Five dimensions of impact | WHATWhat outcomes do enterprises and investors contribute to? How do they know if the outcomes achieved are ‘good enough’? We explore the impact data categories under the 'What' dimension to answer these questions.
The “What” dimension tells us what outcome the enterprise is contributing to, whether it is positive or negative, and how important the outcome is to the stakeholders experiencing it.
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 positive / sustainable (i.e., surpasses a nationally or internationally-recognized thresholds) or negative / unsustainable (does not surpass the threshold), intended or unintended
- Maps to the Sustainable Development Goals and associated targets
- Meets the needs of the stakeholders
The four data categories under the ‘What’ impact dimension provide a practical frame that enterprises and investors can use when collecting, assessing and reporting outcome data. As with the rest of the norms, these categories represent building blocks. If you are starting from scratch, you may want to build your impact management framework on top of them. If you already have an impact framework in place, then you may want to use these categories as a checklist to ensure that you are not missing any essential elements.
What is an outcome?
An outcome refers to the level of an aspect of social, environmental or economic well-being that results from an action or event. Outcomes can be intended or unintended, and positive or negative with regards to thresholds that define acceptable or sustainable performance.
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 that intends 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, enterprises can:
- Prioritize those outcomes that matter the most to the stakeholders experiencing them
- Put policies and safeguards in place to identify and mitigate negative outcomes, including unintended ones
- Better communicate their total impact to investors – recognizing that different investors may invest in the same enterprise for different reasons (i.e., a 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 as four data types: absolute number, percentage, ratio, and categorical.
One type of indicator is not better than another. An indicator’s validity depends on how well it reflects the outcome. Consulting the affected stakeholders or those delivering the enterprise’s activities can provide useful insights about the validity of indicators. Enterprises should also consider the costs and practicality of data collection for different indicators.
Collecting outcome indicators directly may not always be possible or affordable. In these cases, enterprises may rely on an indirect indicator (i.e., proxy) that approximates the intended and unintended outcomes.
An output indicator can sometimes be used as a proxy for demonstrating the degree of progress (if any) towards an outcome. Using bednets distributed as a proxy for malaria reduction, or measles vaccines administered as a proxy for not developing measles, are examples of how outputs can be used to understand change. Here, the clear link between output and outcome eliminates the need to collect data on the outcome indicator.
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 stakeholder experiencing it; and
- Is at least partly within an organization’s control.
Resource: Social Value International has put together step-by-step guidance for creating well-defined outcomes through stakeholder engagement. This guide is particularly useful for identifying unintended and negative outcomes.
How important is the outcome to the affected stakeholders?
Gathering input directly from the people who experience impact can help enterprises uncover which outcomes – positive or negative, intended or unintended – matter the most to those they affect. Based on these insights, enterprises can redirect resources towards improving high-priority outcomes.
When is stakeholder feedback useful?
- Before the enterprise rolls out an initiative: Stakeholder feedback can be used to design an intervention that meets the preferences and needs of affected stakeholders.
- During the initiative: The enterprise can collect data on how stakeholders are responding to the intervention, allowing for quick adaptation.
- After the initiative: The enterprise can leverage stakeholder feedback to understand whether or not the intervention progressed according to expectations, and why.
In collecting stakeholder feedback, enterprises should remember that stakeholders’ views may change over time. Stakeholder feedback should not therefore be a one-time exercise, but a continuous and adaptable process. There are a range of methods available for enterprises to collect feedback, from closed-ended surveys (quantitative indicators) to focus groups and interviews (qualitative indicators). The resource box below presents several sources for gathering stakeholder perspectives.
- 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 Impact, helps us understand what people’s expectations are when buying or engaging with products or services.
- WEF: Guidance on engaging all affected stakeholders – This report, an effort by the World Economic Forum, provides guidance on how to implement stakeholder engagement practices, alongside suggestions for how this practice should evolve.
- Keystone Accountability: Constituent Voice Methodology – This publication explores the use of ‘Constituent Voice’ for engaging stakeholders.
- Feedback Labs – Feedback Labs advocates for feedback loops to understand stakeholder perspectives.
- Acumen: Lean Data Field Guide – This publication introduces Acumen’s Lean Data measurement technique.
- 60 Decibels: Using self-reported data for impact measurement and Remote Survey Toolkit – These publications introduce how to use stakeholder surveys to improve impact performance.
How do we know if an outcome is ‘good enough’?
Enterprises assess whether the outcomes they generate are ‘good enough’ by comparing them to thresholds.
A social or ecological threshold defines the range of performance that is considered positive / sustainable versus negative / unsustainable. These ranges are set with reference to social norms or planetary limits that have been identified through scientific research. From a measurement perspective, this means that outcomes for people are sustainable if they are within the acceptable range determined by societal thresholds, and outcomes for the natural environment are sustainable if they are within the acceptable range determined by ecological thresholds.
Examples include the UK Living Wage Foundation’s Real Living Wage or the Rowntree Foundation’s Minimum Income Standard, which define the necessary income for achieving an acceptable standard of living in the UK.
The diagram below shows a simple representation of a threshold. An outcome within the acceptable range is positive/sustainable. An outcome outside the acceptable range is negative/unsustainable.
Research on thresholds is nascent and our understanding of them is growing all the time, meaning that consensus-driven thresholds may still fall short of those that truly indicate sustainability or the unsustainable tipping point.2 Where threshold and allocation methodologies are not yet available, organizations can engage in collaborative initiatives to work towards establishing their own. Ideally, thresholds and allocation methodologies are:
- Rooted in the best available science on the relevant topic;
- Applicable to the specific situation being measured (which can be verified through stakeholder feedback);
- The most aspirational choice feasible; and
- Transparently reported.
Thresholds are critical contextual reference points for organizations assessing whether an outcome is sustainable or unsustainable. They are distinct from other types of targets that organizations might set themselves which are not explicitly linked to a scientific assessment of what constitutes a sustainable outcome.
For example, the table below indicates thresholds for seven indicators to achieve the SDG they correspond to. The green column shows the acceptable range for achieving the SDG, while the yellow, orange and red denote increasing distance from SDG achievement.
Source: Sustainable Development Report 2023, Methodology, Table A-5.1 and A-5.2 | Indicator thresholds and justifications for the optimum values
Sourcing outcome thresholds
While a central repository of standard-based outcome thresholds does not yet exist, governmental and intergovernmental organizations have produced thresholds for several social and environmental issues. For example, the World Bank has set three international poverty lines ($1.90/day, $3.20/day, and $5.50/day) that are widely used to measure progress globally. These thresholds are particularly helpful for enterprises with anti-poverty policies and interventions. The Science-Based Targets Network is developing further methodologies for determining thresholds and allocations for other topics such as biodiversity, land, oceans, and water. Another relevant resource is the SDG Index, which has released more than 80 universal thresholds across all 17 Sustainable Development Goals.
The threshold should closely mirror the outcome indicator to be reliable and useful. For example, if the outcome indicator denotes the yearly income provided to UK employees from disadvantaged backgrounds, the Real Living Wage threshold would be a reliable measure of whether the income is ‘good enough.’
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
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).4
- 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.5
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.