Critical Mass audience gets to play big business

As one of the corporate sponsors of the UK's leading social enterprise and impact investing event Good Deals this year, the pressure was on PwC to impress a partisan socially conscious crowd in the bear pit that is the Faraday Theatre at the Royal Institution.

After a bright start in the morning on day one of Critical Mass, one might have feared that a session led by a big global consulting firm could end up being a bit dry. As it turned out, our fears were unfounded. Mark Graham, director and social investment specialist, started by assessing the needs of impact investors. He asked us to consider, if we were at the beginning of the race, what the finishing line of impact investment might look like.

London was assessed as a global financial centre for impact investment with some ‘could do better’ conclusions, with one particular black mark around the UK capital's standards of impact standards and reporting. Standardisation of impact investing was also proposed, with a comparison made to the gauge common to accounting that is Generally Accepted Accounting Principles (GAAP).

So far, so ho hum. We’d all just had our lunch and the post-prandial food coma was in serious danger of kicking in. But then; but then.

Malcolm Preston, as PwC's global leader in sustainability and climate change (pictured above), must necessarily be a smart guy to advise the company on that subject. He’s also pretty smart for realising that keeping a crowd engaged in front of accountants that would need the magnetism of Martin Luther King to keep their audience rapt needed something else.

That something else was interactivity. The audience was asked to consider themselves a company contemplating starting a beer company in Africa and ‘buying local’ or have the fictional international brewer import barley to do it. Boy did proceedings liven up then.

Preston explained that for most companies, the board will base their decision on profit and the share price – their shareholders would be the only ones that matter. Our audience was allowed to consider the wider stakeholders, such as suppliers and local communities. Reactions were initially predictable, with the audience siding with the local economy benefits.

Information was scant at first but increased with every round of voting, along with the noise of debate. Audience members were asked to hold up perhaps subconsciously skewed coloured cards – green ones for ‘Grow Local’ (environmental connotations pretty obvious there) and black ones for ‘Import’ (the bad guy always wears black).

The crowd were pretty willing to suck up infrastructure costs (building roads in Africa perhaps seen as a social plus), but wobbled when it came to the use of water for the crops, which we were told, was scarce locally and eight times more valuable than in countries with established water networks. 

The issue of cutting down the existing ecosystem to grow crops was also lobbed in and caused concern. What sealed the deal though, was the improved livelihood of farmers and trickle down effect to families, health and safety awareness and improved local farming knowledge, which would presumably lead to increased empowerment to community self sustainability. In the end, the estimate was a 75% vote in favour of ‘Grow Local’.

Tooled Up

What was fascinating was the model that PwC have developed to assess all these different factors – Total Impact Measurement and Management (TIMM). The tool is broken down into a number of considerations, but crucially, not so many that it feels overwhelming.

Preston offered the example of the power company SSE having to upgrade power lines in Scotland to link up their wind farms, which involved the replacement of 1000 pylons with 600. It drew thousands of complaints, ended up taking longer than it should have and nearly doubled in cost.

But because the views of local communities were taken into consideration alongside environmental concerns (including the blight on the beauty of the landscape) a societal value of £3.50 was identified for every £1 spent.

Conference co-chair Jeremy Nicholls of Social Value International drew together all this learning at the close of the plenary. His suggestion was that critical mass might occur when all companies take business decisions considering wider social impacts.

Perhaps more importantly, he reminded the audience that those affected by big business decisions could also be helped by the TIMM tool: “We should be more accountable to those whose lives we seek to change for the better, because they cannot hold us to account.”
 

Photo credit: Matthew Herring, Matter&Co