Impact Assessment: The Innovation Paradigm Shift that is Coming

As society prioritizes sustainability, innovators and entrepreneurs have also started to consider the social impact of their projects. Social innovation, defined as a novel solution to a social problem where the value created accrues primarily to society as a whole rather than private individuals, is driving societal transformation and systemic change. Governments worldwide are adopting measures to foster social innovation and social entrepreneurship, with the EU putting social innovation at the heart of its political agenda. Corporations such as Unilever and Allianz are integrating social impact into their business models, viewing it as a way to gain access to new customer segments, improve their brand reputation, and attract top talent. However, measuring impact is still a challenge, and traditional metrics such as ROI fall short. Social impact assessment (SIA) is the process of analyzing, monitoring, and managing the economic, social, and environmental consequences of business activity, both positive and negative, independently of the intentionality of the activity. SIA can serve external stakeholders' accountability, internal decision making, and performance evaluation. Though measuring social impact remains a complex issue, in the near future, those who cannot demonstrate tangible social benefits of their activities will find it difficult to convince supporters to continue believing and investing in them.