation product or service directly addresses a global challenge and positively contributes to people's well being or the natural environment. For example: A tech company develops a new technology improving waste management in rural areas, providing quality employment opportunities to people from unprivileged background.
Now that we know our level of Impact, What strategy should we use?
If your product or service has a direct positive impact and addresses an important social or environmental problem (level c), you should have both an ESG and IMM strategy.
If your product is rather neutral, but you benefit stakeholders (Level B) or if your product is controversial (Level A), you should probably start with an ESG framework to minimize risk and increase your positive impact and wait with an IMM framework.