ABC of Enterprise Impact |
Communicating Impact PerformanceEnterprises describe their impact goals and communicate performance across all five dimensions of impact.
Enterprises frequently communicate their impact goals and performance to their stakeholders – whether raising investment or securing funding, speaking to their Board, or engaging with their employees and the local community.
For example, consider how investors select investments to deliver the impact they want. If an investor has broad goals in terms of What effects they want to see, they will then choose between potential investments by assessing the (potential) impact performance of the underlying enterprise(s) across the other four dimensions of impact:
- Who will experience the outcome
- How Much will occur
- The Contribution the enterprise makes to what would likely occur anyway
- The level of Risk that the impact is not as expected
For example, if an investor wants to make investments that contribute to the Sustainable Development Goal (SDG) of good health and well-being (What), they cannot assume that any investment in healthcare is relevant. The other four dimensions of impact will help them understand which healthcare investments are likely to make a real difference when it comes to meeting that SDG.
Investors will want to support business models that not only set goals to try to reduce negative impact but also seek to have a significant effect (How Much) on the health of underserved people (Who), resulting in an improvement of the situation relative to what would otherwise happen (Contribution), with any risk of impact failure (Risk) justified by the level of positive impact if things go as planned.
By focusing on an outcome (such as good health) rather than a sector (such as healthcare), the dimensions also widen the array of business models that investors may consider relevant. For example, education and clean energy (e.g., solar that replaces kerosene) are both significant drivers of good health for some underserved populations.
Beyond comparing performance between enterprises, the five dimensions of impact provide the necessary fundamentals for creating consistent impact disclosure standards.