The journey of a thousand miles begins with one step. — Lao Tzu
A local company that builds eco-friendly houses uses the slogan ‘sustainable is the new sexy™’. They’re right: companies worldwide are now looking to create sustainable products, more eco-friendly supply chains, and zero-waste production facilities. In addition to green initiatives, many corporations are beginning to prioritize equal treatment for all employees, creating positive impact in the communities where they do business, and governing their businesses in an ethical and transparent manner.
The move towards more sustainable, equitable, and well-governed corporations comes from a more informed consumer-base who are willing to pay more for sustainable and ethical products and services as well as investors who are putting more pressure on companies to disclose their ESG (environmental, social, governance) ratings. In fact, 72% of investors say that they value metrics on non-financial risk, yet 64% of portfolio companies are not adequately disclosing ESG risk.
Not only can tracking ESGs lead to short and long term financial benefits, but over time we’ve seen that companies who do so receive greater governmental support, see an improvement in employee morale, and mitigate risks, all of which leads these companies to outperform their competitors in the long term, both in the stock market and in other accounting KPIs.
Despite the fact that ESG investing is on the rise, there’s currently no standardization, which has led to a long-held belief by many that it’s difficult to quantify and communicate returns on social and environmental impact. Many business leaders are unaware of the benefits of ESG tracking and they may view it as a passing fad, a costly investment, or just another item on a list to check off. And for many, fear of a poor ESG rating is enough to avoid tracking metrics altogether. But the fact is, impact reporting can be quite simple. And if you don’t know where you are lagging, how can you make changes to stay competitive in the market?
At Riddl, we talk a lot about measuring your impact and how developing a Theory of Change can help you create and track social and environmental impact. A Theory of Change defines the impact you want to have on your organization, a community or more broadly, on the planet, then maps backwards to list all the in-between steps you need to take to get there. In doing so, you consider all potential pitfalls, risk factors, and underlying assumptions about the initiative, to ensure you’re viewing your impact project from all possible angles.
When selecting impact goals and targets, many in the impact space align these with the UN’s seventeen Sustainable Development Goals, which relate to justice, peace, environmental degradation, climate change, inequality, and poverty. With so many important goals to choose from, most organizations can find at least one that aligns with their brand and mission statement.
Once goals have been selected and a Theory of Change has been created, data collection can begin. By using Riddl, a lot of the heavy lifting of impact work is done for you. Your team can use the collaborative workplace to input impact indicators, discuss the project’s progress, determine social return on investment (SROI), and generate user-friendly impact reports for key stakeholders.
Balancing social and environmental responsibilities with accountable governing to create lasting impact is an important journey. Riddl can help you take that first step. Contact us to learn how.
Written for Riddl by Jill Mersereau