Measuring social performance

1. Measuring social performance by Toni

2. Social performance measures how well an institution has translated its social goals into practice What is Social Performance?

3. Social performance is measured through the principles, the actions and the corrective measures implemented

4. Social Performance Goals -Structure -Conduct -Performance -Impact (Impact on clients/non-clients, communities, etc. in various dimensions)

5. Social performance, thus conceived, precedes impact and leads to impact

6. Conceptual frame Performance = Results obtained in terms of design, action and outcome Impact = Changes among clients, non-clients ( and communities) imputable to MFI activities. Measuring social performance implies evaluation of principles, actions, outputs,some elements of outcome, and corrective measures Impact measurement is too demanding, complicated, costly etc. for averageMFI. Some proxy indicators for impact might be added

7. For example • • Output : Number of loans and savings accounts, and average size (relatively easy to monitor and assess) • • Outcome: Improved money management at household level ( assessable) • Impact : Effects on income, education, nutrition etc. (

8. SocialPerformance Goals • Serve increasing numbers of poor people sustainably • Improve the quality and appropriateness of financial services available to poor people. • Improve the lives of poor clients and their families • Widen the range of opportunities for communities

9. Microfinance is serving ‘the poor’ • vulnerable non-poor clients are in a household above the poverty line but vulnerable to slipping into poverty • moderate poor clients are in the top 50 percentile of households below the poverty line • extreme poor clients are in the households in the bottom 10 to 50 percentile below the poverty line • Destitute clients are in the bottom 10 percent of households below the poverty line

10. Measuring social performance is difficult but essential • Every area of business activity revels in its own management phraseology. Sustainable business is no exception. Terms like "walk the walk", "win-win" and "enlightened self-interest" litter the field's growing lexicon • These terms capture the balance between companies' social, economic and environmental performance • Therein lies true sustainability, it's said – people, planet and profit, all in perfect unity. A dozen years ago, oil giant Shell based its second annual sustainability report around these three pillars. Now most FTSE100 companies follow suit

11. Businesses have never had a problem focusing on the economic bottom line – even if hitting it has been made tougher in recent times. The environment has catapulted up the business agenda too. Earlier this year, the international sports apparel brand Puma went as far as to publish a stand-alone environmental profit and loss account. • "Companies are only just beginning to ask about the social area... it's the next phase in a rolling evolution", argues Giles Gibbons, founder of specialist consultancy firm Good Business.

12. The social impact imbalance • Several things contribute to this imbalance. One is technical. Measuring financial impact is straightforward. The answer is black or red with a currency tag attached. Likewise, tonnes of carbon dioxide or litres of water are generic units that are relatively easy to calculate. • What value should be put on an employee's volunteering efforts, for example? Or a company-led apprenticeship scheme for unemployed youth? • Attempts at standardisation remain in their early days. At a basic level, more than 300 companies follow the London Benchmarking Group (LBG) scheme to calculate the inputs, outputs and impacts of their charitable activities.

13. "There's a lot of comparing apples with pears in terms of social impacts. Because companies can use LBG to consistently measure their social investments, this has provided a push in the right direction", says Mike Tuffrey, LBG's co-founder • In the academic field, complex theorems are also being developed. Leading the pack is Professor Ethan Kapstein. Chair of political economy at INSEAD business school, Kapstein has carried out nationwide social impact assessments for the likes of Unilever, Standard Chartered and SAB Miller. • Kapstein's latest research, released in June, examines Newmont, the world's largest gold producer, in Ghana. The study credits the US mining giant with producing 48,000 direct and indirect jobs, paying $243 million per year in taxes and spending over $4.8 million on a farmer assistance programme.

14. The findings are impressive, but highlight the difficulty in disaggregating the social from the economic. Anglo American, another mining giant, likes to boast that it spends $10.4bn annually on procuring goods and services. Most of the money is spent in developing countries. But is that a social or economic impact, or both?

15. Blurred lines • The measurement dilemma points to a larger conceptual problem. Where do a company' social responsibilities start and stop? • Historically, most businesses used to draw the line at the office door or factory gate. A company's social impacts centred on job creation and, to a lesser extent, how it treated its employees. • Community riots in the UK during the early 1980s widened the scope. In their wake, the Prince of Wales-sponsored group Business in the Community (BitC) emerged. "Healthy backstreets equal healthy high streets" ran its motto. Suddenly, companies' social responsibilities (and commercial interests) came to include their local communities.

16. The following decade witnessed the explosion of industrial globalisation. Food and clothing that was once manufactured locally began arriving from far-flung places – many of which had dubious labour practices. • Following public pressure, companies added their international supply chains to the list of areas where their social impacts were being felt. Codes of conduct followed, coupled with factory and farm audits to prove (or disapprove) compliance.

17. Globalisation has not slowed down. As the clout of the world's largest companies grows, so too have their perceived social responsibilities. • Today, pharmaceutical companies are expected to help cure tropical diseases, logistics firms to aid in disaster relief and banks to provide the poor with credit access. 

18. Ignored impacts • Despite what seems a growing laundry list, at least two major social impacts remain overlooked. • The first relates to companies' relationship with government. Rare is the company that reveals information about its lobbying activities, let alone mention of deals struck or concessions granted. • Taxes fall into the same bracket. Giving to charity is all very well, but it pales when compared to the dollars and pounds that companies pay – or should pay – into public coffers.

19. While using tax havens and other tax avoidance techniques may not be strictly illegal, it restricts the state's ability to fulfil its social role. • In the wake of recent public protests, some business leaders appear to be getting the message. Mining firm Rio Tinto, for example, recently revealed that it contributed $7.4 billion in 2010 to the public purse. • Such examples remain the exception. Corporations have been notably silent in the current "tax me harder" phenomenon led by Warren Buffet and other wealthy industrialists.

20. The second major oversight is product responsibility, which is strange given this is frequently the area where a company's impact on society is most profound. • The potentially negative impacts of other products are more obvious. The link between alcohol and alcoholism or processed food and obesity are illustrative. • Where a causal link to public health and safety is clear, governments generally step in. Hence the ban on asbestos and the use of mobile phones when driving. • More often than not, however, a product's social impacts are associated with consumer use rather than the product itself. One gin and tonic is probably fine. Ten is ill advised. Much therefore depends on how products are marketed.

21. Careful marketing • Fearful that booze might face the advertising restrictions of cigarettes, beverage companies have been at the forefront of responsible marketing in recent years. • Bacardi is typical of this trend. The spirits manufacturer provides a dedicated website where consumers are advised to drink in moderation, not to drink when pregnant and not to drive under the influence. • The company goes as far as to admit that irresponsible use of its product can lead to "a lack of coordination, slurred speech and even double vision".

22. It's a clever ploy. The company can say it's done its bit to raise public awareness. Will we ever see the day when a drinks company chooses Alcoholics Anonymous as its Charity of the Year? Unlikely. • Or is it? UK drinks company Diageo recently garnered headlines for paying for midwives to be trained in advising women on the dangers of alcohol during pregnancy. • In a similar vein, food companies are beginning to take seriously the rise in obesity – a condition due to affect almost half of British men by 2030 according to recent research.  

23. To date, providing nutritional information on packaging has been perceived as enough. Now PepsiCo says it won't advertise drinks that are judged insufficiently nutritional to children under twelve. It promises to do the same for crisps and other snacks next year. • Campbell Soup, meanwhile, is planning to turn abandoned urban lots into vegetable gardens in the US city of Camden, where it is headquartered. The project is part of a ten-year, $10million healthy eating drive that includes efforts to help local corner stores stock and sell fresh produce profitably. • Likewise, a handful of food companies are seeking to promote healthier lifestyle to help consumers beat the bulge.

24. Swiss food conglomerate Nestlé, for instance, offers tokens with selected products. These can then be exchanged for a sports-related activity. So a tube of Smarties gets you a free gym session. • It's a fine line for companies, though. A survey by the Children's Food Campaign maintains that 24 of the 27 products eligible for the scheme are categorised as "high in sugar".

25. Radical solutions • There's one obvious step that companies can take is they want to genuinely combat the potentially negative social impacts of their products: they can stop producing them. • The suggestion may not be as mad as it seems. Nelmara Arbex, deputy chief executive of the Global Reporting Initiative (GRI), points to the example of ITC in India. Formerly known as the Imperial Tobacco Company, the company has diversified from tobacco over the years and now invests in a whole range of cash crops.

26. "This isn't an isolated case. Companies are reacting to a change in social realities", argues Arbex, noting that consumers are increasingly anxious to know the impacts of the products they buy. • "There is a general concern in society about the relation between what I consume and what is going on in the world, which is generally accepted as not really the best", she adds.

27. To meet these changing expectations, GRI now has specific performance indicators regarding product responsibility. • The social impact of what appears on their shelves marks a "blind spot" for retailers especially, warns Mark Line, director at consultancy firm Two Tomorrows. Supermarkets make much of the ethical credentials of their own brands, but are silent about the social impacts of other products on their shelves.

28. "We're not asking them to publish detailed information on this, but to at least express an opinion", Line states. • One of the few major retailers to take a stand is Migros. The Swiss supermarket refuses to stock tobacco or alcohol products – a move that has lost it revenue, but placed it among the world's most trusted brands.

29. Thanks for listening !