CGF Research Institute (Pty) Ltd

Measuring and benchmarking social investments is good business


The performance of today’s enterprise is best measured by fully integrated financial and non-financial indicators set out to track progress against social, economic and environmental objectives. Regulators, board members and public opinion, all agree. This sentiment underpins the notion that the convergence of the financial and non-financial worlds is now under way and that sustainability reporting is set to become the standard by which investors will make their decisions and exercise their options. The United Nations Environment Programme (UNEP) predicts this full integration in reporting to happen by 2010.


Still, most companies fail to identify material strategic and financial risks and opportunities associated with the economic, social, and environmental impacts captured by the 'triple bottom line' agenda. This disconnect between robust governance and progressive sustainability performance, somewhat taints the 8-year progress made in the transition from sustainability reporting as a public relations exercise to a function of corporate governance.


What value is your CSI spend bringing to your company?

It comes therefore as no surprise that the Corporate Social Investment (CSI) arena in South Africa is rapidly changing and developing. It is no longer enough for companies to spend money without measuring the sustainability of their projects, the impact on beneficiaries and the return on investment for the company itself. Rather than being merely philanthropic, the trend has shifted, and will continue to move towards noting the impact of the funding on the beneficiaries and, therefore, the return on investment for the company. It seems nonsensical to think of even the largest of companies spending upwards of R20 million without demanding some sort of impact and company benefit analysis.


What are you really contributing in your CSI?

As in all business units within a company, success is reflected by results and impact; for the community and the company in the case of CSI, and these business principles should always apply to a company’s corporate social investments. The actual investment can be easily undervalued if monetary inputs are the only contributions accounted for.


Are you aware of your actual input costs including management, time and leverage?

The London Benchmarking Group (LBG) model, goes a long way to addressing this by enabling CSI practitioners to measure their total contributions and the impact they are having. As well as benchmark their company’s activities with others in the same sector or those involved in similar project areas. In applying the LBG model the measuring of actual achievement is the critical issue, as opposed to the monetary amount given to a specific project or the CSI budget in total.


The LBG model addresses four key questions:

  • Why do we contribute?
  • How do we contribute?
  • What do we contribute?
  • Where do we contribute?


The use of a practical input/output analysis tool enables management to make informed decisions about efficiency and impact in community involvement initiatives based on the best possible outcome for the most cost-effective contribution.


This newsletter has been supplied courtesy of CGF Research Institute (Pty) Ltd, a strategic partner of Proudly South African.


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