780% RETURN ON INVESTMENT
For every US dollar invested by Novartis in each of the four carbon-sink projects, an average of USD 7.8 worth of societal value is created thanks to climate change mitigation, ecosystem services, local employment and smallholders’ livelihood. Beyond the initial goal of climate change mitigation, these carbon-sink projects support several UN Sustainable Development Goals (SDGs) and promote sustainable business models.
It is common that companies invest in activities and projects with the aim of creating a positive impact. Those activities can be either in their core business or totally separated (sometimes philanthropy activities or “CSR” investments). It goes without saying that companies do not question the benefit generated. Most of the communications around those projects focus at jobs created, ha of land or forest protected, number of person trained or hours of education provided and so on.
The main issue starts when a stakeholder, or a media, discover that the jobs created are barely providing a living wage in a project, or that the ha of forests protected actually exclude nearby communities.
Most of the indicators mentioned previously are mere output from the activity, and they do not guarantee that the life of the people concerned changed significantly for the better. They could actually change for the worse, when jobs provided can be associated to forced labour or happen in dangerous conditions while living wages are not provided.
We need to measure outcomes and impact, following the thinking of an impact pathway which goes from input, activities and output (most of the time what is measured) to outcomes and impact (rarely measured or assessed).
This is what brought us to work together with Quantis for Novartis, to assess the societal impact of four carbon sinks projects in Colombia, Mali, China and Argentina. Each project has some specificities. Some includes an inclusive business model including smallholders (Mali and China) while others focus at local economy development and jobs creation (Colombia and Argentina).
The impact of those projects was assessed using the Social Return On Investment methodology (SROI). The value categories covered were climate change (the initial objective of those projects), ecosystem services (all of those projects involve planting trees), jobs creation and smallholders’ livelihood. The results are presented in the leaflet that you can download directly here (or in the header of the article) and they are presented at the figure below as well.
We discovered that carbon sequestration was not the primary benefit of those projects (apart for Argentina), and that for every 1$ spent in the project by Novartis, 7.8$ equivalent were generated in the society. These projects proved to be positive for the society, even by accounting for some negative impact of the projects (use of fossil fuels, materials and fertiliers/pesticides, etc).
This methodology is crucial to inform and improve decision-making by breaking silos of thinking (climate change vs other societal topics) often observed in the field of sustainability. The results of this methodology help engaging and communicate to internal and external stakeholders. It can also sustain the vision of a net positive strategy for a business and provide new business opportunities as well.
In my opinion, this approach is very interesting as it challenges the status quo and the pre-conceived ideas of many people. It opens up the mind to new point of views that are critical to taking better decision, for us and for the companies we work for.