An LSE Enterprise report has called for a new way to measure the social impact of business.
Corporations increasingly view positive social impact as enhancing, rather than detracting from, their financial returns. With encouragement from state and business leaders, the concept has become mainstream, giving rise not only to company departments but to dedicated institutions.
A variety of tools are available for companies to assess their environmental, social and governance performance. In this report, three researchers analyse the methods currently in use and explore how a new platform might build on their strengths while eliminating their weaknesses. They find that existing methodologies tend to be subjective, resource-intensive and have a narrow focus, although many are able to demonstrate and enhance value.
The researchers suggest creating a new External Rate of Return platform, aimed at all companies. The new platform would enable companies, investors and third parties to report activities across five arenas: the company, suppliers, customers, society and the environment. It would be holistic and transparent, encouraging dialogue about the overall impact of business. Dr Klingler-Vidra, one of the report’s authors, says
We suggest ‘standing on the shoulders’ of the existing methodologies by creating a radically transparent platform that encourages society-wide dialogue about the economic and social impact of business activities – known as the External Rate of Return.
Respond to the report’s Call for Action:
- What indicators and metrics would you suggest?
- Would you like to help build the External Rate of Return platform?
Authors: Mark Florman, Robyn Klingler Vidra, Martim Facada
Contact us using the form below to explore what consultancy or tailored training we can offer in this area.