From september 5, 2016 to september 7, 2016
Convergences World Forum 2016
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31.08.2016 | Sustainable finance
Why "measuring social impact" is important for a bank? What are the goals? What are the financial stakes?... Maha Keramane, Social Entrepreneurship and Microfinance Europe Manager in the Group’s Corporate Social responsibility (CSR) team, answers to all our questions.
In today’s environment, we operate under a constant imperative: boost our effectiveness (ability to reach goals) and our efficiency (optimizing the resources needed to achieve results). For those active in the social and solidarity economy, this trend carries a growing need to measure social impact—defined as how these players affect their beneficiaries and society as a whole. However, establishing a standard of operation in the field remains a challenge, as putting this approach in place can prove complex. Many different methods are currently out there, but no guideline has emerged for assessing the impact of social enterprises. To this end, BNP Paribas has rolled out a comprehensive approach to impact assessment (social, environmental), enabling its customers to showcase their efforts in concrete figures.
BNP Paribas has rolled out a comprehensive approach to impact assessment (social, environmental), enabling its customers to showcase their efforts in concrete figures
“this measurement tool aims to enrich and expand the relationship between banks and their customers.”
Social Entrepreneurship and Microfinance Europe Manager in the Group’s Corporate Social responsibility (CSR) team
Spanning France and other European countries with a strong Group presence—as well as Morocco—my mission comprises two areas:
They are active in every sector, often creating new solutions for personal needs. For example, a young mother created an enterprise offering day care services for children with unusual schedules or from single-parent households. Another mother created educational tools to foster the cognitive development of autistic children. Still another entrepreneur designed solutions to recover heat emitted by data centers for use in heating systems at hospitals, schools, public housing and offices.
Social enterprises have unique and innovative business models. That’s why we have to be just as creative in the way we analyze their activity, by measuring their social impact as well as their financial performance.
BNP Paribas has pioneered a tool for measuring the social impact of a business, focusing on several objectives:
To encompass the variety of target audiences and diversity of actions undertaken, we chose to divide the Social Entrepreneurship sector into 7 Social Action Domains, based on a need/service covered by Social Entrepreneurship:
By promoting its social impact, a business can show how it has optimized its social objectives with the resources at its disposal, and that it has created social value. That facilitates its dialogue with public and private backers.
For this reason, measuring social impact plays a key role in Social Impact Contracts (Contrats à Impact Social in French), a new finance product available in France. These contracts seek funding from private investors for social innovation programs, which are then repaid by a government body based on the success of its social impact model.
The tool relies on the simple fact that a majority of social entrepreneurs have developed an efficient model that will generate savings for the wider community.
For example: when the unemployed return to work, that means less unemployment benefits paid out and more sales tax generated through increased spending. Seniors who use connected objects to remain in their homes are both happier and less costly for tax payers.
So the system underlines the direct connection between creating social value and creating economic and monetary value!
Finally, measuring social impact helps cast social enterprise in a new light. Integrating new elements that account for the creation of social value helps change financial analysis and “acceptable” standards. Social enterprise profits that appear limited at first glance may be augmented through the business’s impact:
measuring social impact underlines the direct connection between creating social value and creating economic and monetary value and helps cast social enterprise in a new light
By developing this tool for measuring social impact, we will make it possible to foster a dialogue between the entrepreneurs and their business managers at BNP Paribas, to improve communications for the enterprise while talking about it in a new way, and to understand the enterprise in every aspect.
In addition, many of our Social Entrepreneur customers lack the resources needed to measure their impact. Our goal is to offer tools so they can: