Corporate social investment: the brave new frontier?

You’re supposed to start a blog like this by making a wild, hyperbolic statement like ‘corporate social investment will save the world’.  It won’t of course.  So why write it?

For all the talk of the rise of responsible capitalism and the hope we pin on ‘millennials’ to influence corporate behaviours, the majority of businesses worldwide continue to maximise short-term shareholder value with little regard to long-term sustainability challenges.

Traditional corporate social responsibility (CSR) initiatives still abound – team volunteering days, parent-child charity partnerships, skills workshops for kids.  They may be well designed but they aren’t nearly enough.  And whilst approaches to sustainable growth, to integrated reporting and financial transparency are becoming more and more common (if not imperative in many markets), if we are to meet the significant challenges ahead we need some radical thinking that can catalyse completely new ways of doing business.

My experience in both the corporate and foundation worlds leads me to believe social investment i.e. repayable finance that aims to achieve a social and financial return, presents some unique opportunities for forward-thinking businesses to get ahead of the competition and put their capital to work; and for social intrapreneurs working in them who are keen to accelerate this kind of change.

Here’s four reasons why:

Engaging the brain: I’ve often seen very smart business people inexplicably leave their brains behind when they engage with social problems. Investing for social as well as financial return directly engages the business brain, whilst encouraging people to think much more clearly about the impact they are trying to achieve.

Promoting genuine cross-sector collaboration: Clear impact goals can help drive stronger and more balanced partnerships between business, government and civil society.  Balanced partnerships maximise the opportunities to use the skills and resources of your core business, whilst accessing the deep expertise outside of the corporate bubble.  We can’t hope to address the challenges we face without working with, and learning from each other.

Driving new ways of doing business: Applying your business’ core skills for social impact in partnership with other sectors can influence corporate culture and act as a test bed for new ideas.  This can lead to new and more social ways of doing business that can give corporates a competitive edge, such as joint venturing.

Scale: Perhaps most significantly, social investment as a form of sustainable capital can often help achieve a scale that traditional CSR budgets can only dream of.

This all sounds great, but where’s the proof it works? It’s a nascent market and there isn’t much in the way of rigorous research.  What there is though are some great examples of corporates who are making positive progress.  These include Centrica’s Ignite (the UK’s first impact investment fund with a focus on energy), and the Global Health Investment Fund (a fund created by a group of corporates to provide financing to advance the development of drugs, vaccines, diagnostics and other interventions against diseases that disproportionately burden low- and middle-income countries)

There’s also growing interest for corporates to go beyond CSR and challenge the status quo. From social investment perspective, Big Society Capital’s recent report ‘Corporate Social Investment: Gaining traction’, released earlier this year to promote its own Business Impact Challenge finds that of 557 corporate social impact programmes at 127 companies globally, over half (52%) were investments that aim to generate financial returns.  The infrastructure to support genuine collaboration between corporates governments, foundations and venture philanthropists is becoming more developed too.

If you think corporate social investment might be right for you, here are some key questions to consider:

What’s your motivation? Genuine social return can rarely be achieved without at least some sacrifice of financial return. So short-term profit and clear social impact may not always go together.  On the other hand, it’s equally important that your motivation is not purely a social one with little direct connection to what your business actually does.  Ideally a corporate should be invested in the social outcomes, not because they are nice people, but because they recognise the link to their own long-term sustainability.

How are you people involved? Are staff committed in significant numbers? Are the senior leadership involved? If it’s a few business volunteers managed by a separate foundation or CSR department, the initiative can more easily be accounted for in the ‘conscience column of the balance sheet’, missing opportunities to use the business’ significant skills and resources, or the chance to effect lasting cultural change.

Are the impact goals clear and measurable? At the very least a social investment should determine some clear impact goals, and you should be able to report transparently on progress towards them.

Are you looking for a way to do more with less? Social investment is not always the right tool.  It should be used because it can deliver genuinely scaled impact where other forms of investment can’t, not because it is there to replace other forms of support such as grants or donations.

So whilst corporate social investment is just one tool of many and isn’t any kind of panacea for accelerating change or eliminating ‘green-wash’, I can see the significant potential it has to deliver measureable impact at scale, connected to and influencing the core business, and fostering balanced cross-sector partnership. It also represents a significant opportunity for business to innovative and develop new markets.  For me that’s exciting.  That’s why I’m delighted to be working with Numbers for Good to bring my corporate experience alongside their deep understanding of social investment to try and grow this market.

Do you agree?

If so do get in touch with the Numbers for Good team – we are happy to explore ideas with you. Email matt@numbersforgood.com to start the conversation. We are also hosting a number of events in the coming months to explore the potential and debate the challenges, starting in just a few weeks’ time.

With thanks in particular to Claire Burton at Deloitte, David Floyd of Social Spider and Isabel Kelly of Profit with Purpose for their constructive feedback on early drafts. 

About the author:

Bob Thust spent 15 years at Deloitte UK, first in the Audit & Advisory practice and then as Director of Responsible Business and Director of Corporate Brand & Marketing.  During this time he created Deloitte Social Innovation Pioneers. Having left Deloitte in 2016 Bob helped establish a new £150m UK Foundation, the Power to Change Trust, as Director of Programmes.  He remains a Strategic Advisor to the trust. Bob has a senior advisor role at Numbers for Good, a UK based social investment organisation, with a focus on the corporate market, and recently co-founded Practical Governance, providing hands on governance support to social purpose organisations.

 

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