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Global Public Sector | Thinking people
The Solution Economy
Social
Impact
• Education
Business
Leverage
Mission
Opportunity
• Employment
• Environment
• Health
• Social Services
• Transportation
Global Public Sector | Thinking people
Solution
Economy
Time 2
Gap between GDP and social gains
Source: Giovannini, Enrico. GDP, Well-being, Happiness, Sustainable Development, etc. Where do we stand? 2015.
Global Public Sector | Thinking people
3
Source: Stuart Crainer & Des Dearlove. 2014. Mobilising value: the Turkcell way.
Global Public Sector | Thinking people
4
Social responsibility & shareholder returns
Source: RBC Global Asset Management, Does Socially Responsible Investing Hurt Investment Returns?
Global Public Sector | Thinking people
5
Capital markets and social responsibility
Measuring ESG
Environmental
 Emissions & climate impact
 Environmental reporting /
disclosure
Social
 Diversity
 Labour-management relations
 Product quality
 Community relations
Governance
 Board accountability
 Shareholder rights
 Executive compensation
Global Public Sector | Thinking people
66
Social impact & shareholder returns
Advancing social measurement
 Verified performance data
 Benchmarking impact
 Performance metrics
 Improving standardization
 Reforming incentives
 Capacity building
Can we use social metrics to enhance enterprise
performance?
Global Public Sector | Thinking people
7
Using social impact measurement to enhance
shareholder returns
Science of Shared Value
Business
Performance
Global Public Sector | Thinking people
+
Social Impact
Measures
=
Shareholder
Returns
8
Quantifying business performance
Enterprise value
Revenue Growth
Volume
Volume
Operating Margin
Asset Efficiency
Selling, General &
Administrative
Property, Plant &
Equipment
• Improve customer
interaction efficiency
• Improve PP&E
efficiency
• Improve
corporate/shared
services efficiency
Inventory
• Acquire new customers
• Acquire new customers
•
• Retain and grow current
customers
Retain
and grow current
customers
• Leverage incomegenerating assets
Price Realization
Cost of Goods Sold
• Strengthening pricing
• Improve development
and production
efficiency
• Improve inventory
efficiency
Expectations
Company Strengths
• Improve management
and governance
effectiveness
• Improve execution
capabilities
External Factors
Receivables and
Payables
• Improve receivables
and payables efficiency
• Improve logistics and
service provision
efficiency
Income Taxes
• Improve income tax
efficiency
Global Public Sector | Thinking people
9
Quantifying social performance
Social Progress Index
Basic Human Needs
Nutrition and Basic Medical Care
• Undernourishment
• Depth of food deficit
• Maternal mortality rate
• Stillbirth rate
• Child mortality rate
• Deaths from infectious diseases
Water and Sanitation
• Access to piped water
• Rural access to improved water
source
• Access to improved sanitation
facilities
Shelter
• Availability of affordable housing
• Access to electricity
• Quality of electricity supply
• Indoor air pollution attributable
deaths
Personal Safety
• Homicide rate
• Level of violent crime
• Perceived criminality
• Political terror
• Traffic deaths
Source: Social Progress Imperative.
Global Public Sector | Thinking people
Foundations of Wellbeing
Opportunity
Access to Basic Knowledge
• Adult literacy rate
• Primary school enrollment
• Lower secondary school enrollment
• Upper secondary school enrollment
• Gender parity in secondary
enrollment
Personal Rights
• Political rights
• Freedom of speech
• Freedom of assembly/association
• Freedom of movement
• Private property rights
Access to Information and
Access
to Information and
Communications
Communications
• Mobile telephone subscriptions
• Internet
users
• Mobile
telephone
subscriptions
•
Press
Freedom
Index
• Internet users
Health and
Wellness
• Press
Freedom
Index
Personal Freedom and Choice
• Freedom over life choices
• Freedom of religion
• Early marriage
• Satisfied demand for contraception
• Corruption
• Life expectancy
• Premature deaths from noncommunicable diseases
• Obesity rate
• Outdoor air pollution attributable
deaths
• Suicide rate
Tolerance and Inclusion
• Women treated with respect
• Tolerance for immigrants
• Tolerance for homosexuals
• Discrimination and violence against
minorities
• Religious tolerance
• Community safety net
Ecosystem Sustainability
• Greenhouse gas emissions
• Water withdrawals as a percent of
resources
• Biodiversity and habitat
Access to Advanced Education
• Years of tertiary schooling
• Women’s average years in school
• Inequality in the attainment of education
• Globally ranked universities
10
Scores below 65
Scores between 65-70
Scores above 70
Source: Social Progress Imperative, 2015.
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11
Building a network of fair and sustainable cities in
Colombia
SPI Inter-cities
SPI Intra-Bogota
Social Progress Framework used
to measure and analyze the level
of welfare for 10 Colombian cities
from 2009 to 2014.
Social Progress Framework used
to measure and analyze social
progress trends for 20 districts
from 2009 to 2014.
Global Public Sector | Thinking people
12
Integrating business & social analytics
Science of Shared Value
Shareholder value
Revenue Growth
Operating Margin
Asset Efficiency
Expectations
+
Social Progress Index
Basic Human Needs
Global Public Sector | Thinking people
Foundations of Wellbeing
Opportunity
13
Impact of SPI on Company Value | Latin America
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143
71.3
companies
Average SPI
14
SPI components and price per net book value
Global Public Sector | Thinking people
15
The effect of SPI on price per net book value by
industry
Industry Breakdown
852
71.4
companies
Average SPI
Legend
Industries shown with a purple dot have a statistically
significant relationship between SPI and P/NBV.
Industries shown with a red dot have no statistically
significant relationship between SPI and P/NBV. Red
dots are not drawn to scale.
Global Public Sector | Thinking people
16
Measuring Up!
Business analytics
Social analytics
Shareholder Value
Big Data, Big Business and Metrics that Matter
Global Public Sector | Thinking people
17
Paul Macmillan
Deloitte
Email: [email protected]
Twitter: @Paul_Macmillan
Global Public Sector | Thinking people
18
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