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Centre on Well-being, Inclusion, Sustainability and Equal Opportunity (WISE)

Measuring business impacts on people’s well-being and sustainability

 

What is the contribution of businesses to people’s well-being and to the environment? How can they measure and manage their impacts? The OECD WISE Centre is building on measuring well-being work to share some of the lessons of the "Beyond GDP" agenda with the community of organisations, businesses, investors and policy makers engaged in managing and measuring impacts. 

Our latest working paper on measuring the non-financial performance of firms provides a conceptual framework on how businesses can use the OECD Well-being Framework to inform the measurement of their non-financial performance and ultimately their impacts on society and the environment.

Business have a significant impact on people’s lives, whether as employees, consumers, suppliers, as part of society as a whole. Through managing and measuring their impacts, organisations and investors can better understand their contributions to society and the environment and integrate this information in decision-making processes. In support of practitioners’ need for guidance on impact management, the OECD and partner organisations have created the Impact Management Platform. This platform aims to clarify the meaning and practice of impact management, ensure that there is coherence across impact management resources and contribute to policy processes related to sustainable finance and sustainability disclosures. It includes links to a wide range of impact management resources, including the OECD’s Guidelines for Multinational Enterprises and related guidelines on Responsible Business Conduct (RBC).

Within the impact management landscape, there remains a need to better understand what exactly constitutes the non-performance of firms in the social area, and for more robust metrics. To respond to these needs, the OECD WISE Centre has developed a conceptual framework that uses the OECD Well-being Framework as a basis to provide conceptual clarity and identify measures of the social performance of firms. Firms can learn from the advances that the international statistical community has made in measuring people’s well-being, and in particular the need to employ a multi-dimensional approach, the importance of measuring the outcomes that matter to people, to consider inequalities between groups and to measure both objective and subjective aspects of well-being.

The OECD’s framework on measuring the non-financial performance of firms (see the relevant working paper and policy brief) identifies four broad categories of stakeholders whose well-being are relevant from the perspective of measuring performance in the social area: employees, consumers, local communities, and society as a whole (see figure below). Measuring the well-being of business stakeholders is useful to ensure that human assets are used to their potential and to minimise risks to enterprise value, and is necessary to understand the impacts of businesses on society.

 

The four components of the social performance of firms

Source:  Measuring the non-financial performance of firms through the lens of the OECD Well-being Framework (OECD, 2022) 


The WISE Centre has developed a measurement framework that can be used to measure the well-being of employees (and inequalities therein) and the resources that contribute to society as a whole (e.g. taxes, research and development), which is referred to as “Scope 1” social performance. This measurement framework is based on a set of metrics that are relevant to all or most businesses and that are aligned with measures of stakeholder well-being and capital creation and depletion used by national statistical offices.

In the future, the WISE Centre aims to use this work to encourage the uptake and harmonisation of measures of business non-financial performance and stakeholder well-being across businesses, governments and national statistical offices. Further work may build on this working paper to advance on measures of consumer well-being and well-being of stakeholders in the supply chain, and provide measurement guidance to businesses.

 

Publications and ongoing work

  • Working paper: Measuring the non-financial performance of firms through the lens of the OECD Well-being Framework (2022): This working paper presents a conceptual framework for understanding the non-financial performance of firms through the lens of the OECD Well-being Framework. Building on existing approaches for measuring non-financial performance, it proposes a measurement framework and indicator set for what may be referred to as “Scope 1” Social performance. In line with the OECD Well-being Framework, this paper emphasises the importance of measuring the well-being outcomes of stakeholders alongside the resources that firms produce and deplete. The paper also emphasises the importance of aligning the measurement of the non-financial performance of businesses at the macro-level and sectoral level by national statistical offices (NSOs) with micro-level measures collected by firms themselves.

  • Policy brief: Measuring the social performance of firms through the lens of the OECD Well-being Framework (2022): This policy brief is aimed at organisations that are interested in embedding a well-being approach to the measurement of the non-financial performance of firms, in particular in the social dimension. It distils the key messages of the abovementioned working paper for a general audience.

  • Industrial Policy for the Sustainable Development Goals: Increasing the Private Sector’s Contribution (2021): How can governments support the private sector’s contribution to the Sustainable Development Goals (SDGs)? This book investigates the contribution of firms to the SDGs, particularly through their core business, taking into account inter-sectoral linkages and global value chains, using novel techniques and data sources.

  • OECD reports on ESG investing (2021): Forms of sustainable finance have grown rapidly in recent years, as a growing number of institutional investors and funds now incorporate various Environmental, Social and Governance (ESG) investing approaches. This page provides access to OECD work on monitoring developments in ESG rating and investing.

  • Social Impact measurement for the Social and Solidarity Economy (2021): this paper examines existing methodologies developed at the local, national and international level and finally reviews how these are being implemented in the social and solidarity economy.

  • Social Impact Investment: The Impact Imperative for Sustainable Development (2019): This publication brings new evidence on the role of SII in financing sustainable development. It depicts the state of play of SII approaches globally, comparing regional trends, and assesses its prospects, with a special focus on data issues and recent policy developments.

  • OECD Due Diligence Guidance for Responsible Business Conduct: The OECD Due Diligence Guidance for Responsible Business Conduct provides practical support to enterprises on the implementation of the OECD Guidelines for Multinational Enterprises by providing plain-language explanations of its due diligence recommendations and associated provisions. Implementing these recommendations can help enterprises avoid and address adverse impacts related to workers, human rights, the environment, bribery, consumers and corporate governance that may be associated with their operations, supply chains and other business relationships.

  • Compendium of Selected Papers on Measuring the Impacts of Business on Well-Being and Sustainability (2018): This compendium shows of selected papers from the Call for Papers issued by the OECD Statistics and Data Directorate, together with HEC Paris/SnO Centre to develop and support research on Measuring the Impact of Business on Well-being is now available. Among others, the papers make the case for greater standardisation and harmonisation of corporate reporting practices (Delmas and Durand), point at the limited disclosure of information on business impacts on the environment and on national communities and the potential for convergence around SDGs and well-being (Itay-Sarig; Beer and Aujogue; Betti et al).

  • Measuring the impact of businesses on people’s well-being and sustainability - Taking stock of existing frameworks and initiatives (2018): This OECD working paper presents an overview of the various kinds of frameworks aimed at measuring or reporting on business’ impact on non-financial outcomes.  It shows that despite the proliferation of information and frameworks to measure these impacts, there is currently no common understanding and practice on how to assess the performance of businesses in different social and environmental areas. 

  • Guidelines on Measuring the Quality of the Working Environment (2017): This publication presents an internationally agreed set of guidelines for producing more comparable statistics on the quality of the working environment, a concept that encompasses all the non-pecuniary aspects of one's job, and is one of the three dimensions of the OECD Job Quality framework.

 

Related initiatives

  • Impact Management Platform: a collaboration between leading providers of public good standards and guidance for managing sustainability impacts. Through the platform, partnering organisations aspire to clarify the meaning and practice of impact management, work towards interoperability and fill gaps as needed, and have coordinated dialogue, as appropriate, with policymakers. The platform supports practitioners to manage their sustainability impacts – including the impacts of their investments – by clarifying the actions of impact management and explaining how standards and guidance can be used together to enable a complete impact management practice.

  • Business for Inclusive Growth Platform: a coalition of businesses, coordinated by the OECD and chaired by Danone, aiming to increase opportunities for disadvantaged and under-represented groups through retraining and upskilling, as well as promote diversity on the companies’ boards and executive committees and to tackle inequalities throughout their supply chains. They will also step up business action to advance human rights, build more inclusive workplaces and strengthen inclusion in their internal and external business ecosystems. Read the Business Pledge Against Inequalities.

  • Centre on Responsible Business Conduct: The OECD Centre for Responsible Business Conduct uses RBC standards and recommendations to shape government policies and help businesses minimise the adverse impacts of their operations and supply chains, while providing a venue for the resolution of alleged corporate, social, environmental, labour or human rights abuses. The OECD Guidelines for Multinational Enterprises (OECD Guidelines) are the most comprehensive international standard on RBC. The OECD Guidelines reflect the expectation from governments to businesses on how to act responsibly.

  • Centre on Green Finance and Investment: The OECD Centre on Green Finance and Investment help catalyse and support the transition to a green, low-emissions and climate-resilient economy through the development of effective policies, institutions and instruments for green finance and investment. The Centre leverages the OECD’s policy and economics expertise and provides a global platform for engaging with key players and harnessing the marketplace intelligence of private sector partners.

  • OECD work on social economy and innovation: Social entrepreneurship is the process through which specific types of actors – “social entrepreneurs” – create and develop organisations that may be either social enterprises or other types of organisations. It also designates a field including a broad set of initiatives with a social impact dimension in a spectrum ranging from for-profit to non-profits. Since its 1990’s pioneering work to define social enterprises, the OECD’s work on social entrepreneurship has significantly expanded and has developed a robust evidence base on effective policies for social entrepreneurship.

 

For further information contact: wellbeing@oecd.org or follow us @OECD_STAT

 

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