The Erb Institute partnered with Innovation Forum during their recent visit to Detroit, Oct. 2-3rd, for their conference on “How business can measure the impact—and ROI—of corporate sustainability.”

The conference delved into the best ways to assess materiality, build a business case and deliver impact at scale. Participants from corporations, nonprofits and academia shared their approaches to measuring impact and return on investment (ROI).

During the conference, Joe Árvai, Max McGraw Professor of Sustainable Enterprise and Director of the University of Michigan’s Erb Institute sat down with Ian Welsh of Innovation Forum to discuss the challenges companies face in measuring their impact. [20:47-31:29].

Árvai related that information overload can affect companies when it comes to evaluating impact and that there is often apparent confusion between impact and outcomes.  Where outcomes measure the incremental improvements against previously outlined benchmarks on a path to sustainability, impact instead is a measure of whether companies are meeting their fundamental goals.  According to Árvai, “In the sustainability space there is so much more to it.”

Árvai also noted the importance of science-based targets, but even with all the best information in the world, companies can make really poor decisions if the information is not particularly relevant to the context of the decision or the stakeholders.  There is a real opportunity for building the case for internal decision support, where the pros and cons of decisions can be weighed with respect to different courses of action.  The same tools that banks and investment firms are using to make portfolio decisions can be very applicable and ultimately useful to other sectors of the economy as well.

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