How can Corporate Social Investing help scale your efforts and transform your practices into more sustainable and inclusive business?
AB InBev is the world’s largest brewer with a mission to “bring people together for a better world”. One might consider this to be smart marketing to sell beer, but they are also letting their purpose do the talking with the creation of the AB InBev Foundation, an independent non-profit that is helping to advance the Global Smart Drinking Goals. The Foundation has aligned itself strategically with the core business interests of AB InBev and is seeking to transform the practice of the sector, going beyond competition and unifying partners around a systemic societal challenge ensuring greater social impact and, in this case, long-term behaviour change.
This is just one example of Corporate Social Investing or “CSI”, where business and philanthropic efforts align to create transformational social impact. CSI involves the deployment of patient capital through foundations or impact funds in the form of grants, equity or debt to NGOs and social enterprises with both financial and non-financial benefits.
A recent survey undertaken by EVPA of around 30 corporate social investment entities (foundations/funds) showed that 8 out of 10 of them believed that their businesses had accelerated their strategies towards greater social impact and purpose since the pandemic. However, a quarter believed they were not adequately meeting the social needs of the communities where they worked.
Corporate Social Investment can help scale and deepen your social impact, which is why it is swiftly gaining momentum amongst multinationals.
The business case for CSI - unifying and embedding purposeThe 2021 Edelman Trust Barometer, the world’s largest trust and credibility survey across 28 countries, showed this year that business was the only trusted institution when compared with government, NGOs and the media, and the only institution seen as both ethical and competent. Increasingly, people expect business to step in and address and solve societal challenges. Specifically, 85% of people expect CEOs to speak out publicly on social issues.
While there was already broad interest in what businesses were doing to address societal issues, according to 3BL Media, attention and expectation soared in 2020 due to the COVID-19 pandemic, as well as the ongoing and very public instances of racial injustice.
The case for embedding purpose within business has never been clearer. We are increasingly seeing Director-level pay linked to performance on ESG (environmental, social and governance - with the “S” rising in importance) as was recently confirmed by Matthias Berninger, Head of Public Affairs and Sustainability at Bayer, whose own pay is linked with these targets. “And it extends beyond philanthropy. It’s all things people and all things social”, according to Alison DaSilva, MD of Purpose & Impact, Zeno Group.
And it makes good business sense too. Companies led by purpose outperform their competitors by over 200%, Unilever’s purpose-driven brands grow 69% faster than the rest of their business.
Furthermore, younger employees are increasingly looking for purpose and meaning in their work, and expect it from their future employers. As a recent McKinsey article says, “employees expect their jobs to bring a significant sense of purpose to their lives.” A strategic and business alignment with social impact can have a positive effect on morale, job satisfaction and talent acquisition and retention.
By aligning a business’s philanthropic aims with its business core business and values, CSI can be a catalyst, acting as an incubator or learning lab for societal innovations and solutions for new markets and can be a good way for business practices to become more sustainable and inclusive.
What would CSI mean for your business?
Engaging in the corporate impact space requires businesses to be bold, potentially take some risks, and most importantly, be invested in public benefit and impact as the primary outcome, with financial return second.
Corporate Social Investing needs a deep understanding of the social context and landscape and a long-term approach (three to seven years). Crucially, it goes beyond funding. It is a high engagement, deeper-level partnership that consists of financial and non-financial support, with a broad level of employee engagement. Often, CSI involves a switch from funding projects to funding organisations, NGOs and social enterprises as a whole. It consists of providing patient capital that often cannot be secured from mainstream banks and seeks to tackle social issues and test innovations.
Importantly, it also contributes to de-risking projects thereby enabling other funders to join. Without this catalytic patient or seed capital on board, other actors who wouldn’t be able to take as much risk would be unlikely to invest.
Businesses embarking on a corporate social investment journey will need to align the full engine of their corporate organisation to scale the project and drive forward a cultural shift to embed purpose within the business. Importantly, investors for impact must be able to measure the impact that they are having.
Sounds interesting. What next?
Companies interested in CSI opportunities should begin by deciding the impact that their business can have. How could you utilise your business to benefit society in a holistic and systemic way?
Then, leverage the knowledge of your impact fund or foundation (if you don’t have one, consider establishing one), and bring about strategic alignment between your core business, values, and philanthropy.
Above all, get the whole team involved and unite behind a common vision and mobilise resources where you can innovate for the business, and create a transformative societal impact.
For a company to truly have transformational societal impact, it should consider a collective impact strategy where its impact funds, foundation, or other impact accelerator entities are working in lock-step with the company in a holistic, purpose-driven approach to address social challenges.
Schneider Electric has a vision to provide energy access to all. In Sub-Saharan Africa the company provides business solutions and technology, while the Foundation helps communities to build capacities through training and the VC impact fund with capital for start-ups.
Similarly, Rabobank is working to provide unbanked farmers with access to finance, beginning with the Foundation providing low interest credit for farmers, who then graduate to next step financing through its Rural Fund before becoming eligible for loans from partner banks of Rabobank or other local commercial lenders.
By leveraging the knowledge and tools of the different entities, these businesses are increase the scope, scale and depth of their impact on communities, ultimately improving lives, but also bringing business benefit.
At a time when corporate leaders are increasingly encouraged to define their business purpose and implement it into their core business, these approaches provide companies with a unique opportunity to enable, and even accelerate the transition towards an overall impact vision for their business.
By working strategically with their corporate social investment entities, corporate leaders can scale or broaden their social impact, deepen their engagement with specific communities, and ultimately herald a purpose-led transformation of their business.