OPINION – From Corporate Social Responsibility (CSR) to Social Impact Assessment (SIA)

The recent progress of Corporate Social Responsibility (CSR) is moving from CSR activities and CSR performance towards assessing social and environmental impacts to the wider community and society to create proactive changes rather than limited benefits to specific stakeholder groups.

Tiffany C.H. Leung

Secretary of the General Assembly

Macau Institute for Corporate Social Responsibility in Greater China (MICSRGC)

Social Impact Assessment (SIA) has been widely adopted in the public sector, social service organizations and civil society organizations rather than in the private sector. Normally, donors, funders and taxpayers request the assessment of social impact to know whether their funds and resources are really addressing societal and/or environmental issues and help immediate and end beneficiaries, whereas project managers and associate partners desire to know whether the intended outcomes and impacts of their projects are properly achieved. Nowadays, organizations tend to borrow this concept to assess their partners and relevant stakeholders whether they could identify some theme-based projects that could make a difference to the community and environment. Organizations are the proactive catalysts in society. Thus, the objective of SIA is to establish measurement standards for social impact and to create potential markets for the maximization of social impact.

Social impact has been widely discussed in the literature and can be defined in various ways. Social impact could be broadly defined as organizations inputting their resources and funds that lead to a number of outputs, intended outcomes and finally societal impacts for both the short and long-term. Social impact traditionally refers to the social value creation from NGOs, social enterprises and social ventures rather than profit-making organizations. Recently, social impact has been examined in the field of management studies, such as accounting, entrepreneurships and information systems. SIA studies have increasingly been promoted in western countries, such as the US, the UK, and Australia. Nowadays, there is a rapid development of SIA in Asian countries and emerging economies. SIA appears to be more in continuous improvement and enhancement of Environmental Impact Assessment (EIA) for organizations in the future. Recently, companies and independent social impact agencies have gradually started to borrow SIA models and frameworks to assess social impacts of the theme-based projects to community and society at large.

There are three main external driving forces for the recent development of SIA over the past few years. First, there is a growing public demand on accountability and transparency on social impact, while the civil society demands for more social involvement, political participation and stakeholder engagement. Second, there is an increasing awareness of social responsibility, environmental sustainability and sustainable development in the recent years. Organizations are willing to identify theme-based projects to address social and environmental issues to create a better society. Third, there is an increasing demand for social venture, social investment and impact investing over the past two decades. Social entrepreneurs and foundations are eager to employ innovative approaches and tactics to cooperate with the local government, companies and social service organizations to address or resolve complex social and environmental issues, such as aging population, climate change and underprivileged people in the community, in a more sustainable manner.

SIA includes several main objectives, including major stakeholders involved in the project, the role and responsibility of each stakeholder, the outputs of the project, the expected outcomes which may have certain effects and changes to the target stakeholder groups, and the dimension and potential performance indicators. However, estimated external factors that will strongly influence the expected outcomes are needed to be considered. These social objectives of SIA could be divided into two main types of impacts: (i) intended consequences from the program actors’ perspective to assess according to the actors’ plan and such planned changes may be in line with society and (ii) unintended consequences from societal perspective to assess according to the viewpoints of society.

From a management perspective, the level of assessment could be broadly divided into five levels. First, individual impact dimension often refers to the assessment on how such an intervention could induce changes to the directly involved individuals in order to enhance quality of life. Second, social impact dimension normally refers to the assessment on how such an intervention could have made changes on the interpersonal level and on interaction with the community that could have immediate effect on their daily lives in order to develop more social capital. Third, organizational impact dimension is to assess the effectiveness of the intervention in relation to the program design and implementation and followed by the subsequent changes that may have positive impact and favorable outcomes to the organization. Fourth, economic impact dimension is to assess on how such intervention could optimize resource allocation in the community and adjustment financial expenditure to have financially sustainability. Fifth, community impact dimension is to assess such an intervention could have positive changes both on community development and on policy changes. After five levels of assessment, organizations could adopt a retrospective approach of theme-based projects to identify potential gaps and seek for continuous improvements.

SIA could be seen as a useful tool to enhance the decision-making process, increase transparency and enhance performance. It is ideal to collect both quantitative data and qualitive data before and after theme-based projects and do benchmarking with other organizations with similar projects, create general notation grid and prepare reports for internal and external users for quality enhancement. Businesses could consider to outsource theme-based projects to civil society organizations or social service organizations and the social impact assessment could be conducted by the independent social impact agencies.