The ROI of Social Impact

The ROI of Social Good Photo

Creating new jobs. Improving internet access. Advancing inclusion. Building essential infrastructure. Boosting public health. Projects have the power to make the world better—but it takes strategic planning to truly make a difference. Companies can't just say they're doing good. They need the proof to back it up. And it isn't some nice-to-have. It’s a question of business survival.

“Companies need to serve more than just their shareholders. They need to be driven by purpose,” says Kamil Mroz, PMI-ACP, PMP, director, program management lead, early patient value missions team at global biopharma UCB, Brussels, and a PMI Future 50 leader. “Companies need to show how their product or service impacts their broader community and brings value to society.”

Project leaders are certainly ready for action: 8 in 10 project professionals list social impact as a personal concern, and 87 percent say it is a concern for their organization, according to a 2020 PMI Pulse of the Profession® in-depth report. Young people in particular have taken up the cause, with roughly 3 in 4 millennials and Gen Zers saying they plan to take action to positively impact their communities, according to a 2020 Deloitte survey. And that’s carrying through to their work.

“More and more young people are working on projects aligned with issues they care about, whether it’s the environment or social justice,” says Ackeem Ngwenya, PMI Future 50 leader and co-founder of Reframd, an inclusive eyewear digital design firm in Berlin.

Yet as companies seek to embed net-positive social benefits into projects, they’re looking for a clear payoff. Whatever the objective, tracking ROI for the company and measuring the socioeconomic impact must be part of the project from start to finish.

“It’s what project owners are looking for today,” says JC Alonzo, environmental sustainability specialist at Black & Veatch, Lenexa, Kansas, USA. “When you prove the financial ROI of social impact, you’ll win over your stakeholders.”

Creating For—and With—People

Projects have the power to change the world. But transforming positive intent into positive action takes strong collaboration. And it starts with listening. According to Pulse data, 69 percent of organizations that measure social impact do so in part through meetings with stakeholders.

That kind of engagement with people can uncover opportunities to deliver wider benefits on many fronts—sometimes with just one project. A company launching a massive infrastructure project, for example, may opt to invest in a training program as a way to add value for local stakeholders and gain their support. But project leaders and their teams shouldn’t make any assumptions.

“For our projects to be successful, they have to reflect what the community needs,” says Oluwole McFoy, general manager, Buffalo Sewer Authority, Buffalo, New York, USA. “We engage them in everything we do.”

Close collaboration with community stakeholders can also help project leaders identify and mitigate negative repercussions. Not all projects align perfectly. A massive new highway may slash travel times and boost economic development, but it will also likely increase air pollution. Pulse research found 35 percent of project professionals say at least some of their organization’s projects have a negative social impact, and they execute a prompt mitigation plan always or most of the time on less than half of those projects.

One option to limit risks: conduct assessments. India’s Rewa Ultra Mega Solar Ltd., for example, is building its massive floating solar plant in Madhya Pradesh. But before it begins, the company plans to hire an outside consultant to evaluate any potential damage to the environment. 

When AES Dominicana was planning to build a pipeline that would burrow through multiple cities in Santo Domingo province and several rural areas in the Dominican Republic, project management office leader Bryan Henriquez, PMP, knew it would create significant disruption for those communities. So the construction management team and corporate social and sustainability team developed a US$3 million program aimed at solving problems residents had shared during project planning meetings.

The construction team built a potable water network in areas without clean water, upgraded roads, and made improvements to playgrounds, streets and lighting systems. The investment helped the team deliver meaningful benefits for the communities—and win support for the pipeline project.

“If you lose two or three months due to issues with the communities caused by bad planning or bad social execution, you’ll probably have to pay damages to your clients and lose revenue,” Henriquez says. “Having a positive social impact plan and investing in the community almost always pays off.”

Leading With Data

Data drives positive social impact. To prevent efforts from straying into the abstract, companies need to measure their efforts with hard data, whether that’s the number of jobs created or the amount of clean water delivered. The first step is determining what to measure, starting with any existing environmental, social and governance reporting. Teams must also take a long look at the potential negative impacts. Armed with such data, teams can identify problems, analyze solutions and forecast benefits.

Beverage giant Coca-Cola HBC, for example, used its materiality survey of roughly 1,000 internal and external stakeholders to define its 2025 sustainability commitments, which, in turn, align to the U.N. Sustainable Development Goals. With that, the company is ready to act on a wide range of issues, ranging from reducing water use by 20 percent in water-risk areas to increasing its management ranks to 50 percent female.

Future 50 leader Eddy Alvarado used data to make the case for the AI platform he developed to help farmers predict the appearance of crop disease and improve crop yields. In a pilot project, one farmer saw a 23 percent increase in tomato yields by using the platform. Those kinds of numbers not only helped boost the farmer’s income, but they also gave Alvarado concrete proof to win over investors and scale the project and his company, Agro360.

“If you can connect the social impact to financial results, it is easier to get investors to fall in love with your model,” he says.

Data can help win over stakeholders, too. To convey critical project data and insights to the community, McFoy found a second use for the safety and security fencing on his project sites: using them as billboards to highlight each project’s benefits and offering QR codes to residents who want to learn more.

Even when data is limited, teams can still turn to core metrics to inform decisions. Identifying KPIs gives project teams a benchmark for measuring the ROI of social impact that they can also communicate to project owners—who will want to know how that impact extends beyond philanthropy.

At telecom titan Ericsson in Addis Ababa, Ethiopia, Future 50 leader Yoftahe Yohannes, PMP, takes this approach to secure investment in knowledge sharing programs as part of every IT infrastructure project he leads. The strategy has two benefits: lowering human capital costs by reducing the project’s reliance on expat talent and demonstrating the company’s commitment to bolstering the local economy. That ROI has been so impressive that his teams have made it part of the scoping process for every major project they deliver in Ethiopia.

“It’s a long-term ROI strategy that gives us an upper hand in these communities,” Yohannes says.

An Impact Ecosystem

Positive social impact is now a business imperative: Doing good isn’t just the right thing to do—it’s the smart thing. Done right, social impact efforts present a win-win for companies: improving results across the enterprise, from the bottom line to the talent pipeline.

Taking on issues like climate change and poverty “has indirect benefits for employee engagement and the ability to attract talent who want to work for socially responsible organizations,” says AES Dominicana’s Henriquez.

According to Deloitte, 60 percent of millennials and Gen Zers say their employers’ positive responses to the global pandemic make them want to stay with their organization longer.

Embedding social impact into the organizational DNA can also entice project investors. Since Buffalo Sewer Authority committed to incorporating sustainable water infrastructure into 25 percent of every project, investors have been more eager to supplement state funding for its projects, McFoy says. In late June, the organization closed on a US$54 million Environmental Impact Bond—the largest in the United States—to finance green infrastructure and stormwater mitigation projects aimed at accelerating improvements to water quality, job creation and environmental justice. The payoff was immediate: As soon as the fund was launched, investors pounced at the opportunity. “We received US$400 million in requests,” McFoy says. “The response was amazing.”

The Social Project Manager

For all the work being done, the world faces profound economic and social challenges, from the climate crisis to extreme poverty. And it’s up to project leaders and their organizations to harness the power of projects to help address some of the challenges. But to deliver that kind of change, they must commit to truly examining how a project doesn’t just benefit the bottom line, but also creates a better world.

How can that vision get turned into reality? Future 50 leader Innocentia Mahlangu, PMP, points to the rise of “social project managers” who see projects as vehicles for change. Working for infrastructure giant Hatch in Johannesburg, she’s often managing projects in remote areas where she admits it can be “disheartening to see the conditions that people live under.”

But she channels that need for change into her projects.

“When planning for a project, you need to factor in: What can I reasonably give back? What skills can I use within the local community and incorporate in the project? By doing that, you’re actually building capacity of people in the project location. And when you’ve gone, they still have that. They don’t lose those skills.”

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