Every year, companies around the world invest billions of dollars, countless resources, and time into corporate social responsibility (CSR) initiatives. Reporting on the amount of these donations used to be enough to please the general public, but in the age of greenwashing and ESG (Environmental, Social, and Governance), stakeholders want accountability.
And for good reason.
Most people are familiar with TOMS’ shoes and their revolutionary “buy one, give one” efforts. Well, the story of the company’s famous donation model highlights the problem of vanity metrics in CSR programs.
TOMS’ original philanthropic strategy was to donate a pair of shoes to a child in need for every pair of shoes purchased. Over the life of the program, the company donated 95 million pairs of shoes. This must have made a significant impact, right?
Several years ago, the company decided to assess the impact made by these donations on communities in El Salvador. To their surprise, when they looked at the results of their efforts, there was no increase in health or self-esteem for the children, school attendance improved only slightly, and the kids were significantly more likely to feel dependent on external aid. The shoes—the program’s outputs—didn’t make a real difference in the children’s lives.
TOMS has evolved this donation strategy into a “grassroots good” philanthropic model. This has helped the company generate more impact by engaging in deep partnerships with community organizations.
Shifts like these, from inputs and outputs to outcomes, show that businesses realize good intentions are no longer enough. For companies interested in driving both social and business value, impact measurement can help them collect the right data about their CSR initiatives to improve society in an authentic, verifiable way. Platforms such as True Impact generate impact data and actionable insights about CSR programs, helping corporate citizenship professionals to demonstrate the value of their work, protect and expand support for their programs, and identify areas for improvement.
Here are six ways that CSR impact measurement can further social and business value:
- Enhance transparency and reputation: CSR impact measurement provides a way for companies to demonstrate accountability for their social impact initiatives, ensuring their mission statements have verifiable data behind their actions.
- Improve ESG reporting: Impact measurement helps companies validate the results of their corporate citizenship efforts for ESG reporting. Employing a proper CSR impact measurement strategy ensures their “S” metrics follow a methodology that ESG auditing and assurance providers can trust.
- Attract investments and lower costs of capital: ESG is often correlated with financial performance. Good ESG practices—and the impact data to back it up—attract investors looking to ESG as an indicator of positive business returns.
- Evaluate effectiveness and improve performance: Impact measurement provides evidence-based metrics to optimize CSR programs. Social return on investment (SROI) and other impact data can help companies improve their methods and allocate resources wisely, especially in times of economic uncertainty.
- Demonstrate a real commitment to the causes that matter most: By investing in CSR impact measurement, companies can demonstrate their commitment to following responsible business practices, verifying their impact, and bettering society.
- Foster innovation to increase social and business impact: By regularly assessing and evaluating the impact of their CSR programs, businesses can explore new ways to achieve their goals using actionable insights from evidence-based data.
More eyes are on corporate social impact than ever before. Without data-driven insights to back up their work, CSR departments run the risk of their efforts being seen as merely lip service or greenwashing. Although this increased scrutiny may seem daunting, it offers an opportunity for companies to show how their corporate social impact is making a meaningful difference in the world.
One last note: Any impact measurement solution must also respect the time of both your corporate colleagues and the staff of your nonprofit partners. Piling on reporting demands at the expense of program implementation is not much of a solution! Collect only the data that matter (outcomes) and discard the rest. Everyone will be better off.
Schedule a demo with the True Impact team to learn how our impact measurement platform can advance the social and business value of your corporate social impact in as little as three months.
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