How to measure social impact & sustainability value a review of compelling new studies, impact methodologies, and case studies

Cindy Drucker Weber Shandwick
@CindyDrucker
Steven Rochlin IO Sustainability
@SteveRochlin
Niki King Campbell Soup Company
@n_kelley
#SB15sd
How to Measure Social Impact &
Sustainability Value: A Review of
Compelling New Studies, Impact
Methodologies, and Case Studies

Do not distribute or cite without the permission of IO and Babson
Defining the Competitive and Financial Advantages
of Corporate Responsibility and Sustainability
June 2, 2015
San Diego, Sustainable Brands
Steve Rochlin, IO Sustainability
@SteveRochlin, #ProjectROI
2
DO NOT DISTRIBUTE OR CITE WITHOUT THE PERMISSION OF IO SUSTAINABILITY
AND BABSON COLLEGE
Contact SRochlin@iosustainability.com

Why Project ROI?
3
Measure Integrate Improve
Build the Discipline

What is Corporate Responsibility (CR)?
Planning cycle
• 12 months
Major functions
• Technical
assessment,
auditing, reporting,
and improvement
of regulatory and
voluntary systems
Examples
• Emissions
• Legal & ethical
conduct
• Safety
Planning cycle
• 12 months
Major functions
• Code & standard
adoption; comms;
stakeholder
management;
partnering; program
design; & reporting
Examples
• Giving & volunteer
• Engagement
• Reporting
• SRI, Ratings, Stds
Planning cycle
• 30 months
Major functions
• Shared value
programming; pilot
products; social
innovation; supplier
development; green
production
Examples
• Cost Savings
• Pilot products
• Pilot R&D
• Cause campaign
Planning cycle
• 60 months +
Major functions
• Strategic planning
• R&D & product
development
• Business process
redesign
Examples
• Products foster
sustainability
• “Net positive”
footprint
Competitive
Positioning
Innovation &
Transformation
EngagementCompliance
Reduce Footprint Increase Handprint Report Accountability to stakeholders
4

Methodology
• Address questions relevant to Senior Executives
• Emphasis on rigorous, recent, peer reviewed research
• Reviewed and assessed over 200 studies
• Focus on the potential ROI CR can deliver
• Identify lessons learned on managing to deliver ROI
5

Headlines:
From Over 200 Studies Reviewed
CR delivers financial value if done well
CR is an intangible asset
Lead or lag but don’t dabble
For specific issues be like Goldilocks –
do what’s just right
Fit, Commit, Manage, and Connect
6

Findings -- Summary Overview
7

CR’s potential to drive market value and share price
8
4% - 6%
Increase Market Value by up to:
Over a 15 year period, increase shareholder value by:
$1.28bn
Increased valuation for companies with strong
stakeholder relationships:
40-80%

CR’s potential value for financial risk reduction
9
4%
Reduce systematic
risk by:
40%
1%
Reduce the cost of
equity by:
Reduce share price
volatility:
2-10%
Avoided market losses
from crises:
$378M
Reduce credit spread
by:
Doubles the probability of
investment grade rating
$38.4M

CR’s potential value for marketing & sales
10
Up to 20% 15% - 20%
1-20%  60%
Increase Revenue from Sales by: Add a Price Premium of as much as:
Consumer Commitment
CR Consumer Segments
Strongly motivated by CR __%
Moderately motivated by CR __%
Neutral __%
Moderately dissuaded by CR __%
Strongly dissuaded by CR __%

CR’s potential value for reputation
11
7% - 11%
CR’s Brand and/or Reputation Value
as a % of total firm value
4% - 7%
Sales & reputation risk protection

CR’s potential value for human resources (HR)
12
25% - 50%
13%
$3700
7.5%
Reduction in staff turnover rate
Willingness to accept decline
in compensation
5%
Potential savings in wages to
encourage hourly workers to stay
90% - 200%
Savings in terms of annual salary for every
employee who stays that might have left
Productivity increase Increase in employee engagement

Findings -- Managing CR to Deliver Value
13

Choose priority value creating goal(s)
14
a) Reduce risks & protect license to operate worth 10% of the company’s value (and beyond)
b) Nurture, grow, & protect a CR-related brand/reputation asset worth up to 11% of the firm’s
value
c) Boost how shareholders view performance to enhance share price and market value by as much
as 6%
d) Enhance competitive positioning with, and deepen the engagement of, your customers leading
to revenue growth
e) Enhance your competitive positioning with, and deepen the engagement of, your employees
leading to reduced turnover and higher productivity
f) Some combination of the above

Manage your CR Asset
15
U
Intensity of approach Intensity of approach
For the total
CR approach
For specific CR
initiatives
CR leaders
do best
Find the
sweet spot
Go big or go
home
Find what’s
“just right”

Follow Good Practices to Drive Financial
and Wider Business Value from CR
MANAGEMENT FRAMEWORK
1. FIT
2. COMMIT
3. MANAGE
4. CONNECT
16

Next Steps
17
• Report Launch
• Spread the word
• Share your stories
Launch Project ROI Institute
• Define metrics
• Identify the activities
with the best rate of
return
• Implement activities with
the right level of
investment
• Measure performance
• Improve

Thank you
Steve Rochlin
Co-CEO
SRochlin@iosustainability.com
+1 703 969 9197
18

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