Blogs & Comment

Putting a Value on Community Investments

There’s a good article by Judith Maxwell in today’s Globe and Mail.It’s called “Seeking the sweet spot, where financial and social returns converge.” Ms. Maxwell points out how much has changed over the last three years in terms of the need for corporations to pay more attention to environmental, social, and governance risks.
There are a number of interrelated drivers for this shift including pressure from securities regulators and large institutional investors, more stringent purchasing guidelines among mass retailers and other corporations, and a new zeitgeist among consumers of all ages that places as much priority on values as on value.
One of the key questions posed by Ms Maxwell is “With all this talk of measurement and disclosure, what has happened to the social dimension?” Some interesting examples are cites including programs by Unilever that foster economic development and sustainability for communities where it operates (see: U nilever commits to sourcing all its tea from sustainable sources.)
However, it finding the sweet spot remains challenging – largely because the management tools used in corporations are almost always quantitative and social outcomes involve behaviour change that, if successfull, lead to qualitative change with respect to issues including health, health care, environment, education, and so on.
At Impakt, we’re faced with this challenge on a daily basis. Recently, we developed a new tool that is a first step towards helping CSR managers understand the value of their social purpose programs. We call it the Partnership Valuation Tool and its essentially a cost/benefit analysis for community programs that involve significant investment but have largely qualitative benefits/outcomes.
I think that finding the convergence of financial and social returns can and should be done in a more disciplined way. However this is territory that will always depend on good judgment by corporate managers and community leaders. As the sign in Einstein’s office at Princeton read “Not everything that counts can be counted, and not everything that can be counted counts.”