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Column by Louise Møller, Co-founder & Partner af Re-lab og BETRUST, for Impact Insider.
It's not exactly a mathematical formula we’re going to examine – and yet, in some ways, it is. As more and more organizations start measuring ESG, most leaders will likely seek insights that can form the basis for sound decision-making and truly show that investing in the “S” is also a smart business move.
This is where the famous SROI (social return on investment) comes into play, and it's time to introduce you to Johan Dubert from Impactly.
Impactly helps organizations, foundations and companies measure, follow and report the social impact of their social initiatives, impact investments and the activities related to the “S” in ESG. According to Johan Dubert, there are several good reasons to measure social impact in investments and decisions.
Johan points out that measuring social impact contributes to increased accountability and transparency, making it possible for customers, investors, employees, and society as a whole to understand how companies and foundations are impacting the community and environment.
Daring to be this transparent requires the courage to be more ambitious about other bottom lines than just the financial one.
Another benefit is that companies and foundations can far better evaluate which programs, projects, or initiatives work best and which can be improved or adjusted. This leads to a more effective use of resources and a better ability to achieve the desired results.
Johan also mentions that measuring social impact can inspire innovation. When organizations see where they can make a difference, it can motivate them to develop new solutions and approaches to solve social problems in a far better and more appropriate way. And real innovation is needed in a time of numerous interconnected crises.
Furthermore, measuring social impact promotes collaboration between organizations as they identify areas where they can work together to achieve common goals. This can lead to stronger partnerships and synergies, improving relationships within a broader ecosystem. Impactly itself is part of collaborations such as Ensomhed i Tal and Open Social Value Bank.
In my opinion, conducting SROI is an integral part of modern social responsibility, sustainable business practices, and impact leadership.
My wish is for more companies and organizations to be as ambitious about social impact as they are about growth and revenue. Anchoring SROI in an accounting program can be the first step toward a more ambitious approach to investing in social impact.
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