Friday, April 19, 2024

Beyond Profits: Unveiling the Ripple Effects-Impact Assessment for Companies: Navigating Social And Environmental Impacts In Today’s Conscious Marketplace.

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As an undeniable reflection of the cultural diversity that subsists on the continent, the African market is decorated with spirited entrepreneurs that have commodified market desires to serve the dynamic African market.

The African market is fortunate to be uniquely poised for further growth and development- its demographic organically and continuously presents new avenues for innovation and entrepreneurship both on a Micro and Macro level. Though this is the case, there are an array of persistent challenges in navigating the social and environmental demands of a market that is growing increasingly aware of the lasting impacts entrepreneurs and other service/product providers have on their various communities. As such, it has become increasingly critical for sellers in the African market to monitor and adhere to proactive Impact Assessments.

An Impact Assessment  helps businesses weigh the consequences of their operations. It is present in all stages of business operations from the policy creation arm to project implementation because it exposes the social and environmental implications of business activities. This process accumulates information that a business can employ to help them better modify their activities for desirable outcomes.

The phenomenon of the ‘impact investor’ is becoming more common in Africa, so, businesses are forced to be more cognizant of their impact on the environment and people alike.

How do impact investors invest? Firstly, they research the organizations/businesses with the most appealing impact portfolio, followed by their financial statements and then select the business that they wish to invest in. Crossing out those that don’t positively impact society and the environment from the start, investors want to ‘kill two birds with one stone’– meeting their wealth goals while having a positive impact on environmental and social welfare as well as promoting responsible business practices. This is a prevalent practice in Africa because of the dramatic effects of climate change and unsustainable practices on various communities. Because of this, African industries are now being pushed to engage with an impact-oriented mindset. It can be challenging to shift organizational activities because it can be a costly and time-sensitive initiative; this is where consultants come in. Consultants can offer pragmatic solutions such as guidance in the formulation of KPIs for businesses to meet investor needs and regulatory criteria, educate in transferable optimization strategies and alternatives (e.g.: integration of SIA takeaways into cross-organizational negotiations), aid in proposal development for projects that are relevant in positively impacting the society, and so on.

Opportunity Born from A Genesis In An Impact Oriented Marketplace

Willing to encounter risks and challenges to growth in order to meet their wealth ambitions, there is an observable interest in entrepreneurship and business amongst the young population on the African continent. Their enthusiasm is substantially reflected in the continued growth of MSME’s on the continent which contributes a grand percentage of 50% of GDP to the continent and an employment rate of 60%. This links in with the improvement of social welfare, household disposable income and structure especially in under-governed regions as well as economic development of the various states on the continent and contribution to insecurity aid such as the food insecurity aid in the Mecha District of Ethiopia.

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The challenges they face can be partially explained as being an effect of a flawed or absent IA. Without an AI, they‘re unable to appropriately accumulate information regarding their operations and are ill-equipped to meet the needs of the ‘conscious market’. This leads to difficulty in securing investments that can help supplement the financing gap- subsequently, they cannot scale up operations. Here, consultants should offer holistic training on matters such as compliance and policy, provide relevant information from materialist assessments and scoping, and offer BD strategies on resource management, investment, partnership opportunities/options, etcetera. By virtue of this, MSMEs and SMEs will be able to embrace IAs with limited challenges and will then be able to appropriately maximize their potential.

Air For Profit – The Assessors Sustainable Economic Opportunity For Continental Development.

Carbon Offsets give the owner of the credits leeway to emit a specified quantity of GHGs from their operations. These Offsets are an attempt to reduce the amount of harmful GHGs in the earth’s atmosphere and as such are accumulated through regulated bartering systems. On a global scale, this economic activity is $2 billion in value but the African continent only accounts for 2% of activity- there’s room for growth in the carbon market.

Aside from the potential economic gain, carbon trading can offer different enterprises on the market the ability to greatly reduce costs whilst managing their impact on the environment. This offers a particularly viable option for African enterprises that aren’t able to realistically meet the net-zero sustainable goal. A good EIA score shows investors that the organization participates in sustainable business activities- this is especially important in determining the impact of investors’ choices. Though the African carbon market is still in its infancy, interdisciplinary consultants can support African businesses realize their carbon mitigation goals, adaptive strategy and brand positioning optimization, and provide specialized support in unlocking the carbon market.

The African marketplace is growing increasingly vocal about their needs and wants due to the backdrop of the impacts that entrepreneurial operations have on the communities around them. To help businesses transition, consultants need to encourage their clients to integrate their IAs into all aspects of their projects to both customize their activities whilst also capitalizing on their strengths/opportunities.

Dr. Edward Mungai
Dr. Edward Mungaihttp://www.edwardmungai.com/
The writer, Dr. Edward Mungai, is a global sustainability expert. He is the Lead Consultant and Partner at Impact Africa Consulting Ltd (IACL), a leading sustainability and strategy advisory in Africa. He is also the Chief Editor at Africa Sustainability Matters. He can be contacted via mailto:edward@edwardmungai.com

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