It took us a while to issue our own Impact Report but as vocal advocates for impact reporting we have to walk the talk! As the old journalistic adage goes: ‘Nothing like a deadline….’
Given we were invited to present a workshop on impact reporting at the 2018 Investor Circle – Social Venture Network conference on Bridging Profit & Purpose, we set our minds to launching Junxion’s inaugural impact report there.
Is it worth reporting?
“Is it worth reporting?” I asked our workshop guests, to get the obvious question out of the way at the beginning. The reasons not to report fall in three areas:
- Lack Resources – it takes too long and costs too much
- Lack of Data quality and selection – it required information that isn’t available
- Lack of credibility in the absence of standards – reports may not be meaningful enough to our audience to warrant the effort.
These are all common concerns, and we addressed each in turn.
For the first point on resources, a company’s impact report should be proportionate to the organization’s size and the complexity of its aims. Don’t throw the organization off balance just to issue a report.
Linked to that is the point about data quality. The data you choose to present has to be relevant to the data you use to run your business. Gathering impact report data should not be in a silo apart from your existing processes to inform strategic and management decisions about your business—suitable impact data may be a subset of the data you already collect. When setting priorities for data collection, compare the importance of the data with the feasibility of collecting it. If a dataset would be very important but also very difficult to collect, consider an alternative. Again, it’s easy to over-resource your reporting project if you don’t consider the ‘reporting ROI.’
As to the lack of standards, sure. There is no GAAP (generally accepted accounting principles) for impact reports. But, there’s enough accrued knowledge to draw on for what makes a good report (see below). For an individual business, the benefits of reporting even at a basic level outweigh the hindrance of still-emerging standards, and definitely outweigh the risks associated with not reporting at all.
Benefits of reporting
When we asked participants about the upside to reporting, they recognized that these fall into internal and external benefits. It has been proven, among startups and Fortune 500 companies alike, that reporting leads to better management outcomes because it helps you to keep performance to goals ‘top of mind’, and gets you to reflect on what you need to do to improve. Moreover, celebrating successes boosts staff morale. Externally, reporting helps build relationships with your stakeholders, inspiring trust and confidence with current and future advocates, customers and investors.
In short, reporting promotes transparency. And why is that a good thing? Because transparency is an invitation to collaborate. A clear, accessible report that tells stakeholders what they need to know, and is written in a credible and humble way invites collaboration with new customers that will help you survive and thrive, with new investors that can help you scale, and with values-aligned suppliers who will support your growth.
So, what’s in a good impact report?
Impact reports need to take your reader on a journey from why you exist, through the difference you have made, to how you will grow your impact in the future. In particular there are five key elements to cover so your report is both meaningful and engaging:
- Need, purpose and vision: What is the problem that you are trying to address? What’s your purpose? What’s your vision of a world made better by your work?
- Activities: What are you aiming to do to address this challenge? How do these activities hang together?
- Current impact: What are the results of these activities?
- Evidence: How do you know you’ve made a difference? Show us the data.
- Future impact: What have you learnt? How will you change what you do?
The reader should be able to discern a ‘red thread’ running through your report—a compelling logic that tells a consistent story about your analysis of the way the world is and how your business is changing it for the better. As we have said elsewhere, frame your story around context, purpose, innovation and impact.
Focus on significant impacts, not all impacts
“How do we measure our impact?” is a question we hear a lot. And so when it comes to reporting, companies need to consider this carefully.
We are a proud Certified B Corp and we first went to the five pillars of the B Impact Assessment (governance, workers, community, environment and customers) as a possible rubric to follow for our report structure. This could work well as a basis for reporting for some companies, but our conclusion was that our major impacts were in our communities and in our work for clients, so that’s where we chose to focus—shorter, and more to the point.
As I explained when challenged on this point in the workshop, we are good employers and we support the growth and development of our staff, but we felt that the scale of impact there (we are a small business) was not significant when compared with our impacts on our community, and for our customers. Likewise, of course we think that the environment matters (see our post on climate change, for example) but biking to work and going paperless it is not where we have a major impact. So we made a conscious decision not to focus on our new appraisal system, our employee manual, or other ways we had added points to the ‘workers’ pillar in our B Impact Assessment when we recertified.
Focus on where you make a significant impact.
It’s about selecting where you have a significant impact, not tallying up everything you do: this is what it means to apply the principle of materiality to your selection of what’s important to report.
Provide the evidence of impact
Applying the related principle of proportionate effort to our own report, we considered how we could efficiently evidence our impact. Our timesheet data showed us pretty readily that we had spent 4.2% of our work hours on various pro bono activities. Many of these hours were in our communities of interest, where we contribute our time and expertise, including for several of us being B Corp Ambassadors or B Leaders contributing to the growth of the B Corp movement.
When it came to our data around our clients, we were conscious that we could not articulate the impact of each one of our 86 projects for 55 clients across the 2017-2018 year. How many beneficiaries had been reached by our strategic planning work or our reporting and communications work? Frankly, we did not know and we concluded it would be very onerous and imprecise to try to answer this question.
So we included data about the numbers, size, location and incorporation type of our clients. We recognize these data as proxies for our impact. For example, we completed projects for eight healthcare clients; we served four clients that each have more than 1,000 members of staff. These are far from precise measures of impact, but they do provide a sense of the scale of difference we have made in the year.
Be humble and recognize where there is more to do
In our workshop in New York, participants wanted to see more metrics related to our client work and pushed us to aggregate the impacts of our work in a year. Fair enough. We acknowledge in the final section of the report that we have more to do in this area.
One thing we have committed to is better follow-up with clients to gather more specific data about the value and impact we have had. This time around we didn’t have that data to hand, but it is in the act of reporting that we have reflected on what we should do differently to up our game. We have learned from the process and made new commitments to improve, to engage more deeply in our communities and with our clients, and to drive more change.
It’s through working together that we will build a shared and durable prosperity for all. And it’s through reporting that we can all be transparent and extend the invitation to collaborate for a better world.
Adam Garfunkel is an owner and Managing Director at Junxion. He’s been involved in corporate sustainability for more than 20 years, writing award-winning reports and supporting the advancement of social innovation on four continents.