Recently I came across the news that Fukuoka Financial Group (FFG) was to set up a subsidiary company in April 2021 to support efforts to achieve the SDGs, aiming at realizing sustainable regional society.
What caught my attention in particular was the following statement: “With the cooperation of a leading expert on the Inclusive Wealth Index, the Fukuoka Financial Group will introduce a new ‘yardstick’ to quantitatively assess activities for the SDGs, to promote sustainability transformation (SX) – transformation of corporate management that prioritizes sustainability of regional communities and local businesses.”*
Some regional banks had already taken initiatives to support local companies through programs such as business matching to address social issues, but implementation of quantitative evaluation of non-financial information has been slow even among city banks. In this context, the above announcement by the FFG would be quite progressive.
Unlike the financial evaluation, which has an established assessment methodology, various approaches have been taken for social impact measurement.
Indicators such as SROI (Social Return on Investment) are well known as cross-cutting social impact measurement, while the UN Inclusive Wealth Index and the OECD Better Life Index have emerged as potential indicators that connect social indicators for well-being and individual impact measurements.
Given the complex nature of social issues, these indicators would not be perfect social impact measurement tools. On the other hand, action against the various social issues is essential to make the world better. We must continue to look for new pathways to solve these issues, and also recognize that making changes for the better will potentially lead to new opportunities for businesses and the society as a whole. The true purpose of impact measurement is not in the act of measurement itself but in maximizing social value by making decisions based on the result of the assessment. Making good use of these indicators and other tools, we must take actions to move forward.
I would like to support the FFG’s new endeavor and expect that such an initiative will spread among other regional banks, leading to achieving sustainable growth of regional society.
Note: The Inclusive Wealth Index (IWI):
An economic indicator developed to measure a country’s long-term sustainable development, taking into account various capital assets. Specifically, the IWI evaluates and quantifies total assets of a country by mainly looking at: (1) manufactured capital (roads, buildings, machines, equipment); (2) human capital (knowledge, aptitude, education, skills); and (3) natural capital (forests, agricultural land, rivers and estuaries, the atmosphere and the oceans – ecosystems more generally – as well as subsoil resources). It is gaining increasing attention as a way of assessing the social value and well-being that cannot be measured with GDP. Corporate data such as sales is an indicator of the flow, while the IWI measures the stocks of a nation.
*: Tentatively translated by EcoNetworks
Nao Okayama (Author), Translation by EcoNetworks