At the World Business Council for Sustainable Development (WBCSD), we work every day with our member companies who are pushing the boundaries of business as usual to create positive social impact. Their social impact strategies are not seen as a ‘nice-to-have’ – they are about making the core business work better for employees, society and, by extension, shareholders. And the value of these strategies is now known to show up in financial metrics. A quantitative analysis of more than 300 companies by Boston Consulting Group found that companies’ performance on relevant social impact issues had statistically significant effects on their valuations and margins.
Unfortunately, companies addressing the social impact of their operations at scale are still the exception, rather than the norm. The good news is that, in discussion with our members, we have found a common differentiator amongst companies who are leading the charge: an engaged and informed Chief Financial Officer (CFO).
CFOs provide a critical link between social impact strategies and action. They influence their companies’ fundamental approach to social impact by thinking about it as an investment, rather than a cost. They are crucial to obtaining and allocating the capital needed to execute these strategies. Further to this, they provide the primary connection between companies and capital markets, and have a key role to play in shaping the financing solutions needed to drive sustainable value, now and into the future.
To share this insight, under the leadership of JPMorgan Chase & Co., we brought together the CFOs and senior finance and investor relations professionals of front-running companies in terms of social performance (BT, EDF, Equinor, Novartis, Novozymes, Banco Santander, Solvay, Vale S.A.) and held a series of discussions to understand how they mobilize, support and scale finance for social impact in their organizations.
The results have been compiled into our new publication: Mobilizing Finance for Corporate Social Impact: A Primer for Chief Financial Officers. This short and simple primer outlines what we mean by ‘social impact strategies’, the value of these approaches, and the sources of finance that are currently available to a company. Most importantly, it provides 4 recommendations from our CFO community to their peers:
- Shape their companies’ social impact strategies
- Integrate social impact into investment decision-making
- Explore “blended finance”
- Communicate and collaborate with peers, investors, and market-shaping organizations
We invite you to use the Primer to start the conversation with your CFOs, finance, and investor relations teams.
Of course, this is only the beginning of the conversation. Right now, companies that ‘get it’ are taking creative approaches to finance their social impact strategies, primarily from their own balance sheets. There is not a well-accepted typology of social impact strategies, or of the financing solutions that make sense. While there is a wealth of insight to build upon in the fields of development finance, microfinance, impact investing and corporate venturing, engagement with the mainstream finance community is in its infancy. We have begun to address these questions here, but further dialogue, alignment and collaboration will be essential to shape this emerging market and to unlock finance to support and scale initiatives for corporate social impact. We at WBCSD look forward to continuing the discussion and hope you will join us.