Recent consumer research by IGD has suggested that interest in Fairtrade among shoppers is still growing – despite the recession.

But whilst we are all familiar with the branding and organisations that support and promote international development through trade, what goes on after the products have been purchased from developing countries?
 

Four questions to consider

• How can we approach measuring the impact of investment through trade?
• Should we prioritise or focus investment?
• Are there any templates to help bring structure to this work?
• What is the value of measurement?

	How do we measure the positive impacts of trade and investment on a product's country of origin?

Some aspects of development are directly targeted at certain projects. Others – and indeed trade in general - hopefully result in an overall increase in investment and lead to an improvement in quality of life and environment in the product’s country of origin.
 

Measuring the impact of trade

So, how can we start to think about how to measure the impact of trade and investment in local communities?

Firstly let’s consider what we are trying to measure:

• Inputs, e.g. the amount of money spent on a targeted health project
• Outputs, e.g. the delivery of health education or training
• Outcomes, e.g. longer life expectancy

Inputs and outputs are more easily quantifiable, than outcomes. Outcomes may result from a combination of inputs and outputs; this will challenge our ability to identify just what exactly is having the effect and what is not.

To challenge us further we need to know that investment leads to change of real quality – we cannot rely on quantitative (how many) data alone to identify our impact. We therefore need to have some qualitative change data to support the role that investment through trade plays in enhancing development. Ideas such as empowerment, productivity and social equity demonstrate the value of investment and will start to identify that 'development through trade' is having a sustainable impact.

The approach to this issue, therefore, needs to be one of ensuring inputs, outputs and outcomes – not just a simple metric – are all considered when assessing impact on development.

But, it is not enough simply knowing what we plan to measure. For example, what are the benefits of measuring the funding of a health centre to improve life expectancy if there is not enough clean water to operate it? So, we do not just need to know what to measure; we may need to recognise a priority, measure all the impacts fully (inputs, outputs and outcomes) and then move forward.
 

What might a priority of investment look like?

Well here is an idea:

1. Clean water
2. Provision of sanitation
3. Improving health services
4. Application of low carbon, sustainable energy
5. Education

This is an example list and may of course not be the ultimate list, but it does seem to make sense that ensuring sustainable energy, for lighting class rooms for example, should come before providing the books, educational material and the teachers.

In the diagram above inputs (books) and outputs (teaching services) need to be considered in the context of a successful outcome – improving the overall quality of education.

With a simple list of priorities, or a basket of objectives, we can start to develop a more comprehensive strategy to understand development. Ultimately these objectives are best articulated in the Millennium Development Goals and the Ten Principles of the Global Compact. These are:

• Eradicate extreme poverty and hunger
• Promote gender equality and empower women
• Improve health and education
• Help build a basis for economic growth
• Ensure environmental sustainability
 

Projects to measure impact

Taking such a comprehensive list of objectives, are there any ’blueprints’ to base work on? The good news is that much of the structure for measurement is already in place, established by a range of organisations through a number of reporting structures such as:

• Sedex Members Ethical Trade Audit (Supplier Ethical Data Exchange)
• Social Accountability 8000 (Social Accountability International)
• Sustainability Reporting Guidelines (Global Reporting Initiative)
• Measuring Impact Framework (WBCSD/IFC)

The work of these organisations can then be applied to our key subject areas and we can see a framework of indicators starting to develop.

In the words of Lord Kelvin (1824-1907): "To measure is to know…[and]…If you cannot measure it, you cannot improve it". This advice, given our wider perspective, still seems to very much run true.

• Understand what the investment impact is - what worked, what didn’t
• Input, outputs and outcomes - the need to consider all three
• Understanding priorities - what is needed locally
• If the investment did not work, were the priorities wrong?
• If it works, can we upscale the impact of investment?

This structure and approach is important to further knowledge and understanding of the value and outcome of consumer spending.

The good news is that measuring and quantifying a range of objectives is a fast developing and growing business. Something Kelvin would hopefully be happy to know.