Theory of Change #2: How to guide
- 15 hours ago
- 5 min read
By Danielle Stein
April 2026
Image: A cable car emerging from the fog, intended as a metaphor for clarity, but actually a bit terrifying
The Outcome Gap aims to improve understanding of what matters most in human rights due diligence - outcomes and impact on people. In the second of our series exploring Theory of Change, Danielle Stein, our Senior Impact Adviser, sets out how business can develop ToCs to address human rights risks and lay the groundwork for understanding if their approaches are effective.
Developing a Theory of Change doesn’t require complex models - but it does require thinking about how change actually happens. Done well, it can transform sustainability from a set of activities into a strategy for real-world impact.
In our previous blog, we explored how a Theory of Change (ToC) can help companies navigate the shift from sustainability commitments to demonstrating effectiveness.
The next challenge, and focus of this blog, is practical: how do you actually develop one?
Many teams assume that a ToC requires months of workshops and complex diagrams. In reality, it is about answering three questions:
What change are we trying to achieve?
What needs to change for that to happen?
What role can our company realistically play in making that change happen?
These questions help teams work more strategically and move from listing activities to developing approaches for genuine change.
Define your entry point
One important early decision when developing a Theory of Change is defining the level at which it operates.
While an overarching ToC can help clarify how key elements of a human rights strategy fit together, ToCs that aim to cover a large company’s entire sustainability strategy are often too broad to be useful. The drivers of issues like child labour, forced labour and land rights disputes are often very different, requiring specific thinking and interventions.
For this reason, the most practical approach is usually to develop issue-level Theories of Change focused on specific salient risks and the company’s approach to addressing them. This allows companies to map the drivers of that issue in detail and design interventions and that can be tailored to context.
The strategy defines priorities and commitments, while ToCs translate those priorities into approaches for addressing specific risks. Often, these issue-level ToCs reveal common patterns - such as the role of purchasing practices, supplier incentives, or access to grievance mechanisms - which can then serve to develop cross-cutting strategic frameworks.
Start with the outcome
Once you’ve clarified your entry point, where to start? It is natural for companies to build a ToC from what the company already does, like audits, training, supplier codes of conduct, community programmes. But a ToC should be grounded primarily in the outcome you want to see in practice.
For example:
Workers are paid predictable and sufficient incomes
Employees are free from forced labour risk
Smallholder farmers have stable and resilient livelihoods
These outcomes describe changes in people’s lives, not actions taken by companies.
Working backwards from these outcomes forces a crucial shift in thinking. Instead of asking “What programmes should we run?”, the question becomes: “What conditions would actually need to change for this change to occur?”
Identify the drivers
The next step is to identify what currently prevents that outcome from happening.
Complex sustainability issues rarely have a single cause. For example, issues like child labour or forced labour are the result of many drivers, such as:
Economic pressures and low supplier margins
Weak regulatory enforcement
Incentives within supply chains
Social norms or labour arrangements
Understanding these drivers helps determine the kind of interventions needed to meaningfully engage on the issue.
For instance, if workers are not using grievance mechanisms because they fear reprisal or don’t have confidence their concerns will be addressed, training programmes on how to use the mechanisms are unlikely to address the problem.
Mapping these drivers can help companies realise that meaningful change on key issues requires a combination of interventions, often targeting internal practices, suppliers, and wider collective action.
Define your contribution
Understanding different drivers can help companies clarify their specific role in influencing them. One business alone cannot solve world poverty. But a private sector organisation can itself lead or support many actions that could demonstrably improve outcomes for workers. This can take a range of forms or approaches depending on the nature of the change, including:
Some changes are directly within the company’s control (eg purchasing practices, supplier incentives, contractual terms) - and we always propose starting here
Some changes can be addressed through programmes or initiatives, individually or with others (eg supplier or worker capability-building, development of grievance mechanisms)
Other changes require collaboration (eg influencing policy or labour enforcement, standard-setting and sector-wide initiatives)
A strong Theory of Change sets out a company’s sphere of engagement and articulates how corporate action contributes to change.
Map the results logic
Once outcomes, drivers and contributions are clear, the causal pathway can be mapped. This is where the familiar "results chain" becomes useful:
Activities → Outputs → Outcomes → Impact
This can span one set of activities or connect a wider set of activities across a given issue. The aim is not to produce a neat diagram, but rather to test whether the logic holds.
Example 1:
If the company improves its purchasing practices, suppliers have greater financial stability, then
Suppliers can invest in decent wages, and so
Reliance on child labour decreases.
Example 2:
If the company supports initiatives to establish and sustain grievance mechanisms with the aim of addressing forced labour risk, then
Workers or affected communities have better access to grievance mechanisms and can raise issues as they arise, and
More issues are resolved, both addressing key risks while informing improvements in wider company practices (such as due diligence and contractual terms), and so
The overall risk of forced labour in supply chains decreases.
These are overly simple examples, but even in these instances, each link in this chain reveals assumptions that should be tracked and reviewed carefully.
Clarify and test assumptions
Every Theory of Change contains assumptions - beliefs about how the world works and the conditions under which the ‘theory’ holds. These might include:
Suppliers will invest increased margins directly into improving labour conditions (example 1 above)
Workers will report grievances if safe channels exist (example 2 above)
Management training will lead to changes in worker behaviour
We observe the risk of a company developing a theory of change in offices far from the location of sourcing; with good intentions, but perhaps limited knowledge of the real context people and supplier businesses face. It is therefore essential that assumptions are developed, debated and tested with those closest to the supply chain in order to create genuine and sustained human rights impact.
Once assumptions are visible, companies can begin asking the most important question in sustainability strategy:
“What evidence do we have that this will work?”
If evidence is weak, a ToC helps companies to test ideas, adapt interventions, and learn what actually produces change.
Remember to iterate
Perhaps the most important point about a Theory of Change is that it is a living document.
As companies collect evidence and learn from implementation, the ToC should evolve. Assumptions will probably prove wrong. Some interventions may work better than expected. New drivers will emerge.
Rather than being a static document, a ToC should be iterative, guiding adaptation and learning over time.
Interested in what's next?
Developing the theory of change is just the beginning. Follow us to learn more about what comes next - including indicator development, measurement frameworks, monitoring and evaluation, learning and adaptation... and much more.
