- Total Societal Impact measures the wider impact of ventures, both positive and negative.
- Considering social impact can lead to new markets.
- Digital solutions offer opportunities to lower carbon output and create new business models.
The world is facing a series of difficult problems right now, from climate change to societal and economic challenges. It’s imperative that we solve these issues as a matter of urgency. Rising to meet these challenges means adopting a practical approach. It requires shifting our perspective, and redefining what success looks like.
As business leaders, we all work towards having a positive financial impact. We want to increase value for our shareholders and build profitable companies. But we now need to broaden our focus to recognize the impact we have beyond the bottom line. We’re used to looking at value in financial terms.
We need a new lens that enables us to also consider the impact the businesses we build and operate have on the world, how we’re impacting the environment, society, and the wider economy. At its core, this means redefining what “good” looks like.
With this in mind, at BCG Digital Ventures we’ve recently added a new metric to our venture building methodology: Total Societal Impact (TSI). This metric enables us to measure and understand the wider impact of the ventures we build, both positive and negative. It aggregates every aspect of the impact a business might have, intentional or otherwise, and pushes us to look beyond the first-order implications of what we do, to consider the broader impact for users, partners, society, and the planet.
In practical terms, TSI is a collection of measures and assessments – not a single metric. It encompasses six dimensions, which align with the UN’s Sustainable Development goals (SDGs): access and inclusion; societal enablement; environmental sustainability; ethical capacity; lifetime well-being; and economic value.
To get more concrete, an environmental sustainability metric might be greenhouse gas emissions; a measure of social well-being might be quality-adjusted life years (one year of life lived in full health is counted as one year). It’s only by measuring each of these factors that we can get an idea of the impact a venture has on the world.
Although optimizing for positive societal and environmental good is worthwhile in its own right, social impact can also unlock new areas for growth. Considering issues around social impact and integrating wider metrics of success can lead to new drivers of business strategy and value creation, helping to create new markets.
We estimate there to be $12 trillion-a-year in value ready to be opened up for businesses that innovate across all dimensions of social impact by 2030. This figure is based on the annual revenue and cost savings of business opportunities targeting the SDGs in four areas: food and agriculture; cities; energy materials; and health and well-being.
Businesses that innovate with digital strategies and new technologies are uniquely placed to lead the way. Two examples of this are ventures we had a hand in building alongside partners. OpenSC is a supply chain transparency venture built in collaboration with the World Wildlife Fund, which leverages technology to make consumer goods traceable.
OpenSC drives responsible production and consumption by enabling consumers to trace the route a product has taken to get to them. Before a consumer buys a fish, for example, they can first see where it was caught, by which vessel, and whether it was caught sustainably.
We also recently partnered with Ontario Teachers’ Pension Plan on Koru, its new venture incubator. The incubator’s first venture is Elovee, software which creates a digital render of a family member to accompany those suffering with dementia, helping to ease their symptoms.
Both of these ventures aren’t just having a positive social impact quantifiable by our Total Societal Impact metrics, they’re also driving bottom-line success in new areas of innovation. Digital solutions are the key here, offering both opportunities to lower carbon output and create new business models.
By holding ourselves to account for more than just the bottom line, we can create lasting value and positive change. New, holistic metrics offer the means to quantify impact and optimize for financial, social, and environmental good.