What are the challenges facing social impact reporting?
“The main issue is that social impact is inherently difficult to translate into numbers. There are two reasons for this. One is that the effects of social impact initiatives are not always tangible. How do you measure someone’s mental health or wellbeing? When it comes to climate impact, it is easy to determine CO2 emissions of a company or the travelled business miles on airplanes. Social impact is a whole different ballgame. It covers a wide range of effects that cannot simply be added up. You have to judge each activity by itself.”
“Second, social impact is not always at your fingertips. It can also be created, both positively and negatively, along the entire value chain. Banks know their customers fairly well. But these customers do business with other parties, and that is where the image gets blurry. How do you measure the effect your euros have on their activities? Getting a grip on this so-called downstream impact is challenging”.
Where do you hope social impact is in five years from now?
“I think we will have quantified a vast amount of social impacts. To be clear, you can never calculate social impact without at least some assumptions and limitations. That is even the case in financial reporting, even though companies have settled on those methods. Human judgement will always play a part, and that is why disclosures will always be necessary. I hope that with each passing year, we can bring social impact reporting on a higher level. And of course, for ABN AMRO, we hope their social impact scores will continue to improve, and for society to benefit from that”.
-ABN Amro Social Impact & Human Rights Update 2021