At a recent gathering of purpose and ESG executives at the Fortune Impact Initiative annual meeting, we facilitated a discussion around the topic of corporate impact sprawl, a concept we covered in detail in a recent feature with Fortune. This is an increasingly common phenomenon, which we describe as the fragmentation of social-impact-related efforts within an organization that is driven by the many different pressures companies must respond to—from customers, shareholders, regulators, employees, communities, and others.
At the professional services organization Deloitte, we have recognized that given the range of different pressures on the business, the fragmentation of social impact activities is actually natural—and perhaps even necessary—to achieve diverse corporate and community-benefit goals.
Corporate social impact sprawl is increasingly a feature of today’s commercial realities, not a bug. And once companies see that dynamic and stop trying to fight the sprawl, our experience suggests that the challenge—and the opportunity—then shifts to how to effectively manage the different social impact activities across an organization.
Effectively managing social impact sprawl means that companies need to stop treating social impact as a single thing, and start managing it as a portfolio of activities undertaken by a distributed network of stakeholders throughout the organization. Making this mindset shift will involve leaders beginning to consider six key, interconnected steps:
- Understand your critical stakeholders, their needs, and how they may affect your business.
Responding to growing pressures begins with understanding where the demand for social impact is coming from. This requires segmenting the different stakeholders that are most material to your business—executives, investors, partners, employees, customers, regulators, activists, and local communities—and undertaking an analysis to understand the benefits and risks associated with each of their social impact positions. Then an organization can better prioritize the needs of different groups and design social impact initiatives that clearly respond to one or more stakeholders. - Map all of your company’s existing social impact activities.
Social impact efforts are typically scattered across the company, and connection points are usually limited and ad hoc. By intentionally mapping activities across the entire organization, organizations can comprehend the full shape and scale of disparate social impact activities and the key business needs that each of these efforts aims to address. This type of detailed landscaping helps identify all the stakeholders involved, what they are trying to achieve, the assets they bring to the table, and how they are connected (or not connected). - Get clear about your different social impact goals.
Engaging in leadership conversations about the overarching ambition of your organization’s social impact work allows you to make smarter choices about both what you do and, more important, what you shouldn’t do. And understanding the big picture also helps build clarity on the goals of each of the pieces—how each activity creates impact, which stakeholders it is designed for, and how it fits with the larger strategy. Getting clear about the pieces helps a company understand how different activities and relationships can be supporting very different objectives underneath that larger vision. - Begin to actively manage your social impact portfolio.
As the old quote often attributed to the World Economic Forum explains, “We live in a world where top down doesn’t work and bottom up doesn’t add up.” The most productive way to deal with this is to recognize that social impact activities don’t all need to be centralized, but they do need to be rationalized and actively managed as a portfolio in relationship to the company’s social purpose and goals—so that it’s possible to consider tradeoffs and see the big picture of the impact the company hopes to create. Intentionally managing social impact work as a portfolio enables you to think about how things add up, where you need to build more cohesion, and where activities can remain distinct. - Measure what matters.
Since there is no one measure that can capture the impact of all the different types of social impact activities, each effort will need a set of metrics that allow you to assess progress relative to the pressure the activity is responding to and the business purpose for the work. Measurement will mean assessing both impact on targeted social and environmental issues and evaluating the business value of social impact on the organization’s brand, culture, and operations. In many cases, companies will need to marry social metrics with more traditional financial ones like costs, incremental revenue, and risks in order to weigh the relative value and social-return-on-investment. - Organize for network impact.
Traditional organizational structures are likely to come up short in dealing with today’s more diverse and distributed body of social impact work. Because social impact activities take place across the organization, companies need to think about how they coordinate a portfolio and orchestrate a network of decentralized activity across the firm. This might look dramatically different depending on the complexity of the work—in some cases simple coordination processes may be enough, but for more robust work, stronger oversight can take the form of chief purpose officers or chief social impact officers, who treat social impact like a core business function and have the positional authority to align the full portfolio of activities and coordinate the network of efforts across multiple business units.
The Deloitte experience
Over the past several years, Deloitte has been on an intentional journey in learning to manage our own social impact sprawl. Deloitte has been focused on “making an impact that matters” throughout our 175-year history, but the initiatives to support our social impact efforts were historically all over the map. They ranged from pro bono work managed in silos across our businesses, decentralized local and national nonprofit relationships, a single ”Impact Day” focused on volunteerism that mobilized our talent in our communities, the philanthropic giving of the Deloitte Foundation (which operates separately from the organization), and our dedicated social impact strategy consulting practice at the Monitor Institute by Deloitte.
All the pieces were making a difference. But there was also a clear sense that our disparate social impact efforts still weren’t adding up.
To address this, we began to take stock of all the different social impact activities within the organization. The process allowed us to get the lay of the land—understanding who and what we were working with when it comes to social impact. That context then made it easier to strengthen relationships across the network of activity, identify common ground, and begin to make choices that allowed us to optimize the portfolio with a clear grasp of the whole.
In 2020, Deloitte established what was then called the US Purpose Office, and at the same time we redoubled our long-standing diversity, equity, and inclusion efforts. We have since integrated these efforts under one US Purpose and DEI Office to amplify our collective impact. The move was not meant to centralize all of the pieces; it was aimed at allowing us to better coordinate our organization’s commitments and actions for delivering our purpose in response to the disparate aspirations and pressures that were emerging from different parts of the organization.
We began to realize that we could both take the pressure off treating any one activity as if it was our sole, crowning social impact contribution to the world, and find ways to increase our impact by consolidating and more deliberately managing our efforts. For instance, we realized that our Impact Day fit differently into our broader social impact strategy once we recognized that it is not only about societal impact and outcomes; it also plays an important role in our talent and community engagement efforts.
At the same time, we also saw that we had an opportunity to maximize the impact of some of our ongoing volunteer activities, pro bono work, and nonprofit relationships by establishing more focused goals for these efforts and investments. This led us to rationalize our ongoing social impact efforts and focus them around a central goal: to invest $1.5 billion over 10 years in equity initiatives to help support individuals and communities facing the greatest barriers to social and economic prosperity. We announced this social impact investment commitment in September 2022, and in the year since we have actively shifted the focus of many of our social impact efforts and any new investments to support this goal. Now we are more actively managing our portfolio to support this commitment, and are developing the tools to measure the increased impact that we are able to make on society through our new approach.
It’s still a work in progress, but we’ve found that once we began to accept sprawl as natural and healthy, we could stop fighting it and begin to intentionally manage the network and portfolio of activity. And we believe that over time, this shift will allow us—and others on a similar path—to rationalize and coordinate our purpose-related activities, while also leaving a healthy amount of space for social impact sprawl to flourish.
Gabriel Kasper and Kerri Folmer are managing directors with Monitor Institute by Deloitte, Justin Marcoux is a senior manager with Monitor Institute by Deloitte, and Dana O’Donovan is the Social Impact and Monitor Institute by Deloitte leader. Monitor Institute by Deloitte is the social impact strategy consulting unit of Deloitte LLP and part of Deloitte’s US Purpose and DEI Office. Deloitte is a Fortune conference partner.
