Our work has taught us a great deal about the discipline of impact measurement and reporting. That said, we’re always learning—so if any of the reflections below spark questions or challenges, we’d love to hear from you. We might just come up with a better approach together.

Varying disciplines across sectors

Some sectors are much more disciplined than others in measuring and reporting social, economic, and environmental impacts.

• Government agencies are usually the most disciplined at the appraisal stage. They ensure significant policy or investment initiatives are thoroughly assessed before funding is committed. Many also publish detailed guidance materials on how to develop business cases and impact assessments for supporting decision-making. However, government agencies are generally less disciplined about the ongoing measurement and ex-post evaluation of past initiatives. There are, of course, some exceptions, but in general, follow-through is less consistent.
• Not-for-profits and other for-purpose entities are better at monitoring and reporting impacts over time and evaluating the performance of past initiatives. This reflects the relatively narrow scope of their activities compared to the broad scope of government activities and the clear reporting expectations of their external funding partners.
• Private entities are good at appraising, measuring and reporting the impacts of their initiatives. However, their approaches tend to gloss over the fact that competitors may offer substitutable products or services. They tend to assume that impacts wouldn’t flow without their initiatives. This is understandable in competitive markets, but a stronger approach would focus on how their initiatives generate superior impacts compared to their competitors.
  

Private entities operating or investing in narrow sectors often outperform large investment funds or holding companies in impact monitoring and reporting. This stems from the practical difficulties of measuring impacts across diverse activities and collecting data that can be aggregated readily across the portfolio. As a result, large diversified entities often report on governance, outputs (rather than outcomes or impacts), and report selectively on individual activities.

Government agencies tend to have a wide focus on measuring social, economic and environmental impacts, particularly when major funding or regulatory decisions are at stake. Not-for-profits are more focused on measuring their social impacts. At the same time, private entities often prioritise governance practices and environmental impacts, given the widespread adoption of ESG reporting and environmental rating tools.

Similar objectives with different languages

Discipline applied to impact measurement and reporting varies across sectors, but so does language. And it evolves over time.

Government agencies tend to focus on “benefits”, given their preference for cost benefit analysis as an evaluation technique. Not-for-profits have historically preferred “impacts”, however this seems to be evolving into “values”—a term more firmly embraced by the private sector.

The table below outlines how language, investment rationale and analytical preferences have varied across sectors.