Local performance 2.0 : Integrating corporate social and environmental measurement & management

The precept of “do no harm,” and even “doing good,” has long has been a key element in defining the responsibility of companies toward local communities—as reflected in the Guiding Principles on Business and Human Rights. Now corporate leaders are increasingly looking at that goal through a new lens.

The new best practice is to have a net positive impact on not just financial measures, but also on social and environmental impacts, which ultimately will mean reframing local social performance to measure local sustainable performance—integrating both social and environmental factors.

This approach would be a shift from some current practices, as today most companies have separate teams to measure and manage environmental and social issues. While social issues are commonly considered by on-site staff with the intent to improve the socioeconomic welfare and security of neighboring communities, environmental issues are usually addressed by technical teams that are tasked with keeping operations within regulatory boundaries, as well as adhering to corporate policies and stakeholder expectations, in order to mitigate risk.

Yet, the reality is that environmental and social issues are inextricably linked when it comes to a range of concerns, such as community access to clean water, healthy air, and productive soil.

These connections are increasingly perceived across public, private, and NGO sectors. For example, within the private sector, many companies now integrate environmental, social, and health impact assessments (ESHIAs) rather than separate environmental (EIAs) and social (SIAs) analyses. This work is consonant with the growing recognition that many of the problems that are being raised by stakeholders with the “social” team are actually environmental issues, such as concerns about the surrounding natural environment—the air, water, and soil.

In this context, the question for corporate managers becomes: How can we measure and manage both social and environmental impacts in order to gain an integrated understanding of our corporate performance?

The answer may lie in the domain of ecosystem services, which are the benefits people obtain from ecosystems. These benefits are increasingly recognised as core to understanding local social performance and ultimately key to local sustainable performance.

For instance, if water availability or water quality is compromised by corporate activities, then social performance may be both undermined and forced into a reactive mode that can stress company resources and interrupt operations.

An ecosystem services approach can enable companies to become aware of a broader range of issues prior to these concerns becoming significant challenges—given that it highlights the many ways in which the environment is used, and valued by, the local community. In this sense, an ecosystem services approach offers a much-needed human dimension to understanding environmental impact and thus can better inform corporate strategies for local environmental and social performance.

The business rationale to adopt this broadened lens is strengthening. Already, a range of extractives companies are exploring an ecosystem services approach, and looking into the issue of integration with pre-existing social and environmental approaches, including Anglo America, AngloGoldAshanti, Barrick Gold, BP, BG Group, BHP Billiton, Eni, ExxonMobil, Freeport McMoRan, Rio Tinto, and Royal Dutch Shell, as detailed in a 2013 BSR report.

Through an ecosystem services approach, companies are exploring:

An integrated analytical framework that allows for understanding of the connections between  disparate economic, social, and environmental objectives as well as concerns (e.g. stakeholder issues, environmental dynamics/stresses, infrastructural development needs, political expectations, business imperatives, and more).

A set of discrete measures that can then be considered individually as well as part of an overall, integrated management dashboard, which would allow corporate managers to recognise potential unintended consequences and cumulative effects across ecological, economic, and social systems. For instance, the dashboard might reveal the effects of water discharge on a community’s access to freshwater. Or it might draw attention to how global greenhouse gas emissions could be addressed through local investments in natural capital, such as terrestrial carbon and the related area of forest carbon initiatives a region.

A clear approach to prioritising that allows managers to see both the big picture as well as the individual issues and can help decision-makers to agree upon parameters, rank concerns, consider trade-offs, identify cumulative effects and unintended consequences, and factor other issues into decisions.

A language and framework that might ultimately be shared between private, public, NGO, and community organisations to track environmental and social challenges and structure discussions among all parties.

Applying ecosystems services tools, such as those described in recent a recent BSR report and WBCSD document, offers the opportunity to better design, implement, and measure corporate social and environmental performance.

As ecosystem services approaches gain traction, across public and private sectors, there will be clearer pathways for corporate leaders to show how they are not just “avoiding harm” but rather producing, and measuring, net positive impacts. 

By Sissel Waage and France Bourgouin, with Alison Colwell, BSR

About the authors

Sissel Waage, Ph.D., Director, Biodiversity and Ecosystem Services

With more than 20 years of experience working on sustainability issues in North America, Europe, and Africa, Sissel advises companies and leads BSR’s Ecosystem Services Working Group. Before joining BSR, she worked for Forest Trends in various leadership positions, including as Director of the International Katoomba Group.

France Bourgouin, Ph.D., Manager,

Advisory Services

As part of the Local Sustainable Performance team, France supports BSR’s industry-wide consulting services for energy and mining sectors in EMEA. Over the past 12 years, France has been conducting field research and consulting on multinational corporations in a development context.

Alison Colwell, Associate Director in

Advisory Services

Alison oversees the design and execution of projects on human rights, community engagement and development, responsible labour, strategy integration, and gender across industries, primarily with energy and extractives companies. She has  conducted fieldwork with communities and stakeholders in Asia, Latin America, the Middle East, and North America.

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