Blog | 15 Feb 2024
Why understanding and investing in your social footprint is good for business
James Bedford
Senior Economist
In the last few years issues such as the cost of living crisis, and the Covid-19 pandemic have pushed the nature of the relationship between companies and their employees, communities, and wider political context to the top of boardrooms’ agenda.
Indeed, the public increasingly believes businesses need to do more to address social issues, as data from the Edelman Trust Barometer indicates. What is more, evidence from a recent survey by Bain&Co shows that consumers are increasingly interested in the social dimensions of the products and services they purchase. The survey also finds that senior executives believe that addressing social issues drives better business outcomes. Internally, there is potential for morale and employee engagement to rise, productivity, and risk management to improve, and possible company/community conflicts to dissipate.
Firms can put themselves at the forefront of this agenda by better understanding their social sustainability—or footprint. This is defined by the UN Global Compact as identifying and managing a firm’s positive and negative impacts on a community. It can do so through the policies it has in place with its own employees, but also along its supply chains, and with its customers.
Comprehending your firm’s impact on society
The way a firm can measure its social footprint is wide ranging. Here we suggest three core themes that could be important for businesses to consider when measuring and benchmarking the impact of their operations, and that of their supply chain, on society. These are economic prosperity, diversity and equality, and wellbeing.
Firstly, an organisation can demonstrate how a business supports economic prosperity in the communities in which it operates. This could include its employment and spending in areas experiencing social and economic challenges and areas with a high concentration of small businesses, and support for long-run prosperity through its R&D and capital investments.
For instance, through our work for Airbus, we found that in 2019, 45% of its UK procurement was with suppliers based in the 10% most deprived local authorities, as identified by the Index of Multiple Deprivation.
Secondly, benchmarking a business’s contribution to diversity and equality through the composition and equity of renumeration of their workforce—for instance in traditionally underrepresented groups such as women and young people.
Our analysis for the World Travel & Tourism Council found that the last decade saw steady growth in the global employment of young people supported by the tourism sector, rising by 27.6% from 30.9 million in 2010 to 39.5 million in 2019. This growth in job opportunities meant that 9.4% of all youth employment around the world in 2019 was supported by the tourism industry, up from 6.4% in 2010.
The final element is the measurement of the subjective wellbeing impacts of employment that an organisation supports in terms of its effect on recognised measures of wellbeing—such as changes in life satisfaction. One organisation we analysed supported an average uplift of 14% on the life satisfaction scale for every job provided, compared with the counter-factual of not having a job.
Measuring and benchmarking a business’s social footprint is the first step to understanding where improvements can be made over time, setting a path to a more sustainable future for the business, its stakeholders, and society overall.
Contact us
To learn how we can help you measure your social impact, talk to us today.
Author
James Bedford
Senior Economist
+44 (0) 203 910 8133
James Bedford
Senior Economist
London, United Kingdom
James is an Economist working within the consultancy division of Oxford Economics.
James first joined Oxford Economics in July 2016 as part of his industrial training scheme, when he spent the year assisting the economic impact team with a wide range of projects. Following his industrial placement, James returned to Newcastle University to complete his BSc in Economics. For his dissertation, James was awarded the European Award for Aviation Economics by the German Aviation Research Society. He has re-joined the consultancy division working primarily with economic impact studies.
Stephen Foreman
Associate Director, Economic Impact
+44 (0) 203 910 8107
Stephen Foreman
Associate Director, Economic Impact
London, United Kingdom
Stephen leads a team of economists who assess the economic impact of a variety of different firms and industries. Recent consultancy projects he has led include assessments for the World Travel and Tourism Council, Dubai Free Zones Council, the Aerospace Technology Institute, Funding Circle, Reckitt, and ASOS.
Stephen has also worked on Oxford’s Global Industry Service where he was responsible for forecasting the global transport sector, leading Oxford Economics’ industry research, and managing consultancy projects for industrial organisations.
Stephen joined Oxford Economics from the UK civil service, where he worked on a range of macroeconomic, fiscal, tax and welfare policy issues across HM Treasury, the Office for Budget Responsibility and the Department for Work and Pensions.
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