Impact measurement has evolved from a niche concern of specialised organisations and academic circles to a mainstream business imperative. Today, pressure to demonstrate the positive impact, or otherwise, of a company comes not only from the public and civil society but from investors, funders, and young talent wary of careers at companies focused solely on shareholder value. Impact has become a differentiating factor – those who pursue it seriously and make it visible gain trust and competitive advantage, while those who merely claim it, without credible evidence, quickly fall under suspicion of greenwashing.
Yet for all these impressive developments, the great transformation remains elusive. Yes, more is being measured. Yes, there are more reports, ratings, and labels. But what has actually changed in the real economic system? Is the fossil fuel industry truly in retreat? Has the supply chain model shifted toward a circular economy? Unfortunately, only in isolated cases.
The Measurement Paradox
This disconnect reveals a fundamental challenge: we’ve become so focussed on measuring impact that we’ve lost sight of creating it. Impact measurement serves many legitimate purposes – from organisational orientation and accountability to differentiation and regulatory compliance. But when measurement becomes the end rather than the means, we risk falling into the “measurement trap.”
Consider the financial sector, where much currently centres on measuring and reducing greenhouse gas emissions. These emissions can be measured, compared, and balanced – bankers feel comfortable with this. And understanding emissions so credible targets and plans to meet them can be made, remains extremely important. Instead of using metrics to manage change and create impact, too often, institutions stop at measurement or question the minutiae of metrics methodology, particularly if they raise inconvenient questions about how financial institutions are mobilising the money entrusted to them.
And impact encompasses more than climate accounting. Social and cultural impacts are harder to quantify and therefore quickly fade from focus. This tunnel vision prevents the holistic approaches that are essential to the kind of transformational change we need, particularly in finance, where interconnections and feedback loops demand comprehensive thinking rather than fixation on single metrics.
The Profit Problem
The challenge runs deeper than methodology. John Elkington, creator of the widely cited Triple Bottom Line approach (People, Planet, Profit), issued a “product recall” of his own concept in 2018. He recognised that in practice, attempts to balance social, ecological, and economic goals usually fail – profit almost always wins.
Organisations focused on impact must first grapple with the question of what is the “right profit.” For genuinely impact-driven institutions, profit is not a goal in itself but a prerequisite. Companies need it to be financially resilient; to pay fair wages, provide reasonable returns to investors and invest in their future. But profit cannot become an end in itself.
Values-Based Banking: A Different Path
In finance, the landscape remains very fragmented. Banks finance the real economy but aren’t directly active – they merely enable activities. ESG frameworks, despite their popularity, often mislead by capturing environmental, social, and governance aspects without backing them up with clear impact logic. Ambition frequently remains low, serving more as a tool to justify a company’s approach than create real transformation.
Impact investing takes a step forward by putting impact at the heart of its activity – when an automotive company issues green bonds to build electric vehicles, it’s typically pursuing plans already in motion, accessing capital markets at slightly better rates rather than demonstrating conviction.
Much more compelling is values-based banking, from microfinance institutions in emerging markets to credit unions and sustainable banks in mature ones. It embeds impact at the beginning rather than measuring it at the end – in values, mission, and strategy. Values-based banks intentionally define areas that provide social, environmental and cultural value, consistently excluding sectors from their lending and investing portfolio due to ethical reasons, and being transparent in the initiatives they finance. This creates transparency, trust, and makes impact comprehensible.
The Cultural Shift Required
We stand at a turning point. The tools for impact measurement exist and knowledge continues growing. But the decisive step is cultural: Are we ready to take impact seriously – not just as a metric but as the goal of our actions? Are we prepared to abandon the illusion that we can have everything: maximum returns, minimal risks, and simultaneously a better world?
Impact measurement can help organisations pursue this transformation, but it is not the goal – it’s the tool. The objective is an economy that doesn’t just function but makes sense. This requires moving beyond the current obsession with measurement toward “impact as an attitude” – a fundamental orientation that shapes every business decision.
Practical principles emerge from this perspective: Begin with purpose and clear values defining what you want to achieve, for whom, and why. Develop solid theories of change supported by both data and stories. Choose fewer, meaningful indicators over incomprehensible data thickets. Include stakeholders in goal-setting while maintaining your own authority over impact interpretation. Most importantly, focus always on impact itself, not its measurement. Impact doesn’t emerge from spreadsheets but from actions and common sense. Measurement serves mission, never the reverse.
The organisations already walking this path – pursuing social, environmental, and human-friendly approaches to business – understand this distinction. They recognise that true impact measurement is ultimately about accountability to purpose rather than performance for its own sake. In their hands, measurement becomes what it should be: a compass for navigation rather than a destination in itself.
Teaser image credit: The author.