Impact assessment: the complete guide

Impact assessments are an increasingly debated topic due to the exponential spread of Società Benefit, so we decided to draft a comprehensive guide for those dealing with this requirement for the first time.

As a translation agency established as a Società Benefit, we at Way2Global have been making impact assessments since we were founded, so we know what they are, how they should be conducted and, most importantly, how the report should be written.

What is an impact assessment?

Impact assessment is a process of analysing and quantifying the economic, social and/or environmental impacts generated by the activities of companies that have chosen to embrace the Società Benefit model.

As stipulated in Article 1, paragraph 376 of Act No. 208/2015, this type of company has a dual purpose: On the one hand, they pursue a profit-making purpose in order to distribute profits to their shareholders, and on the other hand, they promote the common benefit for a wide range of stakeholders, i.e. they operate “in a responsible, sustainable and transparent manner toward people, communities, local areas and the environment, cultural and social goods and activities, entities, associations and other stakeholders.”

At the end of the year, companies that make this choice are therefore obliged to assess the impact generated by their activities, initiatives or projects and disclose it to all stakeholders in full transparency.

The assessment is made by the impact manager, i.e. the internal or external figure appointed as responsible for implementation and improvement of the impact objectives, as well as the final reporting.

Failure to pursue the socio-environmental objectives declared in the articles of association is treated by law as misleading advertising practice, and in this sense, Benefit Corporations are subject to control by the Italian Competition and Market Authority (AGCM).

To better understand how impact evaluation is structured, we can divide the process into three steps: data collection, analysis and assessment with metrics and standards, and drafting of reports. Let’s take a closer look.

Data collection

The first fundamental step in an impact assessment is collection of data and material for analysis. Regardless of the specific product category and the type of common benefit pursued, every company has KPIs (Key Performance Indicators), such as those that objectively measure the degree to which a set targets is achieved. KPIs monitor the progress of the business plan’s results over time and at the end of the year make it possible to record the actual results achieved against the planned targets.

To ensure impartiality and a variety of perspectives, impact assessments must also draw on sources both internal and external to the corporate scope: stakeholders. Gathering their feedback on the company’s operations is extremely important, since they are the first beneficiaries of the positive impact that Società Benefit want to generate.

Interviews and surveys are among the most popular tools for gathering this feedback and fostering what is known as ‘stakeholder engagement’, a continuous fertile dialogue that is essential for any company that aspires to be an integrated part of its ecosystem.

Measurement and analysis with tools and metrics

Once data collection is complete, the second phase of the impact assessment can be implemented: analysis and assessment. Managing the vast amount of collected data is no easy task, especially for those undertaking this process for the first time. And it is no easy task, given the plethora of available options, to decide which tool or metric to adopt to perform the impact assessment.

There are numerous tools and metrics available to perform an impact assessment, and the Società Benefit Law deliberately leaves it up to management and the Corporate Impact Manager to choose the most relevant and effective tool to describe the company’s identity and specific characteristics.

For any company, it is an important strategic choice, because the impact assessment tool is not just a reporting device, but a set of criteria, indicators and guidelines that influence management behaviour and choices over the long term, ultimately determining the company’s competitive advantage, profitability and sustainability.

The most popular tools, which have also been assessed for regulatory compliance by Assobenefit (National Association for Società Benefit), include the following:

• B Impact Assessment (BIA) – An online assessment tool developed by B Lab (an international non-profit organisation promoting the Benefit Corporation model) for measuring the positive impact of companies in the areas of Governance, Workers, Community, Environment and Customers. If a company scores a rating of over 80 points on a 0–200 scale, it qualifies for B Corp Certification. Since 2020, it has been integrated through a UN and B Lab project into the SDG Action Manager platform to measure companies’ progress toward the Sustainable Development Goals.
• NeXt Index – Assessment standard developed by NeXt Nuova Economia per Tutti, a body aimed at promoting a civil, participatory and sustainable economy.
• SABI – Fondazione Buon Lavoro’s assessment standard for participatory self-assessment.
• Matrice del Bene Comune – Assessment standard developed by L’Economia del Bene Comune (EBC) for sustainable value creation.
• EcoVadis – Platform for assessing companies’ social and environmental sustainability, with third-party certification of the rating through documentary verification.
• GRI – Reporting standards with a modular structure created by the Global Reporting Initiative, an international non-profit organisation that enables preparation of a Sustainability Report.
• IR – Reporting framework set up by the IIRC (International Integrated Reporting Council) that enables a Sustainability Report to be drawn up on the basis of an integrated conception (Integrated Thinking) of sustainability issues.

Each company is therefore free to choose which and how many tools to use for impact assessment, provided that they are based on a standard drawn up by an external party that meets the criteria of accuracy, clarity and transparency.

At Way2Global, for example, we primarily refer to the BIA, but we also use other tools for benchmarking purposes in order to gain a broader and more diverse view of the impact we generate each year.

Once the data has been assessed, the final step is to draw up the impact report.

Drawing up the impact report

Drafting the impact report is the culmination of this complex assessment process. It is a strategic document for the company because it provides a clear, complete snapshot of achieved results in relation to the declared common benefit objectives. It is also the basis for setting up future programmes, objectives and strategies. Finally, it makes it possible to meet the principle of transparency toward stakeholders, a mandatory requirement for a Società Benefit.

The impact report is prepared at the end of the year by the Impact Manager and must be attached to the annual report when it is filed with the Chamber of Commerce.

This document consists of three parts:

• A description of the objectives and actions implemented in the financial year just ended in pursuit of the common benefit goals, justifying any circumstances that prevented this from being achieved;
• An assessment of the impact generated using the external assessment standard in accordance with the characteristics described in Appendix 4 of the Act covering the assessment areas identified in Appendix 5 (corporate governance, employees, other stakeholders, environment)
• Planning the new objectives that the company intends to pursue in the following fiscal year.

In the first part, before discussing the objectives and actions implemented in the reported year, it is good practice to briefly introduce the company by outlining its history, vision, mission and, above all, the purpose that guides its operations. The report is consulted not only by stakeholders already familiar with the company, but also by third parties totally unrelated to it such as financiers or potential investors.

The assessment is the report’s focal point, illustrating results achieved against targets by measuring them against the selected Standard across four specific areas: corporate governance, employees, other stakeholders and the environment. Performance can then be evaluated by answering the following questions: Have the goals set at the beginning of the year been achieved? If the answer is no, why not?

The report concludes with a planning section, which outlines the goals for the coming year. Impact assessment is therefore not only a valuable reporting and critical review process, but also a precious opportunity to fine-tune and systematically improve sustainability performance over time.

Once the report formalising the impact assessment process has been drafted, all that remains is to communicate the company’s commitment worldwide.

Translating the impact report

The best way to capitalise on all the work involved in impact assessment is to obtain a translation of the report.

Making this document available in other languages offers companies a number of advantages. First, it is a further demonstration of transparency, which helps to consolidate the company’s reputation. Secondly, translation facilitates the use of the document by stakeholders, which is a mark of respect and attention toward them. Last but not least, it is an excellent tool to raise your profile abroad and attract new customers and investors.

To enjoy these benefits, you must choose wisely which language to translate the impact report into. The most common choice is translation into English, but this is not such a straightforward decision. For companies operating in French-speaking markets, for example, it would be preferable to opt for a French translation. The best way to take this strategic decision is to make a good assessment of the languages of the target markets, both at present and for future expansion.

At this point, one final question remains: Who should be commissioned to produce a translation that faithfully reflects the essence of the company that emerged from the impact assessment?

Among the various possibilities, the best and safest decision to ensure that you receive a high-quality translation is to turn to a professional translation agency.

Agencies know how to handle such delicate translation projects by implementing a structured and certified process consisting of a sequence of steps and multiple checks by translators, linguists and native speakers specialised in handling this type of document.

If you need a language partner to translate your impact report, contact us by simply filling in the form.