The final step is to define an impact thesis for each important SDG outcome the enterprise is targeting. An impact thesis is an outcomes based hypothesis, of how the enterprise expects to contribute positively to sustainable development, and achieving each SDG outcome. In short hand, an impact thesis is an if then statement, if we do X, we expect Y to change. The main question to ask at this stage is, what are the key business actions we will undertake, that will lead to achieving each outcome. This is where you articulate what you actually need to do to achieve your impact goals. The impact thesis also helps you select metrics, and evaluate performance later. An impact thesis can be structured through a theory of change or logic model framework. Some people call it an impact value chain, which is a name I came up with about 20 years ago to make this nonprofit tool sound more business friendly. Whatever you call it, this framework helps you define the specific inputs you need, the actions you're planning to take, who they will impact, and how. The framework also helps to draw out assumptions in your model. Here are the components of a theory of change, inputs are resources that are deployed in service of a set of activities. These can be financial, human, physical or intellectual resources. Activities are what you do to support business and impact objectives, outputs are the tangible, immediate practices, products and services, generated from the activities undertaken. Outcomes, are changes in or effects on individuals or the environment that follow from the delivery of practices, products or services. Impact, is the change or effect in social, environmental or economic outcomes, that can be attributed to the enterprises activities. This importantly compares the outcomes achieved with some sort of baseline, benchmark or counterfactual, of what would likely have happened, without your activities. This change is caused by the enterprise wholly or partially, directly or indirectly. And then of course impacts can be positive or negative, intended or unintended. The framework's primary value is in distinguishing outputs from outcomes and impact. Outputs again are things you can count, often they overlap with business metrics because you can count them yourself,. Number of patients served, number of customers, number of solar panels installed, percent of repeat customers, these are all examples of outputs. Outcomes are changes in the target population that follow from your activities. It could be an increase in literacy, a decrease in disease, etc, outcomes are always expressed as an increase or decrease, and all SDG targets are expressed as outcome indicators, indicators of a change. For impact, we're using a more specific definition than most people use in common conversation. For a social scientist, real impact includes only those effects that can be attributed to or caused by the enterprises activities. Those that would not have happened in a world without those activities, which is what we often call a counterfactual. So for the purpose of an impact thesis, impact is a change in an outcome that can be attributed to the enterprise, either partially or wholly, directly or indirectly. Here is an example from the SDG compass guide for business action on the SDG, on how a company used a theory of change framework, to define its impact thesis related to sales of its product water purification tablets. This thesis traces use of the water tablet to reduce the incidents of waterborne diseases, which relates to SDG 3.3. Notice that impact is expressed as a percentage reduction in the incidence of waterborne diseases, versus what would have happened without the company and pre-sales numbers are used as a proxy for that comparison. When it comes to SDGs the impact thesis should result in a desired increase or decrease in a measurable SDG target. Let's look at how Grace, founder of a maternity clinic in South Africa, defines her impact thesis. Grace uses a theory of change to articulate the specific inputs and activities she needs to build into her model, in order to achieve the outputs outcomes and impact she seeks. Her theory of change related to quality health care for pregnant women, looks like this. Grace's main sea level impact thesis, is that the monthly prenatal home visits, delivery practices, and two postnatal home visits. Will result in better outcomes compared to similar mothers being treated in alternative clinics, who don't provide these additional services. Grace should have an impact thesis for each of the major outcomes she seeks to achieve, so she should also articulate her theory of change for each. The theory of change model may not resonate immediately with all businesses. What's important in this final step is that an impact thesis is articulated in some way, if we do X we expect Y to change, so it can drive business actions, operations and decisions. There are a number of tools emerging to help companies commit to specific actions that will help embed and impact thesis into their operations. For example, the UN Global Compact has put together a host of resources to help with this. One example, is the SDG ambition benchmark reference sheets which provide illustrative details on the steps of company can take to integrate actions related to achieving the SDGs into its business systems. As of this recording, there are at least ten reference sheets covering topics such as gender balance across all levels of management. Zero discharge of hazardous pollutants and chemicals and, 100% of employees across the organization earn a living wage. Let's look at one of the reference sheets that might help Miguel, the multinational division head, selling supplies to smallholder farmers. He may use the reference sheet to help determine some specific actions the company can take to incorporate more sustainable materials into their products. The reference sheet lays out specific pathways to contributing to this outcome, and actions the company could take. For example, the reference sheet suggests utilizing a life cycle analysis tool. Resources like this can give business leaders like Miguel, guidance on how to integrate impact goals into their business actions, operations, strategy, and decision making. Miguel wants an impact thesis that prioritizes a set of activities, to help achieve his goals. For example his if then thesis might read like this, if we catalog the material inputs to our products, understand the end of life options for those materials and final products. Research what substitutes would have less environmental impact at end of life, and make changes that maintain product performance then, we can improve the environmental impact of our products. Making it real, use a theory of change framework to articulate the inputs and activities you believe will drive outputs, outcomes and ultimate impacts for each of your prioritized SDG outcomes. Remember that there are important distinctions between outputs, outcomes and impact. When it comes to assessing your performance, outputs will be relatively easy to measure, outcomes and impact are more difficult and are often reliant on assumptions, and sometimes interaction with others. If a theory of change model seems too detailed for you at minimum, you should articulate the key inputs and activities needed to drive change in outcomes. Consider a simple if then statement, if we do X we expect Y will happen. Once you do be sure your goals are realistic, ambitious, and commensurate with the enterprises size and influence. Embed respect for human rights and other responsible business practices into this work, in whatever way is relevant for your enterprise and context. Once you have impact theses for each of your what who combinations, work to embed these SDG activities back into your overall purpose strategy and business model. Document their importance within the organization. Separate design from approval, separate roles of drafting and approving impact goals. Where those approving the goals recognize they are acting in both the interests of the enterprise, and those expected to be impacted. Design a dynamic approach so that you can periodically review and refine your strategy and impact goals, to ensure they remain fit for purpose, as the organizational and sustainable development context change. At the end of this step you should have, an impact thesis, articulating the inputs and activities, that will lead to change for each prioritized SDG outcome.
