Social Impact & Corporation 2020
At Digital Union, we stress that social impact can provide valuable business currency and that businesses should be thinking about their impact strategies to create additional success. As corporations are becoming a larger part of the global economy, their responses to social and environmental challenges will be consequential to the well being of the planet.
All too often, businesses opt for PR wins and quick impact fixes rather than understanding both the social and economic case to be made for actually incorporating social impact strategies into their business strategies. Digital Union and other organizations such as the Shared Value Initiative were created to help corporate leaders identify and address social problems that intersect with their businesses. Additionally, the B Corporation community, companies on Fortune’s “Change the World” List, and other Firms of Endearment Conscious Capitalism companies are making an effort to change the way that they do business.
We often talk about the economic benefits that a social impact strategy can have for a business; but these strategies also allow businesses to take on the responsibility of providing solutions for the world. Because corporations represent the lion’s share of global economic activity, they have the unique opportunity to positively impact the social and ecological perils facing the world in the coming years.
Pavan Sukhdev, author, economist and founder of Corporation 2020, sets forth four characteristics of what he thinks a corporation must have in the next decade if we are going to solve these problems:
- Goal Alignment: a business should create more than just money.
- Community: a business itself is a community and the communities that evolve within a business are a form of “social capital”.
- Institute: by investing in “human capital”, a business can produce a large public benefit while still becoming extremely profitable.
- Capital Factory: Corporations must create financial capital through their operations, but without depleting other forms of capital.
Additionally, he recommends that businesses start looking at advertising as a way to create a more responsible consumerism (one that doesn’t create an extra footprint).
One interesting business model that follows Sukhdev’s principles is that of the Circular Economy. A 2014 McKinsey article describes the Circular Economy as one that “aims to eradicate waste—not just from manufacturing processes, as lean management aspires to do, but systematically, throughout the life cycles and uses of products and their components.”
Such an economy aims to keep materials and products at their highest utility and value throughout their lifetime, which not only helps the environment but also helps businesses improve resource productivity by looping products, components and materials back into the supply chain after they’ve fulfilled their utility. Rather than a typical “supply chain”, in a circular economy you have a “supply circle”.
For example, there’s a projected 80% growth in the demand for steel in the next 15 years, largely due to growth in emerging market economies, which contributes to more volatile commodity prices and higher variable costs for businesses. In the EU alone, a potential $380 billion potential annual net material cost-saving opportunity would be made possible by switching to circular business practices.
To learn more about what your business can do to prepare for the future, get in touch to explore.
Maggie & Hector