Many happy social returns? Tackling ESG's latest challenge
Leading organisations are forging ahead with the complex task of evaluating their social impact. At a recent Westpac Institutional Bank roundtable event, some of Australia’s sustainability frontrunners explained how.
The environmental pillar of ESG continues to capture attention across the globe, while the fine focus on social impact for organisations is evolving quickly.
As sustainability agendas evolve, the nexus between environmental and social impact is becoming more apparent for organisations, although differences between the more scientifically driven ‘E’ and the human-centred ‘S’ are becoming increasingly apparent.
Research for defining taxonomies continues, and social impact is now being mapped and reported by a growing number of organisations. But it’s a complex area, as some of Australia’s frontrunners and leading experts on the topic outlined at a recent roundtable event held at Westpac’s Melbourne HQ.
Participants at the event, hosted by Kirsty McCartney, Director, Sustainable Finance, Westpac Institutional Bank, and moderated by Jane Calvert, Westpac Group’s Head of Community & Foundations, explained the ways their organisations are approaching social impact, shared insights on the opportunities and the challenges and revealed how they are getting buy-in from internal stakeholders in the process.
Key takeaways from the event included:
- How measuring social value, as a methodology, resonates at the upper levels of an organisation. Clear measurement presents a way to appeal to both the head and the heart.
- Social investment often needs a long runway, rather than a system focused on quarterly profits. Patience, willpower – and often bravery – are required to put paid to the notion that financial returns and social outcomes are in competition.
Social impact should be baked into projects from the outset. Beware the risk of trying to do too much, or going too wide, which may make measurement a challenge. Many partnerships and conversations are required to get stakeholders on board. “There’s a never-ending hamster wheel of trying to make sure people get it,” one roundtable participant claimed.
All participants are at different stages of their social impact journeys. Read on for a quick wrap of their insights.
Trailblazing measurement at Australian Unity
Siobhan Henderson, Australian Unity’s Strategy & Impact Manager, explained how its Community & Social Value (CSV) framework provides “laser precision” on its social impact strategy.
Developed with Social Ventures Australia in 2021, this pioneering framework is used by Australian Unity, a health, wealth and care organisation, to report its social impact, apply a financial value and help shape future strategic and investment decisions. It also functions as a benchmark for continuous improvement. Financing is connected to the CSV framework via an AUD 50 million sustainability linked loan with Westpac Institutional Bank.
The strength of investments is evaluated on both commercial and social returns, reports Henderson. “[Using the framework], we can articulate exactly what the return is going to be. We've used the tool for decisioning on about AUD 700 million in capital so far.”
In the 2024 financial year, Australian Unity reported AUD 2.01 billion in social impact – an increase from AUD 1.76 billion for the previous year. “We weren’t able to do that kind of forecasting before [the framework],” said Henderson. “We thought about it with Westpac, and we were like, well financial returns are fantastic, but what are those internal drivers that we need to track?
“How many customers do we need in private health insurance or home health to make an impact? Where do we need to build a hospital to impact the most? Where can we get both commercial and social returns together? That’s absolute gold for us.”
As a 180-year-old mutual, Australian Unity was uniquely positioned to take the lead. From its first members who put pennies in the tin for social good to supporting social infrastructure, “We’re still doing the same things and still governed by members who want to drive the decision-making,” Henderson said.
Members are central to a strategy that aims for both individual and systemic impact. “If we build a private hospital in an area, what is it saving government? How is that reducing wait times in a public hospital?”
Australian Unity tracks seven domains of wellbeing through a “pulse check” survey of 2000 people annually. “We have trained a good proportion of our employees on social return on investment, which is the framework that underpins our community return model.”
In the office, the Impact and Strategy teams sit alongside Treasury. The mutual wants to be part of the overall taxonomy on social impact and is now scaling its framework to other businesses.
While increasing numbers of companies are currently looking to measure their social impact, Henderson pointed out that regulatory imperative on social impact presents “a ticket to play”.
Driving purpose at Transurban
Gabby Sundstrom, Director, Social Licence at toll road operator Transurban, told the group about the importance of identifying where you can make a difference, rather than “trying to boil the ocean”.
At Transurban, social impact is linked to trust and a social licence to operate. Its Social Licence Framework includes the pillars of championing road safety, strengthening communities, and empowering customers.
In 2024, customers saved 446,000 hours every workday by travelling on Transurban’s toll roads and saved more than AUD 2 million in fuel by choosing the more direct route afforded by its roads.
“The social value of a toll road includes the travel time that it can save people, as well as safety, because the way that toll roads are built makes them safer than other roads,” Sundstrom explained. “There's also the reduction in emissions that you get from travelling on toll roads, because you're travelling for less time.”
Sundstrom noted that of the 5,500 people who completed Transurban’s latest community engagement survey, more than three quarters said it needed to do more than deliver value for its shareholders.
“That survey also gives us a guide on the spaces that we should be playing in,” Sundstrom said. “People have a high expectation of us from a safety perspective, and they’d like us to contribute to a healthy environment.”
Transurban is currently having its framework assured and Sundstrom described the organisation as being at a “midpoint of our journey”.
“We’re looking forward to where we can create the most value,” she said. “And social impact is also a commercial imperative, because when it comes to working with government, for example, we need to be able to talk in the language of social value and demonstrate the value of our roads beyond just getting people from A to B.”
Data-driven policy design in the Department of Treasury and Finance Victoria
Matt Donoghue, Director, Early Intervention and Reform, Department of Treasury and Finance Victoria, discussed how the Department’s Early Intervention Investment Framework (EIIF) enables it to embed richer “people-centred evidence” into budget decision-making.
The Victorian Government’s Early Intervention Investment Framework (EIIF) is designed with people at its centre by quantifying expected impacts for investments in services for vulnerable Victorians.
The EIIF embeds data-driven policy design across service delivery and monitoring, enabling its success to be measured. It links funding to quantifiable impacts for the people using government services, as well as for the broader service system, which includes hospitals, prisons, homelessness and family violence services.
Matt explained that the EIIF draws on data from sources such as client impact surveys as well as data sets from government departments. Outcome measures include impacts on the health and wellbeing of individual cohorts as well as the calculation of avoided costs such as reductions in emergency department admissions.
The Victorian Government has invested AUD 2.7 billion through the EIIF to date, with more than AUD 3 billion anticipated to be generated in economic and financial benefits.
Substantial growth has come from the vision of the state government to implement the program, and from the program itself drawing on the insights of what has worked and importantly also what hasn’t to improve the development of new interventions Government considers for funding.
“One of the circuit breakers that our work has achieved in a small sense is providing consistency across government and a review point. We have consistent unit costs that all departments use, and a clearinghouse for departments to review each other’s estimations” he said.
“We have methodologies that calibrate to each other. We know the foibles of each of those and we ‘check each other's homework’, and for lack of a better term, to say this is reasonable. But most importantly, we seek to track actual impact data over time so we can test how accurate estimations of impact were and how effective funded programs have been.”
It’s important to find a way to build trust. “A major contributor has been having feedback loops with stakeholders on the performance of initiatives research we produce in partnership, and outcomes advice Treasury prepares,” he said. Plus, an incentivising factor has been the focus on reinvestment of savings from social impact investments.
Putting the framework and people at the centre of decision-making makes it more tangible for government and easier to measure success. “Government can see the impact on people who are struggling and how programs can get to them before their needs escalate.”
“At Treasury, modelling is part of our core function – providing Government central consistency, objective tracking over time, and effective management of estimation risk,” he noted. But success didn’t happen all at once. “There was a small step forward, followed by a bigger step and a leap in last year’s Budget with Government funding over a billion dollars’ worth of social investment – social investment scaling up steadily and incrementally over time.”
Changing lives at Lendlease
Edmund McCombs, Head of Social Impact at Lendlease, shared that an effective way to get people to buy into social impact in a large organisation is to let them know that “it is integral to the success of their business”.
In 2019, international real estate and investment company Lendlease set a goal to create AUD 250 million of social value by 2025. By the end of FY25, Lendlease will report that it has met and exceeded its social value target by, at least, 10%. The target includes the value created through its corporate shared-value partnerships, plus other programs it supports through the Lendlease Foundation.
“As an example, construction has one of the highest rates of suicide of any industry, so we needed to tackle it,” said McCombs, explaining that Lendlease works a variety of mental health organisations, including the Johnson Depression Centre based at the University of Colorado in the US, and has created a bespoke program for construction workers that has already been delivered to over 4,200 participants across 127 organisations.
“In our last review, we were able to demonstrate through stakeholder engagement in the SROI [social return on investment] process, that we had demonstrably saved lives, and that the mental health program is producing a return of AUD ~27 for each dollar that we put into it.”
McCombs described measurement as “wildly important” in keeping Lendlease’s social ambitions on track, and particularly helpful when Covid hit and some initiatives that Lendlease was supporting needed to shift emphasis.
“We’re not assessing outcomes ourselves because independent third-party verification is very important to us at Lendlease. We work with two separate social impact consultancies who do the social value modelling and validation because we want the whole process to be robust.
“The tough part is that measurement is onerous and if you do it right, it takes a lot of time. Every year, from about January to May, we are somehow involved with measurement, but this has allowed it to resonate at the upper levels of the organisation because when it is done robustly, and transparently, the work of Social Impact appeals to their heart and head.”
Super with impact at HESTA
For industry superfund HESTA, active ownership is integral to its social impact. The fund has around AUD 90 billion in assets, and it seeks to protect and enhance the value of investments for its more than 1 million members.
Akaash Sachdeva, Manager of Responsible Investment at HESTA, noted that “the needle we can move is in our portfolios and in our investment value chains”.
“The pillars that we work with are active ownership or stewardship because we own companies, and through our capital allocation.”
HESTA uses the United Nations’ Sustainable Development Goals (SDGs) as a framework and subscribes to the Sustainable Development Investments Asset Owner Platform to track the progress of its capital allocation in support of these goals. As at 30 June 2024, 87 per cent of funds under management of HESTA’s Sustainable Growth option were managed through SDG-tilted or thematically aligned strategies.
As a profit-to-member fund, the starting point is to “put members at the centre of everything we do”. “We’re also invested across the economy, and the health of the economy is the biggest determinant of the health of our portfolio.”
“We looked across a range of ESG issues and we said, ‘Okay, which of these is going to cost the economy the most, and what does that mean for our portfolio?’” Sachdeva explained.
With women comprising 80 per cent of HESTA members, Sachdeva said that the impact of gender inequality emerged as an area of priority and prompted the establishment of its 40:40 Vision, an investor-led initiative seeking to achieve gender balance in executive leadership across all ASX300 companies by 2030.
When HESTA first kicked off its gender focus, a salient fact emerged about women in their 50s comprising the largest cohort of homeless people in Australia. At the time, there was an absence of affordable housing investment opportunities. Instead, the superfund developed a long-term incubator approach.
“We said, ‘We’ll put in a bit of money, be patient and let it grow,” Sachdeva reported. The upshot? “Early developments have now made it into the core portfolio.”
What has stood out for the superfund are the different motivations for companies to act on social issues. How they approach achieving goals is nuanced, and there's not one goal which everyone will meet in the same timeframe. “If you ask them all the same things, you end up hitting brick walls,” he said.
Shifting the emphasis at B4SI
Simon Robinson, APAC Director at B4SI, established for over 30 years, the global standard for companies to measure and manage social impact, is encouraged by the upswing of recent activity in the space.
B4SI works with a network of more than 160 member companies spanning various industries and regions and, Robinson observes, while Europe leads the way in social impact measurement, Australia and New Zealand “are not too far behind it”.
Measuring social impact is more difficult than environmental impact. “It’s more organic, which often puts it in the too-hard-basket for many companies,” he told the group, and reporting on social impact is presenting challenges for all organisations.
Broadly speaking, it’s way harder than environmental reporting, Robinson observed, a salient consideration given the magnitude of the task. Ratings agency Moody's estimates USD 8 trillion of rated debt is highly subject to social risk versus USD 2 trillion of environmental risk debts, he pointed out.
As more companies approach social impact measurement, he’s seen a clear shift in focus from philanthropic giving to driving social outcomes.
“There's been a focus for way too long on what I call the ‘big dollar number,’” he said. “If you invest in ‘big dollar number’, what difference have you actually made? What changes are occurring as a result of that?”
The need to have some mechanism in place to make sense of the tangible social impacts is becoming more apparent, he said, as the discussion around social impact is shifting.
“Hearing the stories around the table of organisations thinking about what matters to them, what they are trying to change and intentionally structuring their activities to make meaningful change is very heartening,” he concluded.
Stay informed with Westpac IQ
Get the latest reports straight to your inbox.
Related articles
ESG Impact: What you need to know - April 2025
Browse topics
Disclaimer
©2025 Westpac Banking Corporation ABN 33 007 457 141 (including where acting under any of its Westpac, St George, Bank of Melbourne or BankSA brands, collectively, “Westpac”). References to the “Westpac Group” are to Westpac and its subsidiaries and includes the directors, employees and representatives of Westpac and its subsidiaries.
Things you should know
We respect your privacy: You can view our privacy statement at Westpac.com.au. Each time someone visits our site, data is captured so that we can accurately evaluate the quality of our content and make improvements for you. We may at times use technology to capture data about you to help us to better understand you and your needs, including potentially for the purposes of assessing your individual reading habits and interests to allow us to provide suggestions regarding other reading material which may be suitable for you.
This information, unless specifically indicated otherwise, is under copyright of the Westpac Group. None of the material, nor its contents, nor any copy of it, may be altered in any way, transmitted to, copied of distributed to any other party without the prior written permission of the Westpac Group.
Disclaimer
This information has been prepared by the Westpac and is intended for information purposes only. It is not intended to reflect any recommendation or financial advice and investment decisions should not be based on it. This information does not constitute an offer, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter into a legally binding contract. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice. Certain types of transactions, including those involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that you seek your own independent legal or financial advice before proceeding with any investment decision. This information may contain material provided by third parties. While such material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy or completeness of any such material. Although we have made every effort to ensure this information is free from error, none of Westpac or its related entities warrants the accuracy, adequacy or completeness of this information, or otherwise endorses it in any way. Except where contrary to law, Westpac Group intend by this notice to exclude liability for this information. This information is subject to change without notice and none of Westpac or its related entities is under any obligation to update this information or correct any inaccuracy which may become apparent at a later date. This information may contain or incorporate by reference forward-looking statements. The words “believe”, “anticipate”, “expect”, “intend”, “plan”, “predict”, “continue”, “assume”, “positioned”, “may”, “will”, “should”, “shall”, “risk” and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Past performance is not a reliable indicator of future performance, nor are forecasts of future performance. Whilst every effort has been taken to ensure that the assumptions on which any forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from any forecasts.
Conflicts of Interest: In the normal course of offering banking products and services to its clients, the Westpac Group may act in several capacities (including issuer, market maker, underwriter, distributor, swap counterparty and calculation agent) simultaneously with respect to a financial instrument, giving rise to potential conflicts of interest which may impact the performance of a financial instrument. The Westpac Group may at any time transact or hold a position (including hedging and trading positions) for its own account or the account of a client in any financial instrument which may impact the performance of that financial instrument.
Author(s) disclaimer and declaration: The author(s) confirms that (a) no part of his/her compensation was, is, or will be, directly or indirectly, related to any views or (if applicable) recommendations expressed in this material; (b) this material accurately reflects his/her personal views about the financial products, companies or issuers (if applicable) and is based on sources reasonably believed to be reliable and accurate; (c) to the best of the author’s knowledge, they are not in receipt of inside information and this material does not contain inside information; and (d) no other part of the Westpac Group has made any attempt to influence this material.
Further important information regarding sustainability-related content: This material may contain statements relating to environmental, social and governance (ESG) topics. These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics, modelling, data, scenarios, reporting and analysis on which the statements rely. In particular, these areas are rapidly evolving and maturing, and there are variations in approaches and common standards and practice, as well as uncertainty around future related policy and legislation. Some material may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. There is a risk that the analysis, estimates, judgements, assumptions, views, models, scenarios or projections used may turn out to be incorrect. These risks may cause actual outcomes to differ materially from those expressed or implied. The ESG-related statements in this material do not constitute advice, nor are they guarantees or predictions of future performance, and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of the statements). You should seek your own independent advice.
Additional country disclosures:
Australia: Westpac holds an Australian Financial Services Licence (No. 233714). You can access Westpac’s Financial Services Guide here or request a copy from your Westpac point of contact. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice.
New Zealand: In New Zealand, Westpac Institutional Bank refers to the brand under which products and services are provided by either Westpac (NZ division) or Westpac New Zealand Limited (company number 1763882), the New Zealand incorporated subsidiary of Westpac ("WNZL"). Any product or service made available by WNZL does not represent an offer from Westpac or any of its subsidiaries (other than WNZL). Neither Westpac nor its other subsidiaries guarantee or otherwise support the performance of WNZL in respect of any such product. WNZL is not an authorised deposit-taking institution for the purposes of Australian prudential standards. The current disclosure statements for the New Zealand branch of Westpac and WNZL can be obtained at the internet address www.westpac.co.nz .
Singapore: This material has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (as defined in the applicable Singapore laws and regulations) only. Recipients of this material in Singapore should contact Westpac Singapore Branch in respect of any matters arising from, or in connection with, this material. Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the Monetary Authority of Singapore.
U.S.: Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency. Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated with, a Futures Commission Merchant registered with the US CFTC. The services and products referenced above are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac, is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory Authority (‘FINRA’). In accordance with APRA's Prudential Standard 222 'Association with Related Entities', Westpac does not stand behind WCM other than as provided for in certain legal agreements between Westpac and WCM andobligations of WCM do not represent liabilities of Westpac. This communication is provided for distribution to U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 under the Exchange Act and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors in the United States. WCM is the U.S. distributor of this communication and accepts responsibility for the contents of this communication. Transactions by U.S. customers of any securities referenced herein should be effected through WCM. All disclaimers set out with respect to Westpac apply equally to WCM. If you would like to speak to someone regarding any security mentioned herein, please contact WCM on +1 212 389 1269. Investing in any non-U.S. securities or related financial instruments mentioned in this communication may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the SEC in the United States. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect in the United States. The value of any investment or income from any securities or related derivative instruments denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related derivative instruments.
The author of this communication is employed by Westpac and is not registered or qualified as a research analyst, representative, or associated person of WCM or any other U.S. broker-dealer under the rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules or regulations of any State. Unless otherwise specifically stated, the views expressed herein are solely those of the author and may differ from the information, views or analysis expressed by Westpac and/or its affiliates.
UK and EU: The London branch of Westpac is authorised in the United Kingdom by the Prudential Regulation Authority (PRA) and is subject to regulation by the Financial Conduct Authority (FCA) and limited regulation by the PRA (Financial Services Register number: 124586). The London branch of Westpac is registered at Companies House as a branch established in the United Kingdom (Branch No. BR000106). Details about the extent of the regulation of Westpac’s London branch by the PRA are available from us on request.
Westpac Europe GmbH (“WEG”) is authorised in Germany by the Federal Financial Supervision Authority (‘BaFin’) and subject to its regulation. WEG’s supervisory authorities are BaFin and the German Federal Bank (‘Deutsche Bundesbank’). WEG is registered with the commercial register (‘Handelsregister’) of the local court of Frankfurt am Main under registration number HRB 118483. In accordance with APRA’s Prudential Standard 222 ‘Association with Related Entities’, Westpac does not stand behind WEG other than as provided for in certain legal agreements (a risk transfer, sub-participation and collateral agreement) between Westpac and WEG and obligations of WEG do not represent liabilities of Westpac.
This communication is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. This communication is not being made to or distributed to, and must not be passed on to, the general public in the United Kingdom. Rather, this communication is being made only to and is directed at (a) those persons falling within the definition of Investment Professionals (set out in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)); (b) those persons falling within the definition of high net worth companies, unincorporated associations etc. (set out in Article 49(2)of the Order; (c) other persons to whom it may lawfully be communicated in accordance with the Order or (d) any persons to whom it may otherwise lawfully be made (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this communication or any of its contents. In the same way, the information contained in this communication is intended for “eligible counterparties” and “professional clients” as defined by the rules of the Financial Conduct Authority and is not intended for “retail clients”. Westpac expressly prohibits you from passing on the information in this communication to any third party.
This communication contains general commentary, research, and market colour. The communication does not constitute investment advice. The material may contain an ‘investment recommendation’ and/or ‘information recommending or suggesting an investment’, both as defined in Regulation (EU) No 596/2014 (including as applicable in the United Kingdom) (“MAR”). In accordance with the relevant provisions of MAR, reasonable care has been taken to ensure that the material has been objectively presented and that interests or conflicts of interest of the sender concerning the financial instruments to which that information relates have been disclosed.
Investment recommendations must be read alongside the specific disclosure which accompanies them and the general disclosure which can be found here. Such disclosure fulfils certain additional information requirements of MAR and associated delegated legislation and by accepting this communication you acknowledge that you are aware of the existence of such additional disclosure and its contents.
To the extent this communication comprises an investment recommendation it is classified as non-independent research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and therefore constitutes a marketing communication. Further, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research.