3 Social Impact Tools for Retail Leaders

In today’s retail landscape, success extends far beyond profit margins and market share. Increasingly, consumers are looking to align their purchasing decisions with their personal values, driving the need for retailers to incorporate social impact initiatives into their business strategies.

When I audit companies, they often show me their CSR and sustainability report where I have an overview of their policies and external activities to support "communities." In the social performance management world, we care more about management systems and verifying the implementation of the policies.

You might be disappointed that a social specialist doesn’t prescribe more money donated to "communities," but hear me out. What I'm advocating for is fine-tuning and perfecting management systems — whether legal requirements or voluntary standards — that address operational social risks. Being a socially responsible company starts in-house with how we treat our workforce, manage our suppliers, and mitigate operational risks on communities.

Here are my proposals on how retailers can fine-tune social impact.

Legal Requirements and Beyond

You would be surprised what might come to light if you did a full labor audit on your direct workforce. International best practice following the conventions of the International Labor Organization often go beyond legislation and is a good benchmark for companies that want to be good employers. Typical findings of mine, even in developed countries, include missing time records, overtime payment issues, inadequate facilities, lack of personal protective equipment (PPE), and issues around gig economy contracts.

Supply chain management and reporting on human rights risks are also legal requirements under the UK’s Modern Slavery Act and the new EU Directives (CSRD, CSDDD). The legal frameworks provide some basic requirements both for policies and reporting, however, the guidance on implementation is limited. My clients always tell me that their suppliers signed the code of conduct and human rights policy, but I challenge them to ask for evidence of implementation. Which leads us to …

Managing Operation-Related Social Risks

In terms of the topics addressed, operational social risk management builds on the legal requirements and sets up risk assessments and management plans specific to the site and company operations. A very simple example is contractor and supplier management. While our contractors and suppliers might sign the contract that requires legal compliance, alignment with code of conduct, ethical sourcing policy and human rights, can retailers really afford not to check whether these are incorporated into the operational management plans of their contractors?

I often find conflicting requirements in client and supplier policies. A client of mine had HR policies defining the minimum working age at 18, while its supplier had 15 in its own HR policies. My client could have been in trouble had we not checked the supplier policies and included legal language to ensure no one under 18 would be engaged in its operations. It might seem obvious, but the knowledge gap as to who are the appropriate experts to help companies still exists. Hint: google social performance management.

Extra Mile Initiatives

Proactive positive social impact creation through CSR, charities and "giving back to communities" get most of the attention in sustainability reporting. Believe me I know that supporting vulnerable farmers in developing countries is a better story than upgrading employee facilities in your warehouses. There's no shortage of goodwill, and I wouldn’t discourage you from going the extra mile!

Ildiko Almasi Simsic is a social development specialist and author of "What is a Social Impact?"