Five dimensions of impact | WHAT
Introduction
The “What” dimension tells us what outcomes enterprises and investors contribute to, whether the outcomes are positive or negative, and how important the outcomes are to the people and communities experiencing them, as well as to the planet.
To manage their impacts effectively, enterprises and investors need to go beyond assessing whether C02 emissions decreased or job satisfaction improved. Enterprises and investors also need to know if the outcome:
- Is a priority from the perspective of interested and affected people, communities, and the planet
- Is positive (i.e., meets the needs and aspirations of the people experiencing it and of the planet) or negative (does not meet needs or aspirations)
- Is intended or unintended
- Contributes to the Sustainable Development Goals and associated targets
All of the above aspects may differ with respect to social identities and demographics (e.g., gender, race / ethnicity) and geographic and cultural contexts, as described in the “Who” dimension.
From the outset, enterprises and investors clarify and examine whose perspectives are embedded in the definition and prioritization of outcomes and impacts. Is the enterprise responding to needs that have been expressed by communities, or are they defining outcomes first and then asking communities if those outcomes matter? Effectively engaging the people and communities experiencing impacts is critical to defining outcomes in the “What” dimension.
Data categories
As with the rest of the Norms, the data categories within the “What” dimension are best thought of as building blocks. If you are starting from scratch, you may want to build your impact management framework based on them. If you already have an impact management framework, you may want to use them as a checklist to identify any missing elements or areas for improvement.
What is an outcome?
An outcome refers to the level of an aspect of social, environmental, or economic well-being experienced by people and the planet. Outcomes can be intended or unintended. They can be positive or negative with regards to thresholds that define the level of performance that meets the needs and aspirations of people and the planet.
Enterprises and investors are usually concerned with assessing intended outcomes. However, an enterprise’s activities often generate unintended positive or negative outcomes. For example, a healthy living program designed to improve the health of the elderly (an intended positive outcome) may inadvertently reduce hospital admissions, leading to lower operating costs in public hospitals (an unintended positive outcome). Or, a large retailer selling environmentally friendly products (an intended positive outcome) may unintentionally facilitate child labor in its supply chain (an unintended negative outcome).
Enterprises should seek to understand all of the outcomes they generate, not just the intended ones. Overlooking an unintended negative outcome could raise fundamental questions about an enterprise’s business model, whereas failing to consider an unintended positive outcome could mean a lost opportunity to strengthen the enterprise’s value proposition.
By considering all outcomes, as well as differences in outcomes across social identities and demographics, enterprises can:
- Prioritize those outcomes that matter the most to the people and communities experiencing them;
- Put policies and safeguards in place to identify and mitigate negative outcomes, including unintended ones; and,
- Better communicate their impact to investors – recognizing that different investors may invest in the same enterprise for different reasons (i.e., may focus on different outcomes).
Selecting outcome indicators
Outcome indicators assess progress against specific outcomes, allowing enterprises and investors to understand whether change has taken place. Outcome indicators can be expressed in many different ways including quantitative (absolute number, percentage, ratio) and qualitative (categorical, narrative).
One type of indicator is not better than another. An indicator’s validity depends on how well it reflects the outcome from the perspective of affected people and the planet. Consulting the affected people or those delivering the enterprise’s activities is important to confirm the validity of indicators, which may vary based on social identities and demographics. Enterprises also consider the costs and practicality of data collection for different indicators.
VALIDITY AND CULTURAL CONTEXT
An indicator’s validity also depends on the values and worldview of the people and communities experiencing outcomes.
For example, in First Nations, Inuit and Métis communities in Canada, well-being can be understood holistically across the domains of mind, body, and spirit, as well as in relation to the surrounding natural environment. Storytelling is a widely respected source of knowledge, and “measurable” knowledge includes events such as coming of age ceremonies, visions, and dreams that are measured through techniques such as talking or sharing circles, and photovoice. In such a cultural context, quantitative indicators may not be appropriate.
For more examples of how cultural context can shape the validity of indicators, see Indigenous Approaches to Impact Measurement from Common Approach to Impact Measurement, as well as the Made in Africa Evaluation Concept commissioned by the African Evaluation Association.
Collecting outcome data directly may not always be possible or advisable. In addition to the costs of collecting and analyzing data for the enterprise, collecting outcome data can also bring costs and risks to the people and communities providing data that render an indicator unethical. For example, disclosing experiences of sexual assault may be traumatizing for survivors and even put them at risk of reprisal. Trauma-informed approaches can help assess and minimize the risk of harm when collecting outcome data.
In some cases, enterprises can rely on an indirect indicator (i.e., proxy) of outcomes. An output indicator can be used as a proxy for demonstrating the degree of progress (if any) towards an outcome depending on the strength of the evidence that the output is likely to lead to the intended outcome.
For example, the output of measles vaccines administered can be used as a proxy for the outcome of not developing measles. Here, the clear link between output and outcome reduces the need to collect data on the outcome indicator. Enterprises and investors should be transparent when using outputs as proxies for outcomes and explain the reasoning behind selecting the proxy.
WELL-DEFINED OUTCOMES
An outcome is “well-defined” when it offers the best possible combination of two attributes:
- Measures the level of the aspect of well-being that is most important to the people and communities experiencing it; and,
- Is at least partly influenceable by enterprise and / or investor activities.
Social Value International has put together step-by-step guidance for crafting well-defined outcomes. This guide is particularly useful for identifying unintended and negative outcomes.
How important is the outcome to those experiencing it?
Investors and enterprises may not have relevant lived experience of the outcomes they seek to manage, which could put them at risk of focusing on outcomes that are either not a priority for affected communities or do not reflect the reality or diversity of community members’ experiences.
The diagram below can help investors and enterprises identify their own strengths and gaps in lived experience and context expertise regarding the communities, places, and issues in which they aim to achieve outcomes. The further investors and enterprises are from the center of the diagram, the greater the potential for knowledge gaps in their framing of impact.
Investors and enterprises in this situation have a strong rationale for learning as much as possible about the community, place, or issue of focus before taking action, and for proactively managing impact risks once they do so.
When is community engagement useful?
The people closest to a community, issue, or geography of focus have unique expertise and insights, and engaging with them can be useful at any stage of the impact management process. Because the views of community members may change over time, community engagement should not be a one-time exercise, but a continuous and adaptable process. Enterprises may engage with affected people and communities:
- Before the enterprise rolls out a product or service: e.g., feedback from diverse groups of customers or clients can be used to design a product or service that meets different preferences and needs.
- During the initiative: e.g., the enterprise can collect data on how different groups are responding to the product or service, allowing for quick adaptation.
- After the initiative: e.g., the enterprise can leverage community feedback to understand whether or not the product or service met expectations across different subgroups, and why.
Investors generally rely on enterprises to engage directly with affected people and communities, as they are typically better positioned to do so. However, some investors may choose to engage directly themselves (e.g., when developing an impact strategy for a new fund).
Engagement can be carried out in line with existing frameworks such as the AA1000 Stakeholder Engagement Standard, which underlines the importance of profiling and mapping interested and affected parties to define the purpose and scope of the engagement and involving those parties in developing the engagement plan itself.
The table below presents a spectrum of community engagement approaches adapted from frameworks used in civic engagement, participatory research, and evaluation.
Note on Non-Engagement
In some cases, investors and / or enterprises may choose not to engage directly with affected people and communities and instead rely on desk research to define intended outcomes. This approach can be appropriate in contexts when the priorities of affected people and communities are clear. For instance, an investor who seeks to improve outcomes for Indigenous communities in Canada could refer to the Truth and Reconciliation Commission of Canada Calls to Action, which outlines priority outcomes based on the testimony of more than 6,500 Indigenous survivors of residential schools and their family members.
When implementing a non-engagement approach, investors and enterprises can consider:
- To what extent does third-party research represent the views of affected people and communities, considering different subgroups?
- Are secondary sources sufficient to understand how people may experience outcomes differently or disproportionately based on their social identities (e.g., race, gender, etc.)?
- What is the likelihood that the way we define outcomes and impacts does not align with the priorities of affected people and communities?
- Do we have mechanisms to identify and manage unintended and / or negative outcomes? What channels do affected people and communities have to express concerns or raise grievances?
- Would the burden of participation (for participants as well as for us) outweigh the potential benefits?
Understanding the full range of approaches to community engagement helps investors and enterprises make an informed choice about which approach is appropriate for their particular context. This choice depends on the preferences, capacity, and expectations of communities as well as those of investors and enterprises. Regardless of the chosen approach, investors and enterprises should prioritize understanding diverse perspectives and avoid viewing any community as a homogenous group.
For outcomes relates to the environment, data from secondary research such as the Intergovernmental Panel on Climate Change or the Stockholm Resilience Centre can also be useful.
The box below lists additional resources for developing a plan to engage with affected people and communities.
Relevant Resources
- IMP Exploring how beneficiaries describe their impact expectations: This report, co-authored with Social Spider CIC, looks at how people’s experiences with social services and activities have influenced their impact expectations, goals, and priorities.
- IMP How people describe the impact they experienced: This report, co-authored with Impactt, helps us understand what people’s expectations are when buying or engaging with products or services.
- World Economic Forum Guidance on engaging all affected stakeholders: Provides guidance on how to implement stakeholder engagement practices, alongside suggestions for how this practice should evolve.
- Keystone Accountability Constituent Voice Methodology: Explores the use of “Constituent Voice” for engaging affected people and communities.
- Feedback Labs: Advocates for feedback loops to understand the perspectives of affected people and communities.
- 60 Decibels Using self-reported data for impact measurement and Remote Survey Toolkit: These publications introduce how to use customer and employee surveys to improve impact performance.
- Advancing Social Equity Through Impact Management: Practical guidance and examples of engaging affected communities in impact management (see especially Sections 3.1 and 4.1).
- AA1000 Stakeholder Engagement Standard: A global benchmark for conducting community engagement and integrating engagement initiatives within governance, strategy, and operations.
- Collective Impact Forum Community Engagement Toolkit: Tools for developing a community engagement strategy including guidance on articulating engagement goals, testing assumptions and bias, and approaching groups for engagement.
- UNICEF Engaging Stakeholders on Children’s Rights: Guidance on engaging children and child rights advocates on issues affecting children.
- Value for Women Gender Smart Nexus: A guide for integrating a gender lens in investment and entrepreneurship, including how to segment outcome data and understand differences by gender.
How do we know if an outcome is "good"?
Enterprises assess whether the outcomes they generate are positive or negative by comparing them to thresholds.
THRESHOLDS
A social or ecological threshold defines the range of performance that is considered positive versus negative. These ranges are set with reference to social norms and / or planetary limits that have been identified based on consensus-building processes, scientific research, and the views of affected people and communities.
For example, the 2X Criteria define country and sector-specific thresholds for gender-lens investing such as enterprises’ share of women in senior management, share of women in the workforce, and share of businesses founded by women.
From a measurement perspective, outcomes are positive if they meet the needs and aspirations of people (defined by human rights norms) and / or stay within the means of the planet (defined by ecological ceilings). The diagram below shows a simple representation of a threshold.
Societal and ecological thresholds determine what level of performance is positive
Generally, while adverse ecological tipping points are relatively well understood, development of social or human rights thresholds is less mature. The Taskforce on Inequality and Social-related Financial Disclosures defines human rights thresholds as “the level of outcomes below which people’s well-being should not fall,” but the appropriate level of well-being may not be clear for every outcome and can vary considerably depending on context and perspective.
For example, if selecting a threshold indicator for a living wage, which is generally understood as the level of income that can support a decent standard of living, a practitioner may be faced with a range of options based on differences in geographic scope and different interpretations of what constitutes a decent standard of living (illustrated in the diagram below).
Living wage thresholds for garment workers in Bangladesh (2015-2017)
Practitioners may therefore need to review various possible thresholds and the methodology behind them, consider the perspectives of affected people and communities, and provide a rationale for their selection. While in many cases there is no one technically correct choice, investors and enterprises will ideally select the most ambitious threshold that is relevant to affected people and communities.
Where threshold and allocation methodologies are not yet available, organizations may need to determine a relevant threshold themselves. Sound thresholds and allocation methodologies are:
- Rooted in the best available data on the relevant topic, prioritizing data that centers the perspectives of affected people and communities. For example, the Anker Methodology for estimating living wage emphasizes participation of local people and organization to define standards for living expenses such as nutritious food and healthy housing.
- Applicable to the specific situation being measured (which can be verified through community engagement). A threshold’s relevance depends not only on local context, but also on applicability across different subgroups. For example, a person with disabilities may need to spend more to maintain a comparable standard of living to someone who is able-bodied, and may therefore define a higher living wage.
- The most aspirational choice feasible. For example, the Future-Fit Business Benchmark establishes “Break-Even Goals” as outcome levels that every business must reach to avoid impeding societal progress, while “Positive Pursuits” set the line that will accelerate progress. Focusing on the former will result in a society and planet that barely functions, while more aspirational thresholds set a higher standard for people and the planet to thrive.
- Transparently reported, including information on who defined the threshold and the data and methodology used.
Thresholds are distinct from outcome targets that organizations might set themselves, which are not explicitly linked to a consensus or scientific assessment of what constitutes a positive outcome.
The table below indicates different types of thresholds and examples.
Sourcing outcome thresholds
While a central repository of standard-based outcome thresholds does not exist, governmental and intergovernmental organizations have produced thresholds for several social and environmental issues. For example, the World Wildlife Foundation sets a threshold of microplastic concentrations in oceans at 1.21 x 105 items per cubic meter, beyond which adverse effects on marine species, biodiversity, and ecosystems are likely to occur.
The threshold should closely mirror the outcome indicator to be reliable and useful. For example, if the outcome indicator denotes the quality of affordable housing for U.S. residents, the National Healthy Housing Standard would provide reliable criteria to assess whether housing is safe and healthy.
For more on thresholds, please see the Thresholds and Allocations page on the Impact Management Platform website.
Relevant Resources
- Science-Based Targets Network: Developing methodologies for determining thresholds and allocations for topics such as biodiversity, land, oceans, and water.
- EU Taxonomy Technical Screening Criteria: Performance thresholds for environmentally friendly business operations.
- SDG Index: More than 80 universal thresholds across all 17 Sustainable Development Goals.
- UNRISD Sustainable Development Performance Indicators: Defines thresholds for 17 context-based indicators across environmental, socioeconomic, and governance dimensions.
- United Nations Universal Declaration of Human Rights: Provides guidance for social thresholds.
- International Labour Organization (ILO) conventions: International treaties that set minimum standards for labor rights.
- UN Guiding Principles on Business and Human Rights: Outlines responsible business practices which can inform social thresholds.
How do the outcomes relate to the SDGs?
The Sustainable Development Goals (SDGs) challenge enterprises and investors to understand both their positive and negative impacts on people and the planet. Classifying outcomes into one or more of the 17 goals – and accompanying targets – can provide enterprises and investors with macro-level insights into how their activities contribute to or detract from this widely-accepted global effort.
Most SDG targets are set at global or national level, and so the indicators are designed to measure the percentage of population or resources that have met the societal or ecological threshold referenced in the target. Not all SDG indicators and targets are relevant to organizations.
For assessing an organization’s contribution to SDG targets three pieces of contextual information are needed:
- The societal or ecological threshold referenced by the SDG indicator, which also requires consideration of local or national differences (e.g., living wage)
- The local and national target relating to the indicator (e.g., 100% of women)
- The contribution that the organization has made towards (or detracted from) that target, net of other contributing factors
Assessing contribution to SDG targets: an example
Akin to the ABC classification, there are three ways to consider performance of a single sustainability topic against an SDG target:
- Negative SDG contribution: the organization is detracting from SDG progress by causing negative outcomes in relation to one of the SDG targets (e.g., by paying any employee less than minimum wage, SDG 8.5.1).
- SDG aligned: the organization is maintaining an existing sustainable outcome in relation to an SDG target (e.g., by continuing to pay employees above the minimum wage, SDG 8.5.1).
- Positive SDG contribution: the organization’s activities generate new sustainable outcomes for people or the natural environment which were previously outside of the sustainable threshold. The organization itself did not cause this harm but is seeking to address the need of a specific population or ecological system.
Three types of SDG contribution
Where objectives have been set in relation to SDG targets, organizations can review mapping guides to understand which metrics relate to assessing SDG contribution.
