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Adopt SROI To Build A Sustainable CSR Program

Aug 20, 2020 | by Phoebe C

CSR programs have been made mandatory in most parts of the world. Private corporations spend thousands of dollars every year on their CSR programs to meet the CSR regulations. This leads to the most common & dreaded question asked to any CSR manager – what has been our ROI from these programs?

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This is the biggest battle that any CSR manager or any person working in the CSR department of a corporation has to handle. How do you show your senior management the return on thousands of dollars spent on CSR projects?

Some organizations answer this question by evaluating the effect on the brand equity of the company, but this does not show a very clear picture & is not enough. It should never be enough. The main idea about having CSR for private corporations is to have more accountability to the planet & the people. Incorporating CSR just for marketing is not enough anymore and people can see through it. How can you then show the return on investment for any CSR or social project funded by your company?

The answer is simple, calculating sROI or Social Return on Investment.

Every action we take as corporations either creates value or destroys some value. As far as the core business of any company is concerned, that value is measured in financial terms. 1000 products sold, which created $100,000 for the company. But value is also created or destroyed in social, human, or environmental terms. Especially, if you talk about values created by your CSR programs.

This is where sROI comes in handy.

Social Return on Investment (SROI) is a framework for measuring the value created in social, human, or environmental terms and using monetary figures to represent it. Mostly calculated in the form of a ratio, it tells you how many dollars worth social value was created per dollar spent.

As proposed by Social Value International, sROI has 7 key principles:

  • Involve stakeholders.
  • Understand what changes.
  • Value the things that matter.
  • Only include what is material.
  • Do not over-claim.
  • Be transparent.
  • Verify the result.

There are two different types of sROI – Evaluative & Forecast.

  • Evaluative is calculated after a project or intervention has been executed.
  • Whereas, the forecast is a prediction of how much value you expect to create with a particular project or intervention.

To know more about how to calculate sROI, check out our series on Introduction to sROI calculation

Lets’s cover why sROI is almost a must for any company’s CSR department, if you want it to be sustainable & impactful.

  1. As the term Corporate Social Responsibility implies, companies need to incorporate social & environmental concerns in their business operations & interactions with stakeholders. Analysing your sROI can make it much easier for you to interact with your external stakeholders regarding the social value you created via every dollar you spent. With the changing times, millennials & Gen z are demanding much more from their favorite brands or any company they engage with. The data-driven and impact-driven nature of SROI allows you as a company to go a step further in transparency about the value created. You can prove to your stakeholders, employees & most importantly consumers that you are not just throwing money at problems, but you are genuinely creating value.
  2. Secondly, measuring social return on investment will allow you to speak the same language as the rest of your company. Most of the time in the corporate world, monetary value, ROI created, P&L are of utmost importance. Giving monetary value to social value you create as a company will allow you to integrate your CSR department & CSR activities into your overall business, and get your voice heard.
  3. sROI also allows you to make more data-based decisions. Attaching monetary value to the outcome created with the amount of money spent will allow you & your upper management to make decisions based on facts & figures. The importance of making decisions based on imperative data can never be overstated.
  4. sROI’s first principle is involving stakeholders. This allows you to work collaboratively with not just your internal CSR team, but also with your senior management, cross-teams & even your users.
  5. Last but not the least, sROI can also enable you to show the value you as a CSR manager or as a CSR department are creating to your senior management. This can help you build trust & confidence with your management & help you gain continuous support from them. You can prove your worth for the company & make sure that the CSR department is seen as a core part of the business.

The corporate world has been getting a lot of slack from the world for their abuse of power & extremely profit-oriented motives. CSR programs are a big opportunity for corporations to fix their image but also to use the resources they have available to create a genuine positive change. Today’s world is tremendously different from what it was 40 years ago, users are not the same anymore, employees are not the same anymore, and the pandemic we are going through right now is going to shift the focus all the more… Click To Tweet Corporations have started realizing that and changing the way they function, in a few years the impact of this change in attitude won’t just be felt by the people or the planet but also on the balance sheets of these companies.

If you are a CSR manager who is looking to learn more about ways in which you can align your CSR activities with your core business, then feel free to get in touch with us. We also have our proprietary assessment tool for corporates to evaluate their current standing on Purpose. You can get in touch with us for this or any other questions via email: contact@artemis.im.

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