Benchmarking is a powerful way to influence the behaviour of companies
Introduction
Every once in a while, we need to stop, take a deep breath, look back and ask ourselves: what did we accomplish? How did we get to where we are today? And where do we want to go? Organisations are no different. They need to continuously monitor their progress and evaluate whether they are on track to meet their goals and objectives.
Self-evaluation is important, but independent evaluations can provide more insights into what works, what doesn’t, why and for whom. That’s why we commissioned an independent evaluation, performed by Steward Redqueen, to assess the effectiveness of our work. The evaluation focuses on the first two years of the World Benchmarking Alliance’s operations and analyses our progress, accomplishments and challenges. It’s based on an in-depth review of key documents, analysis of performance data and surveys and interviews with staff, funding partners, Allies and companies.
The evaluation finds that despite being a young organisation and facing headwinds from the COVID-19 pandemic, we’ve managed to deliver on expected research outputs – our first signs of impact are emerging. Nevertheless, we don’t want to become complacent. Here are some key insights from the evaluation that will guide our work over the next few years.
What we learned
Benchmarking can be a powerful mechanism for driving organisational performance towards the Sustainable Development Goals (SDGs), but it’s only the first step. Benchmarks can help to make the performance of companies on the SDGs tangible, insightful and comparable. However, the evaluation also shows that benchmark results are just the first step. To incentivise businesses to play their part in building a sustainable future that works for everyone, we need the collective effort of companies, society, governments, investors, media and other stakeholders. Both our engagement and research efforts are essential to achieve the impact we seek.
Engaging with stakeholders while the benchmark is being developed is just as important as engaging with them after it is published. Furthermore, the companies interviewed highlighted that the most important stakeholder influencing their behaviour are investors. If investors pick up on the benchmark, this is a key motivator for companies to take action. Investors are also crucial because they can restrict financing to certain companies if they think they aren’t sufficiently addressing sustainability challenges This can stimulate companies to act more sustainably – one of our key goals.
Buy in from companies is important as well. A key challenge is generating responses from companies that have not showed any interest in our benchmarking. We have room for improvement here.
The evaluation also shows that we have a clear niche in the ecosystem by focusing on accountability and moving beyond Environmental, Social Governance risks to impact-focused themes and forward-looking ambitions of companies. Since our benchmarks build upon the work of others and we actively cooperate and exchange knowledge with other benchmarking organisations, our work complements, rather than reinvents the work of others.
How this evaluation helps us moving forward
The importance of engaging with investors requires further prioritisation and focus. This could be done by expanding our reach in terms of investor Allies and deepening our relations with the existing ones. Out of our 210 Allies (as of 1st March), 28 are financial institutions, representing more than $9 trillion in asset under management. In addition, in April our new Investor Engagement Lead will join and lead our investor engagement strategy. She will provide a critical link between benchmarks/systems transformations and the investment community (both investors and investor-focused platforms among our Allies, as well as the broader investor/financial services industry).
Beyond investors, we also learned that we need to prioritise engagement with business associations. Getting business associations on board during the methodology and benchmark development process proved particularly valuable with our Digital Inclusion Benchmark. GSMA, the industry association representing the interests of mobile network operators, focuses on, among others, digital inclusion and encourages its members to set up digital inclusion initiatives. Such initiatives performed well in the Digital Inclusion Benchmark published last year.
Our Allies have also started to use our benchmarks to engage with companies and communicate their expectations. For example, in East Asia Friends of the Earth Hong Kong supports our engagement with companies in the region, especially with companies from China. Together with the US, the evaluation identified China as a ‘dark spot’ when it comes to company participation and engagement. In order to ensure intended impact of benchmarks, we will need to prioritise engagement with companies from these regions. This can be achieved through collaborative, cross-sector engagements that bring together our Allies and others to prioritise issue areas and mobilise action within and across stakeholder groups based on benchmark data. We will launch an initiative later this year to formalise these collaborative engagements, working initially in our Social, Digital, and Food & Agriculture systems, to empower stakeholders to hold companies accountable on their performance.
Our diverse Alliance was highlighted as one of our main strengths and unique characteristics in the evaluation. However, the evaluation also stressed the importance of growing the number of Allies from developing countries. Currently, 24 Allies are headquartered in the Global South and we are actively working to grow the number of Allies from different regions to ensure diversity. We invite all stakeholders with a specific focus on impact in developing countries and who share our values and mission to get in touch with Marc Robin (Engagement Manager – Alliance) or Aparna Trichur (Communications Lead – Alliance) for more information and help us accelerate private sector’s efforts in achieving the SDGs.
How is this evaluation beneficial to others?
We believe that the results of this evaluation are useful for other benchmarking organisations and organisations working on enhancing the private sector’s contribution to the SDGs. This evaluation contributes to building the evidence base for benchmarking as a powerful mechanism for driving organisational performance towards the SDGs. It shows that benchmarks can help to make the performance of companies on the SDGs tangible, insightful and comparable. However, the evaluation also shows the importance of engagement activities. The engagement and socialisation of methodologies and research outputs are an important contributor to the impact of benchmarking.