Over 23 years of Impact measurement - NESsT’s Performance Management Tool
An online report that measures social, environmental, and financial indicators at the enterprise level.
NESsT assesses its impact through the Performance Management Tool (PMT), a tool developed in 1999 to assist social enterprises in managing and measuring their businesses, social and environmental performance.
More than 250 entrepreneurs around the world have used the PMT to measure their impact on an annual and quarterly basis– these entrepreneurs lead social enterprises that are diverse in geographies, legal entity types, impact areas, and business models.
Launching the Dignified Employment Survey
In 2018, NESsT sought to deepen its impact measurement by examining the qualitative metrics that revealed how people’s lives were changed by social entrepreneurship.
To gather qualitative data, NESsT sent its teams to meet the people its portfolio enterprises work with or employ in person. The meetings provided rich insights into the quality of their jobs. The fundamental questions that the survey attempted to explore are:
Are the jobs created by NESsT portfolio enterprises really improving the quality of people’s lives? Have these people moved out of poverty? Do they feel that their job is secure?
By speaking directly to the employees and suppliers of its portfolio companies, NESsT was also able to better contextualize impact numbers, with extended clarity on the impact of having a good job across different contexts, such as in different age groups, or types of households.
Since 2018, NESsT has conducted Dignified Employment Surveys every other year.
The 2021 Dignified Employment Surveys Results
In 2021, we wanted to gain a deeper understanding of two areas through the Dignified Employment Surveys — (1) the impact of the COVID-19 pandemic and (2) the impact of adopting a gender lens in our investment strategy. The key results are summarized below.
Outline:
Demographics
Employment
Income
Impact of COVID-19
Gender and Diversity
1. Demographics
Though our portfolio managers could not conduct in-person interviews last year as a result of COVID-19 travel restrictions, they carried out phone and video interviews, where permitted, to understand the population of people impacted by our portfolio of social enterprises, exploring key questions relating to vacation and sick leave, the contribution of the social income to overall household income, the existence of work contracts, and the perception of job security, etc.
In total, around 10% of the total population impacted by our portfolio were surveyed – 388 individuals who live across six countries, including Brazil, Chile, Colombia, Peru, Poland, and Romania.
The majority of people supported by NESsT enterprises are from low-income backgrounds. Preliminary demographic data from the 2021 survey revealed that there were more men at every education level except for the Master’s level.
NESsT’s two flagship initiatives — NESsT Empowers and NESsT Amazonia — mainly target working-age adults based in rural or urban areas.
Initiative Spotlight:
NESsT Empowers invests in enterprises that connect women and youth to the resources they need to launch their careers in high-growth industries such as tech. Enterprises in the NESsT Empowers Portfolio include CIEDS from Brazil, Mamo Pracuj, and asperIT from Poland.
NESsT Amazonia addresses regenerative forest conservation by supporting climate-smart solutions that grow sustainable value chains while improving livelihoods in the Amazon basin.
We support racially and ethnically diverse communities across Central and Eastern Europe and Latin America, including a large population of indigenous peoples.
*NESsT recognizes that Meztizo is not a race. This category includes people (from Latin America and Europe) who self-identified as mixed race in the survey.
2. Employment
The majority of the workers surveyed are employed by NESsT Portfolio enterprises with appropriate legal contracts and documentation registered by the local government.
One important insight is that the security and benefits provided by legal documentation vary across regions. In some rural communities, it is customary to renew employment contracts on an annual basis – having more flexible employment allows them to continue with other activities that can bring in additional income sources for their families. For others, paying the many taxes and fees imposed by the government through long-term contracts can bring additional financial burdens.
As part of the incubation program, NESsT provides business assistance that helps entrepreneurs provide job security to their workers in a number of ways.
Portfolio spotlight:
To ensure career security for their workers, NESsT Chile portfolio enterprise Próxima Servicios gave 10% of total company ownership to its employees at no cost, offering each worker the chance to become partners of the company three months after they begin working.
NESsT Brazil portfolio enterprise CIEDS’ solution offers career training and placement support that help youth from landing their first internship to their first job in high-growth industries.
The majority of people surveyed expect to grow in their careers and feel secure with their jobs.
More than 85% of those surveyed believe that they will continue their job next year. Over half expect that they will keep the same job with access to higher incomes, and more than 20% expect to stay within the industry at a job that requires a higher skill set with higher pay.
3. Income
The income of the people impacted by our portfolio is, on average, 142% over the minimum wage. The income measured only refers to the wage earned from the enterprise.
Enterprises in rural areas are mostly seasonal businesses that earn the majority of their income in a few concentrated months. For example, agriculture and fisheries depend on specific climate conditions that correspond to changes in season. NESsT Portfolio enterprises in these industries contribute extensively to the family income of their suppliers overall but cannot offer consistent year-round income.
To counter the income volatility brought about by seasonality, NESsT helps rural enterprises to equip their farmers and suppliers with the skills that give them the ability to make their production processes more efficient, access new clients, diversify and improve the quality of their products, and always receive fair prices.
Income vs Poverty Line: Moving people out of poverty
The income of the people impacted by NESsT portfolio enterprises is on average 397% over the poverty line.
Income varies across sectors across the world. Some industries, such as education and IT, pay better than others.
The Need to Support Circular Economy Businesses
The results of the surveys illustrate that circular business models, including farm/fish-to-table businesses and upcycle textile businesses, are among some of the lowest paying sectors.
Compared to linear economy models that lead to mass production and consumption patterns, the circular economy model has the potential to drastically reduce global greenhouse gas emissions while generating employment opportunities; research shows that recycling one ton of solid waste pays $101 more in salaries than disposing of it in a landfill.
The circular economy is based on three principles: (1) design out waste and pollution, (2) keep products and materials in use, (3) regenerate natural systems.
Many NESsT Portfolio enterprises are contributing to the transition toward the circular economy, including Ecocitex and Bendito Residuo in Chile, Estrafalario in Peru, and Arte Social Cooperative and Heca in Poland.
4. Impact of COVID-19
Most people were able to keep their jobs during the COVID-19 pandemic
After the onset of the COVID-19 pandemic, NESsT distributed emergency funding to the social enterprises in our portfolio. We prepared a contingency plan and closely examined the needs of portfolio enterprises in each sector, providing tailored business guidance to help them navigate through critical challenges such as the closing of sales channels.
The Dignified Employment Survey results show that the NESsT Portfolio enterprises maintained employment and income levels for most workers during the pandemic – 63% of people’s income remained the same or increased.
NESsT enterprises worked to ensure that their employees, those among the highest at risk from the global health crisis, are able to access income to meet their basic needs and prepare for the impact of economic shock. Since the initial outbreak, enterprises that were forced to shut down, such as those in the tourism industry, have resumed their operations and are working to hire back their employees and raise wages.
5. Gender and Diversity
NESsT’s enterprises are not all women-led - 47% of all managers of NESsT enterprises are women and 81% have women on their leadership teams.
In our last Dignified Employment Survey, we asked our communities questions to gain a deeper understanding of the gender differences they experience at work. Building on the results, we helped our portfolio to implement gender inclusion plans and policies that address issues ranging from workplace safety and harassment to gender wage gaps. Though adopting a gender lens is still a work in progress for many enterprises, the results from the 2021 survey demonstrate initial success - 77% of those surveyed think women and men are treated equally and 91% feel safe at work.
Recognizing the Benefits of Wraparound Services
Photo: Proxima Servicios
More companies have also begun to offer wraparound services, including childcare, language classes, and psychological support, that address key barriers to work especially for women and other historically marginalized populations in the workforce, helping them to unlock quality careers with growth opportunities that were previously inaccessible.
As a next step, NESsT seeks to support its enterprises to continue to offer important wrap-around services to their employees, workers, and suppliers to improve equity and inclusion in the labor market.
Since 1999, the PMT has gone through a number of iterations and remains central to NESsT’s investment thesis and methodology.
Every year, we share the learnings derived from the PMT and the Dignified Employment Surveys with our portfolio and the public, helping entrepreneurs to improve day-to-day decision-making and long-term business and impact performance.