Generally speaking, social impact is how organizations, businesses or individuals’ actions affect the surrounding community. It may be the result of an activity, project, program or policy and the impact can be both  positive or negative. The social impact can be felt by people directly associated with that organization or individual, or have a more far-reaching people in different communities, states and even countries.

But more commonly, the term “social impact” is used to define actions which have a positive impact on communities.

As individuals, we can make a positive social impact through many aspects of life . It might be starting up your own business with positive social impact or  you know business which

having a negative social impact and sharing your knowledge with friends and family.

How you choose to spend your leisure time is also telling, as travel can have both a positive and negative social impact. Planes emit huge amounts of carbon dioxide and travel can have detrimental effects on indigenous cultures, but it can also create jobs and help increase cultural awareness and tolerance around the world. As a result, the way you choose to travel can result in a vastly different social impact

Opting to support community tourism initiatives and staying in locally-owned guesthouses helps create jobs within communities, while eco-tourism projects can help conserve vital habitats for both wildlife and people. If you respect indigenous cultures and way of life during tourism activities, you can help create a positive social impact for their future.

This is also true of volunteer abroad programs which seek to make beneficial impacts on local communities in a diverse range of fields. It offers volunteers an insight into how other people live and helps them gain essential life skills while working alongside local people on projects which matter to them.

The social impact is mutual, with local communities seeing beneficial changes throughout the duration of the project and volunteers returning home enlightened as global citizens. Newly developed skills and a more open-minded attitude about the world can then be used to benefit their communities back home, whether it be as part of a focused project, a business startup idea or just in day-to-day interactions with others.

Business owners and their employees can also incorporate social good into their operations, striving to create wide-reaching benefits for their customers, the surrounding community and environment. In today’s world, customers are aware that the purchases they choose to make can speak volumes, and many are looking to support businesses that incorporate positive social impact ideals into their business model.

It needs to be at the core of operations and help determine each and every business decision that is made. It’s important to define what the social impact of your business operation is and whether your entire team believes in it to ensure it is authentic and can be realized. It should be engrained in everything you do as a business and part of the company culture because if it’s not being practiced there, it cannot reach out and connect with the rest of the community.

But most importantly, the social impact you seek to create as a business should be done for the right reasons and not just to jump on the bandwagon of “social good” to reap the financial rewards. It should be meaningful to you and your team and be sustainable well into the future.

As a business, social impact may not necessarily be realized in the product or service you are marketing, but can also be in the way the business functions. Some employers encourage or even offer grants for their staff to participate in volunteer abroad placements during their vacation periods and match the hours worked with a financial donation from the company to a designated charity. Others encourage employees to donate their paid time off to working with a charity of their choosing. Word of each new experience and volunteer encounter permeates through the business and helps inspire others to do the same.

When it comes to social impact initiatives, there are certain things we know to be true. For example, we know that these days, an increasing number of consumers seek out products that have a positive impact on the world in some capacity. In fact, 90% of Millennials say they will switch to a cause-branded product when choosing between two brands of equal quality and price, and 51% of global consumers will pay extra for products and services committed to positive social and environmental impact. We also know that as of September 2017, there are over 2251 certified B Corporations, which are companies that undergo a rigorous assessment to demonstrate that they focus on social good alongside profit. These companies span across 130 industries in 50 countries, and these numbers continue to increase.

Though these are exciting and inspiring pieces of data, there’s one underlying piece of information that we haven’t quite defined: What does social impact really mean?

The answer to that question is complicated. When you search the phrase “what is social impact?” on Google, you’ll find a multitude of definitions — here are just a few of them:

“Social impact can be defined as the net effect of an activity on a community and the well-being of individuals and families.” – Centre for Social Impact (CSI)

“A significant, positive change that addresses a pressing social challenge.” – Michigan Ross Center for Social Impact

“Social impact is the effect an organization’s actions have on the well being of the community.” – Knowledge at Wharton High School

The definitions are similar, but they aren’t the same. To shed some light on what “social impact” means to people coming from different perspectives, we asked thought leaders and experts we know to share their thoughts on the subject.

Here’s what they had to say:

Understanding a company’s social impact is crucial to sustainability

The social impact of a business is easy to identify but difficult to measure, however understanding the effects a company has on society and the environment is vital to achieving sustainability

Sustainability has three dimensions: environmental, economic and social which are all inter-linked. For example, the protection of natural systems requires good social conditions and is unlikely to happen during war.

Similarly the survival of society needs a supportive natural environment, not one ravaged by climate change. But neither will happen unless we manage scarce resources at our disposal more successfully in both financial and environmental terms. And in terms of social impact.

Many companies have social goals: they do something that others in society find useful and are willing to pay for. But what is ‘social’? How do we factor the social impact of companies and their contribution to sustainability?

Companies also impact on communities. Particularly those that have a significant direct impact on the natural environment, such as mining or oil extraction, agriculture or heavy manufacturing. It matters greatly to those living near their operations how they are carried out and what degree of care is taken over impacts on health for example.

Some companies, particularly mining and oil firms, may even create communities in order to operate. The living conditions of such workers are an inescapable part of the social responsibility of the company. The social impacts of removing communities or clearing land in order to operate are even more powerful. So the social impact of a large dam or other major infrastructure projects may be profound. At its worst, it can destroy lives; at best it will destroy a way of life.

Human rights and labour relations also matter. Companies of all kinds have a role to play in ensuring that there is no discrimination in the way their staff are managed, promoted and trained, and that they have decent conditions of work.

All these impacts are much easier to identify than measure. Measurement of social impact is hard because to reduce human experience to numbers is to fail to capture some part of it. This does not mean that any kind of measurement is useless. But it does mean that complacent reliance on a set of numbers is bound to seem unsatisfactory.

There are a number of important social impacts that are much easier to measure, but about which companies are reluctant to be transparent. One of these is tax. The payment of tax is one of the most important contributions to society that most companies make. It is also one that they can be most secretive about – mainly because the countries in which they add value through their operations often bear little relationship to those where they are liable for taxes.

However the social impacts of companies go far beyond even the kinds of substantive consequences listed above. At its broadest, social impact includes anything that affects company-stakeholder relationships: from how much and how reliably suppliers are paid (think supermarkets), to how a product affects lives (think Facebook). From how small shareholders may be treated to the impact of alcohol on health and communities.

Nevertheless companies don’t run our lives. Or do they? One of the stakeholder relationships that companies cultivate with great care is that with government and the state. This can be legal or illegal. In countries where corruption is most prevalent, the distortion of economic life has some of the most devastating social consequences possible.

But where it is legal, and takes the form of lobbying, it raises questions about the role of companies in society. In a democracy, one would expect that people, rather than companies, should be the key influence on government. Yet the very phrase ‘corporate citizenship’ challenges that assumption. Changing the rules by which society operates leverages social impact beyond measure.

Companies have always been part of society. They should not be seen as a separate power that must be ‘balanced’ with society in a zero-sum kind of way in order to achieve sustainability. They should be seen more as the locus of productive activities that must be harnessed for the greater good of society as a whole. Understanding their social impact is an essential step in that process.

Adrian Henriques is professor of accountability and CSR at Middlesex University and author of ‘Corporate Impact – measuring and managing your social footprint’


Social Impact: What Does it Really Mean?