Beyond financial profit, New Zealand businesses are increasingly acknowledging and measuring their social impact. This means looking at how a company’s activities affect its employees, communities, and the environment. Measuring social impact allows businesses to understand the true value they create, attract socially conscious customers and employees, and contribute to a more sustainable and equitable Aotearoa.
The Growing Importance of Social Impact in New Zealand
New Zealand’s unique cultural context, deeply rooted in Māori values like kaitiakitanga (guardianship of the environment) and whanaungatanga (relationships and community), significantly influences the importance of social impact. Customers are demanding more than just quality products or services; they want to support businesses that align with their values and are actively contributing to a better society. A 2023 study by Colmar Brunton found that 73% of New Zealand consumers are more likely to purchase from a brand that shares their values. This trend reflects a broader global shift towards conscious consumerism, forcing businesses to re-evaluate their priorities.
Furthermore, attracting and retaining talent is becoming increasingly challenging in New Zealand. Employees, particularly younger generations, are actively seeking out companies with strong social purpose. A Deloitte survey indicated that purpose-driven companies experience 30% higher levels of innovation and 40% higher levels of employee retention. Ignoring social impact can lead to a loss of skilled workers and difficulty in attracting new ones.
Investors are also paying attention. Impact investing, which prioritizes both financial returns and positive social and environmental outcomes, is gaining momentum in New Zealand. Organisations like Impact Investing Aotearoa New Zealand are working to promote this approach, demonstrating a growing recognition of the financial benefits of investing in businesses that address societal challenges.
Defining Social Impact: What Are We Measuring?
Social impact encompasses a wide range of outcomes, depending on the nature of the business and its core activities. Common areas of focus include:
- Environmental Sustainability: Reducing carbon emissions, minimizing waste, conserving resources, and protecting biodiversity are all critical aspects of environmental sustainability. This can involve measuring carbon footprint, water usage, waste diversion rates, and engagement in conservation initiatives.
- Community Development: This involves contributing to the well-being of local communities through job creation, skills development, support for local organizations, and initiatives to address social issues like poverty and inequality. Measurement might include the number of jobs created, the value of community donations and sponsorships, and the reach of community programs.
- Fair Labor Practices: Ensuring fair wages, safe working conditions, and opportunities for professional development for all employees. Metrics include employee satisfaction scores, salary ratios, health and safety incident rates, and diversity and inclusion statistics.
- Ethical Sourcing: Promoting ethical and sustainable practices throughout the supply chain, including fair treatment of suppliers, responsible resource management, and transparency in business operations. This includes supplier codes of conduct, audits of suppliers’ practices, and certifications like Fairtrade.
- Cultural Sensitivity: Recognizing and respecting Māori culture and traditions, engaging with Māori communities in a meaningful way, and promoting te reo Māori (the Māori language). Metrics can include the representation of Māori employees, the use of te reo Māori in business communications, and partnerships with Māori organizations.
It’s crucial to define which areas of social impact are most relevant to your business and align with your core values. This process should involve consultation with stakeholders, including employees, customers, community members, and investors.
Methods for Measuring Social Impact: A Practical Guide
Measuring social impact can seem daunting, but there are various methods and frameworks available to help businesses get started. Here’s a breakdown of some popular approaches, along with practical examples:
Input-Output-Outcome-Impact (IOOI) Model
This model provides a structured framework for understanding and measuring the different stages of social impact.
Input: Resources invested in a project or initiative (e.g., funding, staff time, materials).
Output: Direct products or services delivered (e.g., number of people trained, amount of waste recycled).
Outcome: Changes in knowledge, attitudes, skills, or behavior as a result of the outputs (e.g., increased employment rates, reduced landfill waste).
Impact: Long-term, sustainable changes in the community or environment (e.g., improved quality of life, healthier ecosystems).
Example: A social enterprise providing job training for unemployed youth.
Input: $50,000 funding, 2 full-time trainers.
Output: 50 young people trained in hospitality skills.
Outcome: 30 of those young people find employment within 6 months.
Impact: Reduced unemployment rates, improved economic well-being for those young people and their families.
Social Return on Investment (SROI)
SROI is a more comprehensive method that attempts to quantify the social value created by a project or initiative and compare it to the resources invested. It involves assigning monetary value to social outcomes, which can be challenging but provides a powerful way to demonstrate the overall value created. Calculating SROI can be complex and may require specialized expertise, but it provides a compelling way to communicate the value of social initiatives to stakeholders. Several organisations like The SROI Network provide information and training on SROI methodology.
Example: A community garden project.
Investment: $20,000 in materials, volunteer time valued at $10,000.
Social Impact: Improved access to fresh produce (valued at $5,000), increased community engagement (valued at $8,000), reduced social isolation (valued at $7,000).
SROI Ratio: ($5,000 + $8,000 + $7,000) / ($20,000 + $10,000) = 0.67:1. This means that for every $1 invested, the project generates 67 cents of social value. While this example is simplified, you would need to perform a lot more analysis as part of an official SROI.
B Impact Assessment
Developed by B Lab, the B Impact Assessment is a comprehensive online tool that evaluates a company’s social and environmental performance across five impact areas: governance, workers, community, environment, and customers. It provides a standardized framework for measuring impact, comparing performance against other businesses, and identifying areas for improvement. Achieving B Corp certification requires meeting a minimum score and demonstrating a commitment to continuous improvement. It’s also a globally recognized symbol of a company’s commitment to social and environmental responsibility. A B Corp certification can cost anywhere between 800 NZD to 60,000 NZD depending on the company revenue per year.
Global Reporting Initiative (GRI) Standards
The GRI Standards are a widely used framework for sustainability reporting. They provide a comprehensive set of indicators and guidelines for disclosing information on a company’s environmental, social, and governance (ESG) performance. Following the GRI Standards can help businesses to transparently communicate their impact, improve accountability, and benchmark their performance against industry peers, though they are highly complex.
New Zealand-Specific Tools and Frameworks
Several organizations in New Zealand are developing tools and frameworks specifically tailored to the local context. For example, Te Rau Matatini has resources related to measuring outcomes for Maori communities. Check out the Te Rau Ora website for helpful models for measuring social impact of kaupapa Maori health and workforce developement services. The Aotearoa New Zealand Government’s Social Wellbeing Agency also provides information and resources related to measuring social outcomes.
The Process of Social Impact Measurement: A Step-by-Step Guide
Implementing a social impact measurement system involves a series of steps:
- Define Your Objectives: Clearly identify what you want to achieve through your social impact initiatives and how this supports goals for the business. What specific social or environmental challenges are you trying to address with supporting New Zealand overall?
- Identify Stakeholders: Determine who your stakeholders are (employees, customers, community members, investors) and how they are affected by your business activities.
- Select Key Performance Indicators (KPIs): Choose specific, measurable, achievable, relevant, and time-bound (SMART) KPIs that reflect your social impact objectives.
- Collect Data: Gather data through surveys, interviews, focus groups, document reviews, and other methods. Ensure data is accurate, reliable, and representative of your target population.
- Analyze Data: Analyze the data to identify trends, patterns, and insights into your social impact.
- Report Your Findings: Communicate your findings to stakeholders through reports, presentations, and other channels. Be transparent about your successes and challenges.
- Use Your Findings to Improve: Use the insights gained from your social impact measurement to improve your programs, operations, and overall business strategy.
Data Collection Methods:
Surveys: Can be used to collect quantitative and qualitative data from a large number of people.
Interviews: Allow for in-depth exploration of individual experiences and perspectives.
Focus Groups: Facilitate group discussions to gather insights on a specific topic.
Document Reviews: Provide valuable data on past performance and trends.
Observation: Direct observation of activities and behaviors can provide valuable insights.
Overcoming Challenges in Social Impact Measurement
Measuring social impact is not without its challenges. Common obstacles include:
- Attributing Impact: It can be difficult to isolate the impact of a specific project or initiative from other factors that may be contributing to the same outcome.
- Measuring Intangible Outcomes: Some social outcomes, such as improved well-being or increased social cohesion, are difficult to quantify.
- Data Collection Costs: Collecting and analyzing data can be time-consuming and expensive.
- Stakeholder Engagement: Engaging with stakeholders to gather data and feedback can be challenging.
To overcome these challenges, businesses can:
- Use a combination of quantitative and qualitative data: This provides a more holistic understanding of social impact.
- Involve stakeholders in the measurement process: This ensures that the measurement is relevant and meaningful to those affected.
- Start small and scale up gradually: Begin with a limited number of KPIs and gradually expand the scope of your measurement system as resources allow.
- Seek expert advice: Consult with social impact measurement specialists for guidance and support.
Real-World Examples of Social Impact in New Zealand Businesses
Many New Zealand businesses are already demonstrating a commitment to social impact. Here are a few examples:
Ethique: This Christchurch-based company produces solid beauty bars that eliminate the need for plastic bottles. In addition to reducing plastic waste, Ethique is committed to fair trade practices and donates 2% of sales to charity.
Allbirds: This footwear company uses sustainable materials like merino wool and eucalyptus tree fiber to create its products. Allbirds is also committed to reducing its carbon footprint and has implemented a carbon offsetting program.
Commonsense Organics: A New Zealand organic supermarket chain committed to sustainable and ethical practices. They support local farmers, promote fair trade, and minimize waste in their stores.
Tearfund New Zealand: This Aid and Development organisation enables New Zealanders to partner with communities around the world to end poverty. They create opportunities for Kiwis to engage with global issues and empower communities through volunteering, advocacy and ethical purchasing.
These are just a few examples of the many New Zealand businesses that are making a positive social and environmental impact.
The Future of Social Impact Measurement in New Zealand
The future of social impact measurement in New Zealand is bright. As awareness of the importance of social responsibility grows, more businesses are expected to embrace social impact measurement as a core part of their operations. This will lead to greater transparency, accountability, and ultimately, a more sustainable and equitable Aotearoa.
Increased use of technology will play a key role in simplifying process. For example, blockchain technology can be used to track and verify the ethical sourcing of products. Data analytics can be used to identify trends and patterns in social impact data. Artificial intelligence can be used to automate tasks and provide insights into social impact.
Collaboration will also be crucial. Businesses, government agencies, and non-profit organizations need to work together to develop standardized frameworks, share best practices, and build capacity in social impact measurement.
By embracing social impact measurement, New Zealand businesses can create a more positive future for themselves, their communities, and the environment.
FAQ: Your Questions Answered
What is the difference between social impact and corporate social responsibility (CSR)?
Social impact is the broader, measurable effect of a business on society and the environment. CSR is the set of actions a company takes to address its social and environmental responsibilities. Social impact measurement is the process of quantifying those effects, while CSR is more about the doing.
How much does it cost to measure social impact?
The cost varies depending on the method used, the scope of the measurement, and the expertise required. Simpler methods like the IOOI model can be implemented with minimal cost, while more complex methods like SROI may require specialized expertise and significant investment. B Corp certification also has an annual fee associated with it. Tools like the B Impact Assessment are free to use and are a good starting point.
What are the benefits of measuring social impact?
The benefits include: attracting and retaining customers and employees, improving brand reputation, enhancing stakeholder relationships, accessing new funding opportunities, driving innovation, contributing to a more sustainable and equitable society and improving financial performance.
How often should social impact be measured?
The frequency of measurement depends on the nature of the business and its social impact initiatives. Some businesses measure their social impact annually, while others measure it more frequently, such as quarterly or monthly. At a minimum, social impact should be measured annually to monitor progress and identify areas for improvement.
What resources are available to help businesses measure social impact in New Zealand?
Several organizations in New Zealand offer resources and support for businesses interested in measuring social impact, including Impact Investing Aotearoa New Zealand and the Social Wellbeing Agency. The Sustainable Business Council is also a great networking point. You can also look to international organisations like The SROI Network and the Global Reporting Initiative.
References
- Colmar Brunton. (2023). Better Business: 2023.
- Deloitte. “Purpose: A beacon for talent.”
- B Lab. “B Impact Assessment.”
- Global Reporting Initiative. “GRI Standards.”
Ready to go beyond the bottom line? Start your journey to measuring social impact today! Define your objectives, engage your stakeholders, and choose a measurement method that aligns with your business. Your commitment to social responsibility will not only benefit your community and the environment but also strengthen your business and build a brighter future for Aotearoa.
