Leaders will gather at the first face-to-face Davos in more than two years and – despite a backdrop of countless recent crises, including a global pandemic – the event will focus much of its agenda on sustainability. However, it is clear that these crises have transformed the way sustainability is perceived – in Davos and beyond – and its impact is now seen within a broader spectrum of societal benefits.
For tech companies, demonstrating progress along this spectrum means delivering sustainability impact through core products and services—and a key enabler of this is impact measurement. Impact measurement moves one step beyond traditional sustainability measurement to capture the overall benefits products and services deliver to society through their use. And if businesses want to continue to be positive actors in their communities, they need to start incorporating impact measurement into their sustainability and impact strategies.
Impact measurement looks beyond bottom-line financials to discover how the needle is truly being moved on sustainable development. Knowing there’s a certain number of businesses using an automated building management system can be considered relevant in terms of a system’s commercial success. But knowing that using the system has resulted in a significant reduction in annual energy consumption for each business is where the greater potential for positive impact can be made.
Why impact measurement?
Clearly, impact measurement requires a paradigm shift when quantifying the societal outcomes of products and services. Thinking in terms of benefits to society may not come naturally to businesses that are used to measuring a product’s success according to sales or number of users.
A paradigm shift could be an imperative for companies. Nearly 90% of millennials believe that companies should be judged on more than just financial metrics; 64% of consumers believe that brands can be a powerful force for good in society. Impact measurement can also bring a range of benefits—including:
- Enabling products to be improved to increase impact delivered
- Attracting investment from external investors
- Improving long-term customer engagement and brand loyalty
- Enhancing credibility and differentiating from competitors via accountability and transparency on impact
How to measure impact?
While it may seem that impact measurement requires a considerable reconfiguration of how products and services are tracked and assessed, the following straightforward guidelines can help businesses make the shift:
Identify the specific and most important impact that a product or service contributes to. As per the example above, this would mean identifying that the key impact of the automated building management system is a reduction in energy consumption. This can help tell the story of the products’ impact and determine the relationship between product usage and short- and long-term outcomes. In some cases, a universally accepted standard, such as the United Nations Sustainable Development Goals (SDGs), can serve as a framework within which to articulate social or environmental benefit delivered.
Develop a meaningful “unit” by which to quantify product or service impact against a baseline. In the case of the automated building management system, the unit of impact would be each kilowatt-hours of energy saved. The baseline or “business as usual” impact should also be identified to help understand the benefits. This could be outcomes experienced by consumers prior to using a product or if the product didn’t exist. For example, how many vaccinations would have been administered without the app or how much energy was used prior to implementing the system?
Quantify impact. This can be done either through understanding the actual impact delivered (e.g., how many additional vaccinations were delivered) or by understanding the average percent increase or decrease in impact. There are a range of research methods available to quantify impact. Drawing on existing user data or academic research can be the starting point of quantifying impact but generating data via expert or user survey can yield information when existing research is not available.
Manage and monitor to maximize the impact of a product or service. To do this, businesses should determine the most meaningful ways to communicate impacts overall and with individual key stakeholders groups. Impacts can also be maximized by improving the efficiency of how the product delivers impact or by increasing its market share. And one of the best ways to monitor product impact is to embed impact data collection and measurement in the product itself. For example, embedding automatic tracking of energy use in the building management system.
Measurement that’s meaningful
Shifting to impact measurement requires tech companies to think more expansively about the role their digitally enabled products and services play in society. The goal is to discover how products improve people’s wellbeing and their environment—and numbers and reach often are poor indicators of real impact on real lives. This means tech companies need to reframe their assessment methodologies, finding new measurements that paint a more vivid and ultimately more meaningful picture of the societal benefit their products can provide.
To build a more sustainable future for our children and the next generations, everyone’s participation is essential. That is why at eSmart Recycling, we believe in partnerships between the public and private sector. We could not deliver equipment to at-risk kids and families in the same way if many players in the community were not involved; from our corporate partners, to our nonprofit partners.