Impact measurement is currently a hot topic among the private sector. Some companies claim various benefits gained from conducting impact measurement. The next question is how much the value of companies—which have implemented impact measurement—is reflected in their financial reports.
One of the benchmarks for company value is its financial report. In research conducted by Ernst & Young, the trend in company value shows that the proportion of business value recorded as tangible assets on the balance sheet has drastically declined; from more than 80% in 1975 to around 50% in 2020, and less than 20% for major tech companies in the S&P 500. This fact drives organizational leaders to emphasize the importance of long-term programs and intangible assets as added value for companies.
On the other hand, the global commitment to achieving the Sustainable Development Goals (SDGs) by 2030 also pushes the private sector to take concrete steps in supporting SDGs through business operations, social initiatives, and environmental policies. This trend shift and these objectives highlight the importance of intangible assets such as intellectual property, human resources, SDG-related initiatives, and public trust as added value for companies—despite being difficult to measure using traditional reporting methods—as a crucial component of business value.
In an increasingly competitive business era, the narrative of sustainability drives impact measurement—assessing the magnitude of the impact of project implementation on certain aspects—to become a key to strengthening innovation and sustainability. Impact measurement is not just a management tool, but a strategic compass directing companies toward sustainable and responsible success.
By understanding and communicating their impact, companies not only build a better future for themselves but also for the society and environment around them.
In Indonesia, the government has emphasized that both state-owned enterprises (BUMN) and private companies must measure and report their impact through the Regulation of the Minister of BUMN No. PER-05/MBU/04/2021 Year 2021 on the Social and Environmental Responsibility Program of BUMN and Law No. 40 Year 2007 on Limited Liability Companies. This regulation outlines the government’s expectations for the implementation of BUMN programs, particularly related to measurable Social and Environmental Responsibility (TJSL).
Not only BUMN, but the private sector, in this case, Limited Liability Companies (PT) are also encouraged to report the implementation of their TJSL. Through this regulation, it is hoped that every company can measure the contributions and benefits generated through the programs they have initiated to bring change or added value to stakeholders and the company.
On the other hand, corporate social responsibility (CSR) also needs to start focusing on aspects of governance, social, and environmental preservation. These three aspects are crucial for companies to consistently implement in their operational policies. This includes involving employees through training on the importance of sustainability, engaging in initiatives related to the three aspects of sustainability, and transparency in reporting the environmental impact of company operations. By implementing these steps, companies not only fulfill their social responsibility and help preserve the environment but also enhance their company’s reputation in the eyes of consumers, investors, and the broader public.
Moreover, the various benefits of impact measurement for fostering innovation and sustainability include:
So, how can impact measurement effectively strengthen innovation and sustainability?
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