Measuring social impact: MRC and Square Research Center introduce the SDGIA methodology

A science-based approach to social impact measurement

Measuring social impact presents several methodological challenges. Establishing causality between an activity and its social outcomes can be costly and complex, while comparing impacts across companies pursuing different social objectives remains difficult.

The SDGIA methodology was developed to improve the balance between analytical rigor and operational feasibility. It relies on scientific literature at each stage of the assessment process, enabling investors to leverage existing academic evidence rather than conducting resource-intensive impact studies for every company under analysis. 

A distinctive feature of the methodology is its use of the UN Sustainable Development Goals (SDGs) as a common reference framework. By linking company-level outcomes to SDG indicators, SDGIA seeks to express social impact as contributions to improvements in human well-being, supporting both cross-company comparison and portfolio-level aggregation.

The six-step SDGIA framework

The methodology structures social impact assessment through six sequential steps:

1. Impact declaration analysis to evaluate the company's impact objectives and theory of change.
2. Stakeholder identification to map all groups potentially affected by the activity.
3. Selection of key stakeholders based on materiality and measurability.
4. Qualitative description of impact channels to explain how outcomes are generated.
5. Identification of relevant impact indicators grounded in academic research.
6. Stakeholder impact evaluation using quantitative evidence and SDG-based assessment metrics. 

Throughout the process, scientific studies are mobilized to strengthen causal analysis while maintaining a pragmatic approach that remains applicable for investment teams.

A contribution to an ongoing collective effort

The SDGIA methodology is not presented as a definitive solution to social impact measurement. Rather, it is intended as a transparent and evolving framework whose assumptions, methodological choices and limitations are fully documented and open to discussion.

This work contributes to a broader research agenda led by MRC on impact measurement, including ongoing academic research exploring alternative approaches to company-level impact assessment and portfolio aggregation. The objective is to enrich the collective debate and support the emergence of more robust standards for sustainable finance.