Social impact assessment belongs to the relatively staid world of management prediction and decision-making tools and is frequently equated with risk management processes. In contrast, social innovation is a highly contested concept which has emerged dramatically from the shadows of obscure 19th century sociological theory and become a pet term over the past few decades for advancing political, civil and business interests around the world.Yet, there is more to social impact assessment than meets the eye. As both a research methodology and management tool, it combines the best of both risk management and social innovation.

The paradox between risk and innovation

One of the primary benefits of social impact assessment (SIA) is risk avoidance, mitigation and management. The purpose of social impact assessment is to enable a project operator to identify, avoid, mitigate and manage the risks of social impacts imposed by a project – typically a built infrastructure project – on individuals and communities (Vanclay et al, 2015). Happily, good impact management in turn mitigates strategic risks to a project. These may include risks of increased costs and delays arising from community opposition and extended approvals processes.

Where does social innovation fit into this risk landscape? Usually, there is a paradoxical tension between risk management and any sort of innovation. The innovative unknown is risky; to mitigate the risk, only the known is tolerated. This paradox seemed stark during my doctoral studies of the social impact investment market (which sits within the socially responsible investment universe) around 5 years ago, when the emphasis on ‘scaling social innovation’ was code for crystallising a ‘proven’ social innovation in time and applying it across geographic and demographic boundaries in an ever-expanding fashion, regardless of the need for further social innovation to meet the challenges of time and context.

However, growth and development in the socially responsible investment space has led to tremendous movement away from this approach to social innovation. Nowhere is this more apparent than in the increasing number of ESG (Environmental, Social, Governance) standards and frameworks utilised by socially responsible investors which require social impact assessment as the foundation of social performance management systems in project development. Similarly, purchasers wishing to verify socially responsible practises within their supply chain are applying increased pressure on those who operate the projects which produce raw materials – such as mining companies – to demonstrate and underpin their commitment to positive social performance with social impact assessment.    So, how does social impact assessment promote social innovation? More specifically, what kind of social innovation does SIA promote?

So, how does social impact assessment promote social innovation? More specifically, what kind of social innovation does SIA promote?

Definitions of social innovation

There are two key schools of social innovation thought. First is the school which prizes human equality and sees social innovation in the shifting dynamics of power and privilege among different groups in society (for example, Moulaert et al, 2013). To this school, an innovation is ‘social’ if it addresses a lack of social justice or equality. Second is a school of social innovation thought which gained popularity through promotion in the business schools of major universities such as Stanford, Duke, Oxford and Cambridge, and prominent management journals such as the Stanford Social Innovation Review and the Harvard Business Review. Termed the ‘utilitarian’ approach to social innovation (Ayob, Teasdale, & Fagan, 2016), this view sees an innovation as ‘social’ where it has an actual or potential positive impact on measurable wellbeing indicators, usually at the macro rather than micro level (looking at the wellbeing of entire populations rather than individuals).

Social impact assessment promotes human equality

Social impact assessment combines the best of both of these social innovation worlds. On the one hand, social impact assessment is a ground for local community voice and involvement in a project, shifting the weight of power and privilege away from project proponents and governments and redistributing it - to a sometimes lesser and sometimes greater extent - amongst communities and civil society organisations.

Leading practice social impact assessment empowers communities by requiring meaningful community engagement as part of the social impact assessment process. Meaningful community engagement finds its expression in actions such as informing communities about the design of a project and the outcomes of environmental impact assessments before asking their opinion about its potential social impacts, or their ideas for avoiding, mitigating or managing those impacts. Meaningful engagement also requires involving people who are potentially most vulnerable to impacts (not just those with the most influence on or interest in a project) in participative research designed to understand how a project will impact them. Through meaningful engagement, social impact assessments result in the ‘human equality’ definition of social innovation.

In Australia, the importance of meaningful engagement in SIAs is increasingly emphasised, with the energy industry coming under particular scrutiny. Media reporting of conflict between energy project proponents and communities usually focuses on proponents’ failures to integrate community voice in project design and management decisions. Regulatory bodies who review SIAs as part of approvals processes are applying a similar pressure. For example, a December 2023 decision by the New South Wales Land and Environment Court to reject an application for the development of a solar farm and associated infrastructure cited the proponent’s inadequate engagement with community and subsequent failure to ‘consider community views or values’, particularly in relation to the visual impacts of the farm.

Social impact assessment promotes positive social outcomes at a population level

On the other hand, social impact assessments directly promote utilitarian social innovation. This is because SIAs are built on a ‘baseline’ of population-level demographic and other indicators. The process of social impact assessment is a predictive judgment about whether a project would result in either no change (impact) to those baseline indicators; a negative change to them; or a positive change – the latter being the definition of social innovation, according to the utilitarian school of thought. These changes are often called social outcomes.

A social impact assessment goes even further in its promotion of utilitarian social innovation by proposing measures to not only mitigate the negative but also enhance the positive social outcomes of a project. For many people in the built infrastructure space, this kind of social innovation (positive social outcomes as a result of project activities) is the hallmark of healthy corporate social performance.

Let’s dive a bit deeper into the characteristics of a social impact assessment. What exactly is it about a social impact assessment that promotes social innovation?

Social impact assessment is predictive, not evaluative

Social impact assessment is often (understandably) confused with a different research methodology called social impact measurement. Social impact measurement is evaluation by another name. On the other hand, while social impact assessments do provide a baseline that can be utilised for future evaluations as part of a project’s social performance management system, and may involve strategic assessment of past management measures, the purpose of social impact assessment is prediction, not evaluation.

These predictions shape the application of the mitigation hierarchy so that very specific recommendations for future avoidance, mitigation and management measures are made. As part of a leading practice social impact assessment process, these recommendations are then integrated into a social impact management plan.

The social impact assessment process promotes social innovation because (a) predictive decision making, while it involves careful application of critical thinking, is not mired in the bias toward ‘proven’ (rather than innovative) measures that evaluative decision making is prone to; (b) the baseline research includes a multitude of both qualitative and quantitative data sources, bringing insights that project management personnel may not have otherwise had access to; and (c) the baseline conditions and potential impacts are analysed in light of existing project controls, with the aim of innovating on those controls to reduce the significance of impacts and enhance the significance of benefits in the residual assessment.

Social impact assessments are designed to be integrated into an adaptive system of social performance

A social impact management plan is constructed after a social impact assessment is completed. A social impact management plan sets out the mitigation and management recommendations of the SIA that were adopted by the project operators; details of those responsible for implementation, both internally and externally to the project; and a monitoring and evaluation program which tracks the implementation and analyses the outcomes of the adopted mitigation and management measures.

This is a key point at which evaluation comes into a social performance system: not with the social impact assessment, but with the subsequent social impact management plan. Yet, there are some unique constraints on the evaluation design in a social impact management plan. Evaluation methods are chosen for their ability to promote a cycle of social innovation – that is, to promote continuous improvement in mitigating the negative impacts and enhancing the positive benefits of a project. Evaluation methods are usually therefore developmental and formative, rather than summative; with data collection integrated as much as possible into existing data collection systems, rather than providing an additional organisational burden; and with an emphasis on feeding real-time results into decision making within an organisation’s social performance system, rather than methods which result in a time lag between when the decision is optimally made and when the evaluation results are available.

This adaptability is the hallmark of a good social performance system. Without it, a social impact assessment is little more than an approvals tool. With it, SIA becomes a conduit for social innovation, corporate risk reduction and the development of sustainable built infrastructure projects that serve communities now and into the future.

You can download the paper here.

This article is written by Dr. Ali Mollinger-Sahba the Associate Director of Social Impact at ReGen Strategic.

 

REFERENCES

Ayob, N., Teasdale, S. & Fagan, K. (2016). How social innovation “Came to Be”: Tracing the evolution of a contested concept. Journal of Social Policy, 45(4), 635-653.

Moulaert, F., MacCallum, D., Mehmood, A. & Hamdouch, A. (Eds.) (2013). The international handbook on social innovation collective action, social learning and transdisciplinary research. Northampton, MA: Edward Elgar.

Vanclay, F., Esteves, A.M., Aucamp, I. & Franks, D. (2015). Social Impact Assessment: Guidance for assessing and managing the social impacts of projects. International Association for Impact Assessment.

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