Key Point 5: Economic measurement
Key Message
How can you begin to report on your economic measurements? You can start by considering the following areas:
- Types of income received or generated
- Direct or indirect economic impacts
- Benefits received from suppliers
- Jobs created
- Economic value added by your event(s)
Fiona Pelham talks about these points in more detail, and you can read a transcript of the video below.
The topic of economic impacts can cover a range of areas. For example, the amount of income you receive, or how you spend that income, the number of spend in a percentage spent on local suppliers, the number of income generated from different types, for example attendee payment for a ticket, or sponsorship.
I am going to tell you about two of the GRI EOSS indicators which relate to economic indicators. The first is direct economic impacts and value creation, as a result of sustainability initiatives. This means as a result of the changes you’ve made, or the initiatives you’ve taken to implement sustainability, what is the economic impact going to be?
For example, you may have chosen a supplier with strong sustainability credentials, what is the economic impact of that? Has that supplier been able to create additional jobs? Or have they been able to partner with local social enterprises creating a product that your need?
The second reporting indicator I am going to talk about from GRI EOSS is the type, amount, and impact of benefits, financial and in-kind, received from the event organiser, from suppliers. So this refers to when suppliers may also be paying additional income to the event organiser. Perhaps they pay them an additional finder’s fee, maybe there are in-kind benefits that they receive.
In today’s current world of transparency, there are lots of policies and processes in place to make sure that the relationship between suppliers and event organisers is very transparent. This indicator has been created to help you report that transparency.
Remember, when reporting on economic indicators it may be tempting just to focus just on the financials, and often this can be confidential information which you’re not able to share. So try to share things which explain your economic status in a different way. For example, the number of people you employ, or the percentage of income you receive from different places.
Reporting on economics can be more than just financial figures.
Definitions
Direct Impacts
These economic impacts can be considered as the value of the immediate interaction between an organisation and its interested parties (for example buying products from a supplier would have a direct impact on the supplier). Direct impacts focus on the direct results of the flow of money.
Indirect Impacts
Indirect economic impacts are one step removed from direct impacts; they are the later results of the interaction between the organisation and its interested parties, and may be non-monetary (for example, the supplier being able to grow the business and provide more jobs for local residents). Indirect impacts are the result of money circulating through the economy, beyond the original recipient.
Value Creation
The additional or increased benefits that occur as a result of your event or your activities, for example brand reputation and employee satisfaction.
Climate Change
When considering the risks and opportunities associated with climate change, you may wish to include physical risks through changing weather patterns, such as storms, sea level rises, water availability, and related diseases and injuries. There are also regulatory risks to consider, for example in relation to emissions. Opportunities could include renewable energy, increased efficiencies to require less energy consumption, and the chance to provide new products and services.
Presentation
This presentation provides more detail on economic measurement. You can read a summary of the presentation below.
Income by type
For the majority of your economic reporting, the focus is on openness and transparency. Many organisations will be already reporting on their financial performance, so you may already have data which you can use for this aspect of your reporting.
One aspect that you can report on is the income that you have received for your event, and where that money has gone. This could include money from sponsors or other funding, from ticket sales, or also “in kind” payments received, as well as expenditure on operating costs, wage bills, community investments and so on.
Spending locally
A category which is particularly relevant to the event industry is the impact on local areas and the economic impact on the area where the event is held. Consider what you consider to be the local area, so how many miles would you consider to be local (e.g. 50 miles)? You can then include this information in your methodology. You can then report on the amount of goods and services (and their value) that you have procured locally.
Value creation
Linked to this is the direct and indirect value created by your event. This could include money that you have spent yourself, the jobs that have been created, and the subsequent economic boost to skills and employment in the town, city or region, or any other economic value that has been added by your organisation or event.
Value creation can also extend beyond the local area, so consider the economic benefits that have arisen as a result of your event elsewhere. What initiatives have you put in place, and how can you report on them?
Benefits from suppliers
Again, this is linked to your openness and transparency. You should list any financial or in kind benefits that you as an event organiser have received from suppliers. What practices do you have in place to reduce risks relating to benefits from suppliers (e.g. statements in contracts, royalty agreements)? What benefits have you received, including gifts, value in kind, commissions by type and value? What type of suppliers are providing benefits?
Climate change risks and opportunities
At some point, you will have made a decision that sustainability is important to you, and this may have been influenced by the potential risks and opportunities linked to environmental factors such as climate change. If you are implementing ISO 20121, you may have already analysed your risks and opportunities, so you can use this information if relevant.
In this section, you can report about the economic risks and opportunities associated with climate change. Risks and opportunities could include problems relating to weather patterns and attendee travel or incidents such as flooding making your event less accessible, the rise in gas and electricity prices, opportunities to use new technology and renewable energy.
In terms of your reporting, you can estimate the risk and opportunity and the steps that you are taking to address these.
Resources
Integrated Reporting
Section on the GRI website which explains the new concept under development to demonstrate how an organization creates value.
Assignment
Choose the categories that you will be reporting on
To produce a Level C GRI report you should report on 10 categories, or "indicators":
Social indicators
HR: Human Resources
LA: Labour
PR: Product Responsibility
Economic indicators:
EC: Economic
Environmental indicators:
EN: Environmental
Event Organizers Sector Supplement indicators:
EO: Event Organizers
Within your 10 indicators you should include at least one social (HR, LA, PR, SO) one economic (EC) and one environmental (EN) indicator. You should also include a minimum of 7 indicators that are not from the event sector supplement (i.e. that do not start with EO).
Areas you could consider within economic measurements are:
- Policies that you have for hiring people from the local area (EC7)
- How much income you received and how that was spent, including any economic benefits that relate to your event's sustainability initiatives (EC1 and EO1)
- Potential and actual financial risks due to climate change (EC2)
- Any significant financial assistance you received from any government bodies (EC4)
- Development of any infrastructure or services that were mainly for the benefit of the public (EC8)
- Financial and in kind benefits received by suppliers (EO10)