Social impact refers to the effect that an organisation or activity has on the well-being of people and communities. It can be positive, negative, or neutral, and can be assessed at different levels, from the individual to the global.
There are many ways in which an organisation can have an impact socially. For example, a company may have a direct impact on its employees through its labor practices, such as providing fair wages, safe working conditions, and opportunities for advancement. It may also have an indirect impact on the broader community through its supply chain, by sourcing materials from suppliers who uphold ethical and environmental standards.
An organisations SI can also be evaluated in terms of the services or products it provides. For example, a healthcare organisation may have a positive social impact by providing affordable and accessible healthcare to underserved communities. On the other hand, a company that produces harmful products or engages in unethical practices may have a negative social impact.
Assessing SI can be complex, as it involves considering a range of factors such as cultural values, economic conditions, and individual circumstances. It can also be difficult to measure, as it often involves subjective judgments about the value of different outcomes.
Despite these challenges, there is growing recognition of the importance of social impact, particularly in the business world. Many companies are now looking for ways to maximise their positive social impact and minimise their negative impact. This can involve adopting corporate social responsibility (CSR) initiatives, such as investing in community development projects or implementing environmentally-friendly practices.
There are also a number of tools and frameworks that organisations can use to assess their SI. These include the triple bottom line, which evaluates sustainability in terms of social, environmental, and financial performance, and the social return on investment (SROI) approach, which measures the financial value of a project’s social and environmental impacts.
Social impact is a key consideration for organisations that want to make a positive contribution to society and create long-term value for all of their stakeholders. By understanding and managing their social impact, organisations can help to create a more just and equitable world.
Each month we’ll aim to bring a bit of humanity and common sense back into the world of finance.