Assess impact

Organisations collect contextual information to assess their impact

Last updated: June 17, 2022

Overview

In addition to performance on an outcome at a point in time, organisations need to gather information to place this performance in context to assess impact.

This contextual information enables comparison and interpretation of performance for decision-making by helping the organisation answer questions including:

  • Is performance on the topic sustainable/positive? (relative to societal or ecological thresholds)
  • Is performance getting better or worse over time? (by looking at change on a metric)
  • Is the organisation causing change that likely wouldn’t otherwise occur? (by looking at a counterfactual)
  • Are all stakeholders – or areas of the natural environment – experiencing the same change? (and is everyone experiencing the same change: assessed by considering geography and demographic)
  • For how long does the outcome last?
  • How important is the outcome to the stakeholder?
  • What is the risk to people and the natural environment that impact does not occur as expected?

Is performance on the topic sustainable?

Societal or ecological thresholds provide critical context to understand whether performance is negative/unsustainable or positive/sustainable.

Several allocation methodologies are under development to help organisations translate thresholds into organisation-specific targets.

Organisations assessing their contribution to regional (EU taxonomy) or global (SDG) targets do so with reference to thresholds and specific allocation methodologies.

Figure 1: Societal and ecological thresholds determine what level of performance is ‘sustainable’

Is performance getting better or worse over time?

Once an organisation knows (or has estimated) where the threshold lies, it can determine which direction of change is ‘better’ or ‘worse’. Repeated measurement, assessed against a threshold, enables an organisation to know whether performance is getting better or worse over time. The change in outcome over time is sometimes referred to as the degree or depth of change.

Figure 2: Assessing the degree of change in performance on metric

Is the organisation causing change that likely wouldn’t otherwise occur?

Not all change is caused by an organisation. Often other factors are at play. Organisations can collect information to understand what might have occurred anyway, in the absence of their own activities. This is known as assessing the counterfactual. Another way to think about this question is to consider: would others (e.g. government, other products/services) likely have caused this outcome in the absence of my organisation?

Figure 3: Identifying the counterfactual to estimate the organisation’s contribution to the outcome

Not all management decisions will require assessment of change against the counterfactual, as it will be clear that some changes were entirely caused by the organisation (e.g. with waste omitted or natural resource usage).

Counterfactuals are most helpful when an organisation’s goal is to cause an impact that likely would not have occurred otherwise, and in particular for organisations seeking to Contribute to Solutions (see Figure 6 below).

The concept of the counterfactual is distinct from:

  • the attribution, or apportionment of ‘shares’, of an outcome to different parties based on their contribution to it.
  • the consideration of whether an organisation is out- or underperforming a peer on the same sustainability topic.

Are all stakeholders – or areas of the natural environment – experiencing the same change?

Within a stakeholder group, different demographics may experience different degrees of change, or the number of people affected may vary. Group-wide averages may obscure these differences and lead to decisions that are neither in the best interests of stakeholders nor of the organisation.

To avoid this, the following data are helpful:

  • Number of stakeholders experiencing the change (this is not applicable for environmental outcomes); and
  • Demographic and geographic detail (e.g. geographic boundary, gender, ethnicity) with which to segment the data.
Figure 4: Segmenting performance on an outcome by demographic

For how long does the outcome last?

Organisations consider the duration of stakeholders’ change in well-being, separately to the duration of the organisation’s activities or outputs. Stakeholders typically want positive changes in well-being to be enduring, but standards recommend that organisations consult stakeholders to understand the desired duration of the change, and measure outcomes for that length of time where possible.

How important is the outcome to the stakeholder?

To help with prioritising which outcomes to manage, organisations can consult with stakeholders to understand the relative importance of different outcomes being experienced, for example, using a 1-10 scale for least to most important.

What is the risk to people and the natural environment that impact does not occur as expected?

Practitioners have identified nine common types of impact risk. Each type of risk should be considered in turn to assess the likelihood that the expected impact will occur for people and/or the planet.   

The level of impact risk is assessed by considering the likelihood that the desired impact does not occur, and the magnitude of what the consequences would be for people and/or the planet if it didn’t.

Full assessment

Once an organisation has measured an outcome over time and collected additional information to place this change in context, they have what they need to assess a single impact and whether it is significant.

Figure 5: Assessing impact

Assessing impact enables classification of an individual impact as ‘ABC’ against the objectives defined in the ‘set objectives’ action. Particular classifications (A, B or C) required different sets of contextual information.

Figure 6: Classifying impact based on performance information

Resources

Identifying relevant contextual data

Five dimensions of impact

Last updated: 2018

Guidance on the types of data needed to understand and assess impact performance. The IMP community of 2000+ practitioners identified five dimensions of impact that can be broken down into 15 more detailed data categories.

For organisations

Use this resource to:

  • Assess impacts: Use the five dimensions as a checklist to ensure the information gathered is sufficient for the decision it will inform (see also the ‘Investment classification’ resource).

For investors and financial institutions

Use this resource to:

  • Assess: Use as a checklist to ensure the information gathered is sufficient for the decision it will inform (see also the ‘Investment classification’ resource)

Maximise Your Impact: A Guide for Social Entrepreneurs

Last updated: 2017

Guidance to help an organisation maximise the positive social value it creates.

Use this resource to:

  • Set and revise objectives: Use the guidance on engaging stakeholders and understanding their objectives and needs in order to design a business model around delivering these objectives.
  • Assess impact: Check whether the organisation has all the information it needs to assess impact. The guidance contains 10 questions that guide impact assessment and function as a checklist to ensure all necessary contextual information is collected.
  • Integrate and act: Follow the guide to integrate information on social value into management decision-making.

Standard on applying Principle 4: Only Include What is Material

Last updated: 2018

Standard and guidance on how to apply the fourth of SVI’s Social Value Principles.

Use this resource to:

  • Identify sustainability topics: Use the guidance on how to determine which impacts must be included to support decision making that optimises value for all stakeholders. It includes two screens for materiality: firstly for outcomes that are relevant and secondly for the outcomes that are most significant.
  • Assess impact: Follow the guidance to determine whether an impact is significant to people or the environment, requiring management.

SDG Impact Standards for Enterprises

Last updated: 2021

Practice standards that provide a common language and a system for integrating sustainable development issues, the Sustainable Development Goals and impact management into business and investment decision-making. These practice standards also outline the ‘ABC’ classification methodology, which helps organisations assess whether an impact ‘Acts to reduce harm’, ‘Benefits stakeholders’, or ‘Contributes to solutions’ in relation to the SDGs.

Use this resource to:

Set up processes and embed practices that orient an organisation towards achieving the SDGs. The SDG Impact Standard contains practice indicators that are relevant to several actions. Use the links below to access guidance for different practice indicators. Alternatively, view the whole guidance document here.

Setting thresholds

How To Guide For Setting Science Based Targets

Last updated: 2021

Guidance that provides a brief introduction to a leading methodology for translating planetary thresholds related to greenhouse gas emissions into company-specific targets. It also provides further links to more detailed implementation guidance.

Use this resource to:

  • Set and revise objectives: Set a company-specific target for greenhouse gas emissions that incorporates an ecological threshold for a given global warming scenario.
  • Assess impact: Assess performance against a company-specific target for greenhouse gas emissions that references an ecological threshold. 

Science-Based Targets for Nature: Initial Guidance for Business

Last updated: 2020

Guidance for setting science based targets related to nature. More generally, the SBTN is embarking on a multi-year strategy to develop guidance for translating planetary thresholds and societal goals into company-specific targets for air, water, land, biodiversity and ocean.

Use this resource to:

  • Set and revise objectives: Set a company-specific target that references an ecological threshold for nature.
  • Assess impact: Assess performance in context of ecological thresholds.

Assessing performance

B Impact Assessment

Last updated: 2019

Tool designed to help organisations measure and manage their impact on workers, community, environment, and customers.

Use this resource to:

  • Identify sustainability topics: Fill in the online questionnaire to understand performance on sustainability topics that are likely relevant to manage, based on the organisation’s size, sector, and geography. B Lab’s questionnaire is developed through research and public consultation, and so provides an evidence-based starting point for identifying sustainability topics to measure.
  • Measure sustainability performance: Use the B Impact Assessment as a set of metrics. The questionnaire enables organisations to quickly get started collecting information on performance on sustainability topics that are likely relevant to manage, based on the organisation’s size, sector, and geography.
  • Assess impacts: Fill in the questionnaire to track change in performance over time. Each question is scored – some with reference to social or ecological thresholds – to help the organisation determine whether it is performing sustainably on that topic.
  • Benchmark: Compare performance with peers on each sustainability topic or as a whole organisation. If an organisation scores 80 points or above on the questionnaire, it can apply to be certified as a B Corp. The tool provides guidance to help organisations improve their score every year, and all B Corps must update their responses to the self-assessment to re-certify every three years.

SDG Action Manager

Last updated: 2020

Tool designed to help organisations measure and manage their impacts in relation to the Sustainable Development Goals.

For organisations

Use this resource to:

  • Identify sustainability topics: Fill in the online questionnaire to understand the SDGs most relevant to manage, based on the organisation’s size, sector, and geography. The questionnaire draws from B Lab’s B Impact Assessment and the UN Global Compact’s 10 Principles. It was developed through research and public consultation and so provides an evidence-based starting point for identifying sustainability topics to measure.
  • Measure sustainability performance: Use the SDG Action Manager as a set of metrics. The questionnaire enables organisations to collect performance information on the SDGs that are most relevant to manage, based on the organisation’s size, sector and geography.
  • Assess impact: Fill in the questionnaire to track changes in performance over time. Each question is scored – some with reference to social or ecological thresholds – to help the organisation determine whether it is performing sustainably on that topic.
  • Benchmark: The self-assessment tool helps organisations compare performance with peers on each SDG or as a whole organisation.

For investors and financial institutions

Use this resource to:

  • Assess: Engage with underlying assets and support them in completing the SDG Action Manager Questionnaire. The multiple-choice, weighted question format helps underlying assets and their investors quickly judge whether performance on a topic is likely to be unsustainable or sustainable, and what they can do to improve.

See also Thresholds and allocations and Sustainability performance classifications.


Definitions

Context

Refers to the circumstances that form the setting for an event, statement, or idea, and in terms of which it can be fully understood. Here the term specifically refers to the other information that an organisation needs to collect to fully understand what type of impact has occurred, in order to make a judgement about the nature of the performance. This contextual information is sometimes referred to as the multi-dimensional nature of impact. See Assess Impacts.

Source: Oxford English Dictionary

Counterfactual

The situation or condition which hypothetically may prevail for individuals, organisations, or groups were there no intervention. Measuring the counterfactual answers the question: what would have happened to people or the natural environment if they/it had not interacted with the organisation?

Source: OECD Development Assistance Committee

Impact

A change in an aspect of people’s well-being or the condition of the natural environment caused by an organisation.

Source: Impact Management Platform; Well-being defined as in OECD Well-being Framework

Impact risk

The risk to stakeholders that the desired impact is not occurring, or that unexpected negative impacts are occurring. This risk is distinct from financial risk, since it is risk of consequences for affected stakeholders, rather than risk to the financial value of an organisation. There are 9 types of impact risk currently identified.

Source: Impact Management Project (IMP)

Outcome

The resulting level of well-being experienced by a group of people, or the condition of the natural environment.

Practitioners should be aware that some available standards and guidance (e.g. OECD, IFC, Capitals Coalition) define outcome as a change in-, rather than a level of-, well-being. Whilst collecting data about performance over time usually involves measuring the level (e.g. wage paid in prior period relative to wage paid in current period), it is not always the case that this data is disaggregated for decision-making (e.g. if management or the board of a company are only provided with a figure about the change, such as ‘percentage increase in wages paid’). Using information about the change alone prevents comparison of performance against a social or ecological threshold, and therefore determination of whether the level of performance is ‘sustainable’ or ‘unsustainable’.

Additionally, if an outcome is defined as a broad aspect of well-being (e.g. ‘health’) it may be too general to inform which metric should be used. To help with accurate measurement, a well-defined outcome is needed. See Glossary term Well-defined outcome.

Source: Impact Management Platform

Significant

An impact is significant if the change in well-being (or the condition of the natural environment) caused by the organisation is big and/or occurs for many people, lasts for a long time and is important to those affected. See Assess Impact for information on collecting these data points..

Source: Social Value International (SVI)

Societal or ecological threshold

A level or range of performance that divides sustainable from unsustainable performance. These ranges are set with reference to social norms or planetary limits that have been identified through scientific research. Learn more about Thresholds and allocations.

Source: United Nations Environment Programme Finance Initiative (UNEP FI); United Nations Conference on Trade and Development (UNCTAD) (The Cocoyoc Declaration, 1974); Kate Raworth

Stakeholder

An entity or individual that can reasonably be expected to be significantly affected by the organisation’s activities, products and services, or whose actions can reasonably be expected to affect the ability of the organisation to successfully implement its strategies and achieve its objectives.

Source: Global Reporting Initiative (GRI); OECD Due Diligence Guidance for Responsible Business Conduct; OECD Well-being Framework; Value Reporting Foundation (VRF) Integrated Reporting Framework

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