What tools and methods can I use as a startup, if I want to measure sustainability impact?

In the third part of this blog

In the third part of our blog post series we provide a short overview about methods and tools that you may use for measuring impact for your startup. in this blog post we focus on scorecard approaches. Process based approaches (Theory of Change) will be discussed in the next blog post.

Scorecard vs. process based approaches (Theory of Change)

There are two main categories of measurement approaches.

Firstly scorecard approaches, where you score on different dimensions relevant for sustainability impact. Depending on the tool/method, you are either asked to score your current performance (what you have "achieved" so far). In many cases this is difficult for startups, as in early stages there is not so much you have achieved. Or you are asked to score your potential. This is sometimes easier for startups, in order to evaluate different business models, scenarios or strategic choices you can make.

The second category are process based approaches where you have to show a causal link between your activities (what do you do?) and the change ("impact") that you achieve. The most prominent approach for process based approaches is a so called "Theory of Change". A theory of change is more complex than simple scorecard approaches - and tends to take more time if you want to really develop a well grounded theory of change. However, in the extremely quickly developing field of impact investing and impact measurement, we see a theory of change as emerging standard and we recommend to develop a theory of change. The theory of change will be discussed in one of our next blog posts. Process based approaches and scorecard approaches both have their pros and cons, and it all depends on your current situation where you are at with your startup.

Below we present three scorecard approaches that we selected based on different criteria that we perceive to be relevant for startups.

Three Scorecard approaches that may be helpful for startups

1. The impact compass

Screenshot taken from Impact Compass White Paper. © Impact Compass, Center for Social Innovation, Stanford Graduate School. See https://www.gsb.stanford.edu/sites/gsb/files/whitepaper-csi-impact-compass.pdf

The Center for Social Innovation at Stanford University has developed a useful tool that may be used to get a quick scan for new projects, startups, investment opportunities, strategic decisions etc. You can either use it to score a current situation (achievement), but it may be most relevant for scoring the sustainability impact potential for some time in future.

The "Impact Compass" has 6 dimensions that are well chosen in our opinion. You can rate a startup directly on the website and create a visual report. For direct access click on the following link.

The dimensions include "value to society" (i.e. how important is the problem you address?), "efficacy" (i.e. do you know whether your activity will really contribute to solving the problem?), "impact magnitude" (i.e. how much of the problem can you solve?) or "scalability" (i.e. how many people benefit from your activities?).

From our experience this is a valuable approach to conceptualize the impact a startup might have.

Besides the online scoring tool, there is a White Paper the discusses the approach in more detail, as well as a webinar.

2. Manual for the sustainability assessment of start-ups

Screenshot from Borderstep Institute Manual. © Borderstep Institute. See: https://www.borderstep.de/wp-content/uploads/2018/03/GreenUpInvest_Leitfaden_EN_RZ.pdf

The Borderstep Institute (in collaboration with GreeUp Invest) has developed a very useful scorecard approach, that is available as a PDF document via the following link. It is one of the few approaches that has been specifically developed for startups.

This Pdf manual covers the aspects a) business context, b) startup team c) business concept and d) product and services and allows creating an overall score.

It allows for flexibility to be adapted to the needs of the user (startup, investor) and is in our opinion conceptually a very good and comprehensive document and approach.

3. B-Impact Assessment

Screenshot taken from B-Impact Assessment Website (https://bimpactassessment.net).

The B-Impact Assessment is currently probably the leading sustainability impact scorecard approach and is something that can be helpful for startups.

The assessment looks however at current achievements, rather than impact potential. And from some startups we have heard that In early phases of a venture, some questions are not yet relevant (which is the down side). But it can open eyes in which areas sustainability will become relevant in future and where it could be implemented. B-Impact Assessment uses a freemium model. For further information, please click on the following link.

Process based approaches (Theory of Change)

Process based approaches (Theory of Change) that are in our opinion the most reliable way to identify a startups contribution to sustainability impact, will be featured in our next blog post. If you do not want to wait, please click on our SHIFT curriculum, step "General background (3/4) Gain a basic understanding how impact is measured via a "Theory of Change".

For our complete curriculum on impact measurement for startups, please click on our curriculum published on SHIFT.