For all the talk of enhancing the impact of business on development, there is little measurement of what that impact is – and little discussion of how to measure it. How different is the information needed by auditors for verification, by managers for enhancing performance, by the board for public disclosure or by policy-makers for molding the investment climate?
At a corporate level, do we measure the big numbers, the poverty footprint or report on international indicators, such as those within the Global Reporting Initiative? At the sector level, can we measure multiplier affects on economic output, or track the value chain down to the poor? At the enterprise level, how do we assess the local benefits of good business initiatives, or of the whole business? What is useful, when, and for whom?
A recent meeting in London, convened in the 2009 series on Harnessing the Power of Business for Development Impact and organized by the Overseas Development Institute (ODI), the UK Department for International Development (DFID) and Business Action for Africa, sought to explore how we can better understand the impact of business on development, and particularly what companies themselves do in this area.
Event summary:
For a detailed write-up of the various contributions, see the event summary (pdf, 4 pages). Also available: video highlights of all contributions.
In the first session, ODI’s Caroline Ashley highlighted four different approaches for measuring business impact on development that have emerged so far, that is:
- Local assessment: Livelihood impacts and stakeholder views of a firm or initiative
- Value chain foot printing: enterprise and poverty impact of the entire value chain
- Economic contribution: multiplier effect of a business in the national economy
- Reporting against fixed indicators: company performance reporting against a ‘scorecard’ of indicators.
Speakers from Anglo American, Unilever and Vodafone built on this by reporting on how they have used these approaches:
- Edward Bickham outlined how Anglo American is doing local community and site specific impact assessment using their Social Economic Assessment Toolbox (SEAT).
- Miguel Veiga-Pestana explained how Unilever assessed their entire value chain in Indonesia and their economic contribution in South Africa.
- Joaquim Croca explained how and why Vodafone aims to explore the impacts of mobile phones at the local level in Africa.
In the second session Marie Rosencrantz explored how CDC – as a donor organization – assesses the impacts of business investments.
The final session discussed how a wider adoption of different approaches could be facilitated. The discussion particularly focused on the question as to whether the business case is sufficiently strong to scale up impact assessment, how companies can choose the right approach for their business needs and how the trade-off between efficacy and ease can be managed. Jessica Davis of the World Business Council for Sustainable Development (WBCSD) commented on the process how the WBCSD over the last couple of years has developed a framework to measure impact of business on development and particularly the challenges regarding things such as ‘how to define development’ and ‘how to define impact’, thus also what is actually to be measured.
More information on the topic of impact assessment:
- Managing the impact of a mining project – the case of Alcoa
- Beyond the bottom line: measuring business impacts on society
- What gets measured gets done - WBCSD Measuring Impact Framework
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