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Interview with Filippo Montesi

February starts with an interview with Filippo Montesi, Senior advisor of Human Foundation and Secretary General of Social Impact Agenda for Italy. An exchange dedicated to the topic of “Impacts”….Enjoy!

Social Impact Assessment (SIA) is an increasingly used and appreciated tool, both by the Third Sector and the for-profit sector active – for instance – in cooperation projects. What will be the prospects for the development of this tool in the coming years? What do you see on the horizon? 

I believe that SIA will continue to develop and its use will increase, as more and more organizations will make it both for regulatory reasons and for internal culture, a very interesting path the latter. I foresee that beyond the legal nature of who will use it (profit vs. nonprofit) the approach will be relevant: there will be a dualism between those who will do it for compliance or communication vs. those who will do it as a method of strengthening the value proposition or strategic reinforcement, thus giving more social and economic value to the whole process. Then there is the issue of standardization of methodologies: there is a push in this direction by investors (for comparability of performance) and by companies seeking funds. That said, while it is important to converge methodologically, it is also true that one cannot lose sight of the meaning of the evaluation process by flattening everything in the name of benchmarking. Finding a single balance point is difficult; many will exist in a continuous development between “standardized” and “contextualized” approaches. For example, at strategic level data will be managed in a standardized way and will have to be aggregated and compared. The more managerial side of operations, on the other hand, will have to deal with more detailed and granular infos.  The important thing is not to fall into a SUM 0 game with these two alternatives. 

SIA carried out using methods such as SROI (Social Return on Investment) is crucial in determining funding opportunities for social ventures that need start-up capital, especially if they have elements of social innovation. How can investors’ attention be focused on such indicators and make them central to the resource allocation process? Can you cite some examples?

First of all, there is a need to raise awareness of SROI as much as possible, not only among investors but in the entire ecosystem to bridge a skills gap that does not capture the analysis and management approach. Then there is a culture gap related to the dichotomy between financial and social performance. On the former, it is natural to be accountable for financial returns, while the social component lacks an accountability perspective. Only in recent years have we built discourses on “social impact”, reviewing accountability models and mapping experiences – albeit embryonic – that plan rewards linked to social objectives …but still very incipient. 

Assessing impacts is a necessary issue not only for Third Sector Entities but also for the for-profit sector, just think of the mandatory Impact Report for Benefit Companies. Many Benefit companies then also have to comply with sustainability reporting requirements (DNF, etc.). How do you think impact assessment can be integrated into the Sustainability Report? What synergies are there between the two documents? 

Sure, it is necessary….the problem is that organizations do a social outcomes assessment, invest resources in it and then keep it “valid” for 5/6 years losing sight of the continuous improvement perspective that should update that document. The SIA should be implemented regularly over time, integrating it into the organization’s processes and routines with a view to managing and optimizing impact. 

One can integrate the two documents, but there are no standardized methods yet …SROI analysis offers a good approach by defining principles and practices for measuring social value, or there is a very interesting experiment called IMPACT WEIGHTED ACCOUNTS by Harvard Business School, where a framework has been developed that tries to integrate economic accounting with social-environmental accounting: sector by sector, metrics and calculation methods are developed to have the income statement of large companies integrated with social and environmental elements.  That said, the cultural issue is dominant: until we internalize that any organization produces positive and negative impacts we will have problems integrating impact management into for-profit and nonprofit organizations. To date, many for-profit entities simply consider negative environmental impacts to be externalities ….without reporting or internalizing them. Yet social and environmental dimensions are part of the company’s business model, so why not consider them in reporting? 

“Impact” is being talked about more and more and often for things that are not well defined. In some cases it really seems that hype has been created on this issue and that “everything is impact.” How can we avoid generating impact-washing? And most importantly, how to recognize it?

We need to develop skills, highlight good practices….recognizing, however, that sometimes impact-washing is not intentional….and here again is the importance of training on the topic: if specific skills are lacking, training and peer-to-peer comparison are needed. 

On how to recognize impact-washing I would say to start first with the characteristics of well-done storytelling. First there needs to be transparency: explaining quantity and quality of initiatives to be reported. Then you need real stakeholder engagement (specifying how they were involved how to track impacts). In this sense having a “stakeholder perspective” means empowering them. In addition, it is necessary to verify the results …and here there is still a lot to be done in terms of establishing an audit and verifying the methodology, because there is often no process control practice. “I said I produced positive impact in country X: what is the methodology and what are the sources of verification“? You need to have a verification device that stands. Finally, it is necessary to go and see if improvement actions are indicated in the report: this is a good indicator that the company is taking its work and impacts seriously. 

Could you recommend a book or publication that talks about “Impact”?  

Yes, I choose a book that gives a strategic view of evaluation and at the same time clarifies operational and technical aspects in a pragmatic way: “THE GOLDILOCKS CHALLENGE” published by Oxford University Press. It can be read by donors, social enterprises, investors, public administrators and evaluators. Interestingly, there here are plenty of case studies in development cooperation, including in Uganda where KOKONO operates 🙂