[MUSIC] Once the enterprise has prioritized certain SDG outcomes, they will actively manage towards, it's time to get more specific about the impact goal for each outcome, using the Impact Management Project's ABC goal levels. Each outcome can be categorized based on the type of impact that the enterprise aims to achieve. This is the impact level, or impact goal. Impact goal levels help enterprises and investors along the capital chain talk about the type of impact they are aiming to achieve in the same way. It's an important communication tool that helps enterprises aiming for certain levels of impact, connect with investors aiming for the same level through their investments. The impact management project defines three levels of impact goal, A: act to avoid harm, B: benefit stakeholders and C: contribute to solutions. Of course, for some impacts, the enterprise may not know its level of impact or may actually be causing harm. These outcomes are categorized in this column on the left, as "Does or may cause harm." How does an enterprise decide on an A, B or C level goal for each outcome? This may seem complicated at first, but we will break down the categorization using a couple of fundamental questions. How does the outcome relate to a threshold deemed good enough? How does the company's goal relate to its previous performance and that threshold? How substantial is the change in outcome compared to what this population would have experienced otherwise? In other words, how underserved is the population? Let's start with the concept of a threshold. A threshold is a societal norm or ecological level deemed good enough. The threshold gives important context to an enterprise's goals and performance to assess if they are contributing to sustainable development. Many reporting standards are making explicit that goals should be set and performance should be measured in the context of thresholds. For example, the SDG impact standards for enterprises asks that an enterprise determines relevant SDG thresholds, establishes credible impact baselines, and sets realistic but ambitious impact targets. And the GRI sustainable context principle requires that the organization shall report information on its impacts in the wider context of sustainable development. The threshold for a given outcome could be defined in a number of different ways. It could be defined by asking stakeholders what range of outcomes would be acceptable to them. It could be defined by policy or industry standards, for example, a living wage of $11.98 for a single adult with no children working in North Carolina. Some thresholds could be defined by the SDGS, such as an infant mortality rate of 2.5% or lower at a country level. For some environmental goals, the threshold may be based on planetary limits. For the purpose of understanding the differences between A, B and C level goals, let's add the visual of a threshold to our chart and then show how each impact level goal relates to the threshold. A, act to avoid harm, describes an outcome for which the company was previously. at period one. performing below the threshold and is now, at period two, aiming to generate a better outcome, yet will still perform below the threshold. There are many outcomes for which a company may simply not yet be able to achieve outcomes above the threshold, but is actively trying to reduce an existing negative impact. This is extremely common and can have significant impact on SDGs, as reducing negative impacts creates less need for the deep, intense work defined in the SDGs. Note that for an A level goal, the relevant comparison is with the company's past performance on that outcome. B, benefit stakeholders describes an outcome for which the company is continuing to perform above the threshold for its stakeholders. C, contribute to solutions, describes an outcome for which the company is performing above the threshold where that level of outcome would not have occurred otherwise due to some market failure. Note here that the relevant comparison is with other solutions in the market, you will often hear references to an underserved population at this level. This again refers to the fact that the other options in the market are not adequately serving the need at a sufficient level. Finally, to be a C level impact, the change and outcome must be substantial, defined as either a deep change for few or a shallow change for many. And remember if a company doesn't have an explicit impact goal around a certain outcome, it would be in the "does or may cause harm" category, since the impact is not being actively managed. So for each outcome, the enterprise should set a goal around the level of impact A B or C that the enterprise aims to achieve. We have created a flow chart that makes it easier for an enterprise to determine if a certain outcome is an A, B or C level goal or should remain in the does or may cause harm category. Let's look at how Grace would use this flow chart to set her impact goals for each SDG outcome she prioritized through steps one to three. For her outcome to increase access to quality maternal health care, first ask: does the enterprise seek to perform above or below the threshold for this outcome? Grace's maternity clinic seeks to achieve a lower infant mortality rate than what the population it serves would otherwise experience using alternatives in the market. In fact, the clinic seeks to help achieve the SDG target of reducing neonatal mortality to 12 per 1,000 births. Her goal is above the threshold. Is the outcome a substantial change: deep for few, or shallow for many? For the stakeholders experiencing this outcome, every additional baby's life saved is extremely significant. So it meets the definition of substantial. If not for the clinic, would the outcome likely be below threshold? As we have already noted, the population would experience a worst average infant mortality rate, if not for Grace's clinic. For this outcome, the maternity clinic's goal is a C, contributing to the goal of getting infant mortality down to a certain level population wide. Now, let's look at the outcome related to decent wages. Does the enterprise seek to perform above or below threshold? Currently, the clinic is not paying a living wage to all employees, so they have been operating below the threshold on this outcome. In addition, they know they cannot yet pay a living wage to all employees, so they will continue to operate below the threshold for some time. Does the company plan to improve performance? They are raising pay above the living wage for some workers. This is improving performance even if not yet above the threshold for all workers. So this is a yes. Were previously negative outcomes due to the company? Yes, they are improving an outcome that was previously below the threshold due to the company's own actions. This makes wages an A level goal. At the end of this process, Grace would have defined the level of impact for her five main outcomes. By articulating the levels of impact for her goals, she can then determine how to take actions or create structures in the business that will help her achieve those goals. Making it real: for each outcome the enterprise will actively manage, set an ABC goal level. This will help you internally articulate the kind of change you are aiming for and will help you communicate externally with investors who are targeting certain goals. If you don't have enough information to answer the questions in the flow chart, be realistic and label this a does or may cause harm level for now. Consider ways you could get the information you need to possibly move to an A,B, or C level goal. Remember to consider current and planned performance in the context of a good enough threshold. That threshold could be determined by asking stakeholders or by third party research or policy. Be realistic about the goal level. The SDG Impact Standards make clear that there is important work to be done moving from does or may cause harm to avoid harm. After all, reducing negative impact lessens the need for the deeper work of C-level goals. At the end of this step, you should have set an ABC goal level for each prioritized SDG outcome that the enterprise will address.
