July 1, 2022

How to measure the impact of your company’s social or environmental actions

When companies deploy extra-financial actions, which is the case for the overwhelming majority of them, measuring their impact is not yet automatic. François Dampeyrou, expert at Cabinet Leyton, provides some advice on how to achieve this.

Relocation of suppliers, energy savings, carbon offsetting, recovery of waste and unsold items or development of career management, the possible social or environmental actions are varied. According to a recent survey*, companies have indeed taken up the subject pfor more than 90% of them, all company sizes combined. Unsurprisingly, it is the Énergie family that receives the most care.

Only 40% of companies that have taken extra-financial actions measure their impact. Why ?

François Dampeyrou, Head of Transition Financing at Cabinet Leyton: « This figure should be read in terms of its progression over time. Three years ago it would undoubtedly have been less than 20%. Within Leyton, we support 15,000 business leaders and discuss these extra-financial actions in particular. We note that this subject takes root: it started with very large companies via individual or collective initiatives and also because of regulatory constraints, including extra-financial reporting, and gradually, the subject goes back down to the average and small businesses as the survey proves.

How should the notion of impact of an extra-financial action be understood?

« Whatever the action, it always has several impacts. Managers very often anticipate an additional cost in the short term. In many cases this is a mistake, because these actions allow access to public aid or lighter taxation and therefore a positive impact on the income statement. There is therefore a prerequisite: clearly identify the possible impacts upstream of the deployment of an action. Any action on the energy item, in the current context of rising prices, is justified. Five or six years ago, it was this logic alone – that of short-term cost control – that prevailed. Such an approach should also make it possible to identify the modification of its production processes as an issue. This dimension appeared two to three years ago, but without the companies attaching a temporality to it. However, the purpose is obviously to make investments to shape production with regard to the energy transition. ».

What impacts and indicators should we aim for?

« The challenges to be covered vary a lot and are most often dependent on the business sector of the company. Within industrial companies, three are often mentioned: attracting talent, particularly within technical and R&D teams, sourcing raw materials and limiting energy costs. For other activities, we can find the same issues but the weighting will be different. Important point, any action, whether to relocate the supply, to have ranges more in line with customer expectations, to produce solutions that are more respectful of the environment or to improve the quality of life at work , must be part of a global CSR approach ».

Once the actions have been identified, how should the company prioritize them?

« Depending on the return on investment (ROI) of course, but which must be defined according to three parameters: you certainly need fast return on investment times but with a broad impact. Such is the case with the formation of teams and energy savings. The third parameter is to cross-reference this selection with the strategic plans of the State, the regions or the European Union. This may result in a different sequencing of priority actions”.

*Leyton x Daf-mag.fr survey, December 2021, 61 “finance function” respondents from SMEs and ETIs

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