In the face of the climate crisis and growing social inequality, individuals, governments, organisations, and businesses must be held accountable not only for how we do not harm the planet and people but also for how we improve it and how we improve the lives of its inhabitants.

Businesses increasingly focus their sustainability reporting on social impact driven by two major forces. Firstly, the investor. We are witnessing the exponential growth of a new financial and economic system that puts impact at the heart of investment. Impact investors manage over $3 billion worldwide, reflecting a remarkable 280% growth in impact investment wholesale vehicles over the past five years. Second, the regulatory. In Europe, companies, starting with the largest and progressively extending to all listed companies and voluntarily to SMEs, are subject to the Corporate Sustainability Reporting Directive and its European Sustainability Reporting Standards. They are also subject to the social disclosure of their value chain.

The reporting of these hundreds of data points, as well as the financial impact boost, will only unleash the power for good that businesses have if efforts are directed to:

1. Connecting business strategy to socially agreed-upon goals. Our societies have agreed on social priorities through our democratically elected representatives (Agenda 2030), and any business strategic intervention must clearly state how it will contribute to improving this agenda.
2. Moving from the account of what is being done to the account of what is being improved. Sustainability reports should report on improvement in people’s lives, not activities or people reached. This is the definition of societal impact used by the European Commission and coordinated by Spanish Professor Ramón Flecha for the Research Framework Programme.
3. Introduce science into metrics. Improvements in people’s lives can be measured scientifically. Social science has come a long way from mainly diagnosing society to contributing to how certain interventions, based on scientific evidence, demonstrate social impact. Although most companies, agencies and universities are doing reports with elementary mistakes, an increasing number of them are doing excellent work with all the scientific and social requirements.
4. Co-create knowledge about improvement with beneficiaries. It is not the business alone or external organisations that decide whether social improvements have taken place. From the beginning of the intervention design, a co-creation process with consumers, beneficiaries, or communities is also needed to unequivocally and scientifically demonstrate the improvement the intervention has had on their lives.

The legislative and financial framework offers businesses an unparalleled opportunity to move from compliance and ticking boxes exercises to a strategic commitment to creating long-lasting social value. The most far-sighted and accomplished companies are already doing it.

(Image by John Pearce)

María Vieites Casado

Executive Director of Social Impact in Cambridge, UK. She led projects across 22 countries, building networks of universities, governments, businesses, and educational centres focused on societal improvement. In public service, she advised Spain’s Education Secretary of State and contributed to national arts and inclusive education boards. She also has extensive experience in multinational environments and has published on educational success, policy development, and societal impact.