How do you measure a company’s social impact? Many sustainability metrics and reporting frameworks offer ways for companies to assess their environmental and economic impacts, but social impact is more difficult to measure—and even to define.
A company’s social impact might encompass a wide range of issues, from worker health and safety, to diversity, to community programs. Research shows that companies lack a clear, consistent definition of social impact, as well as metrics that allow comparison among companies and across industries. As the social side of sustainability is becoming more integral to corporations’ sustainability work, better defined impacts and metrics will be needed.
To develop a common framework that companies can use to define social impacts and a set of metrics to measure them, the Ford Motor Company partnered with the University of Michigan’s Erb Institute on a two-year collaborative research study, known as the Social Impact Project. This project was designed with the strong intention of developing a framework for measuring corporate social sustainability impact that would be useful across industries and sectors. Below we share a brief overview of the project.
Academic-industry collaboration has much to contribute to moving the needle on defining corporate social sustainability, and we look forward to encouraging more harmonization in the social sustainability reporting field.
– Melissa Zaksek, Erb Institute Research Manager
A structured decision-making process
The team used a multi-step structured decision-making (SDM) approach to actively prioritize inclusivity and gather more meaningful stakeholder input. The next task was to identify the most representative stakeholder groups, who were then interviewed in focus group settings:
- Employees—based on whether their work may impact social sustainability (such as marketing, human resources and corporate strategy)
- External subject-matter experts—including international research and public policy institutes, investor relations organizations and representatives from municipal government agencies
- Community members—a sample population in the area in which the company operates, across different geographic and economic settings in Southeast Michigan
Results and key insights
The team used a means-end chart to “bucket” the objectives and identified four core impacts that Ford’s product use and operational and philanthropic activities create:
- Preserve human rights
- Protect human health, safety and well-being
- Increase access to social good
- Enhance societal economic prosperity
Based on these core impacts, the team created a “Model for Human Progress.” To measure and quantify these impacts, the team developed a set of recommended metrics, as well as a set of “aspirational” metrics. The recommended metrics can be implemented immediately. The aspirational metrics support a more holistic view, but they are not included in existing reporting frameworks, so they represent an aspirational vision for the future of social impact measurement.
The role of trust and innovation
Based on the analysis of the interviews, the team found that trust and innovation are key enablers to the core social impacts in the model. Without trust, stakeholders will not choose to engage with companies and so will fail to realize the social sustainability benefits a particular company may be trying to impart. Product and process innovations, which help maintain and improve quality and reliability and uncover new ways of driving human progress, help maintain this trust over time. Thus, these two enablers were identified as key components of the model.
Academic-industry collaboration
This collaboration has contributed to a new way of thinking about measuring corporations’ social impact. The Erb Institute played a pivotal role in developing Ford’s new Model of Human Progress and associated suite of metrics. Erb Institute Research Manager Melissa Zaksek stated, “Academic-industry collaboration has much to contribute to moving the needle on defining corporate social sustainability, and we look forward to encouraging more harmonization in the social sustainability reporting field.”
The Social Impact Project team included, on the academic side, Dr. Merriam Haffar, Erb Institute postdoctoral fellow, who led the project under the supervision and direction of Dr. Joe Árvai, the institute’s former faculty director. At Ford, the project team was led by Mary Wroten, Ford’s associate director of sustainability, along with Senior Manager Rebecca Shelby and Sustainability Specialist (and Erb ’13 U-M MBA/MS graduate) Deb Heed, under the direction of Cynthia Williams, Ford’s global director of sustainability, homologation and compliance.