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Given the complex nature of corporate social responsibility (CSR) and social impact in general, I want to offer some thoughts on how corporate purpose has developed and how it has influenced businesses. This piece is not meant to be a complete history of the topic; it’s meant to show when these topics inspired impactful changes in history that led to their importance today. In 1969, the Department of Energy enacted the National Environmental Policy Act (NEPA), which requires federal agencies to consider the environmental impacts of proposed actions and alternatives before foregoing any work to protect, restore, and enhance the environment. In an ethics seminar at Yale University on ethical responsibilities for institutional investors, social impact was introduced. The following year, NEPA communicated a set of procedures called the Social Impact Assessments (SIA).
The International Association for Impact Assessment (IAIA) defines social impact as a framework that embodies the evaluation of all impacts on humans and all the ways in which people and communities interact with their socio-cultural, economic, and biophysical surroundings. SIA connects with a broad range of teams in the field involved in the assessment of areas such as: aesthetic impacts (landscape analysis); archaeological and cultural heritage impacts (both tangible and non-tangible); community impacts; cultural impacts; demographic impacts; development impacts; economic and fiscal impacts; gender impacts; health and mental health impacts; impacts on indigenous rights; infrastructural impacts; institutional impacts; leisure and tourism impacts; political impacts (human rights, governance, democratization, etc.); poverty; psychological impacts; resource issues (access and ownership of resources); impacts on social and human capital; and other impacts on societies. It wasn’t until January of 2020 that the B Labs non-profit certification company saw a large uptick (over 50,000 companies) with its social impact tool. Private companies indicated on their certifications that they were mitigating social impact issues that were of concern to the public sector.
Social impact is the outcome a brand’s actions have on a community through their investments, volunteerism, and economic empowerment. It’s how they’re creating positive change in an impactful way, whether that’s through ethical business practices, philanthropy, volunteerism, social justice, environmental sustainability, or humanitarian efforts. Social impact goes beyond profits and focuses on the impact. This could include things like employee giving programs, sustainable business strategies, or diversity and inclusion efforts. Essentially, it’s about making a difference that matters to people and the planet.
In a world of socially conscious business, the advancement of technology and connectivity, corporate social responsibility (CSR), and social impact have all become business imperatives. CSR is a set of initiatives and strategies in the form of self-regulation that dictate a company’s measurement in three categories known as the “three P’s”: profit, people, and the planet. Historically, CSR was broken into four categories: environmental, philanthropic, ethical, and economic responsibility.
To motivate long-lasting transformation, transcending mere profit motives, 181 CEOs met in 2019 to sign a new Statement of Purpose Corporation through the Business Roundtable. These leaders made a commitment to benefit all its’ stakeholders (customers, employees, suppliers, communities, and shareholders). These leaders recognized that they could not only focus on profits; it was equally important to generate long-term value by making an impact on environmental, philanthropic, ethical, and economic responsibility. With this newly signed corporation, a fourth “P” was created, adding measurement and value creation to socially conscious brands known as “purpose.” With this evolution, companies abroad started making public impact statements to communicate how their operational activities and products were going to make a difference in the world in which we live. Read more
Brands have a responsibility to build adaptive and mitigation programs that benefit all their stakeholders (customers, employees, suppliers, communities, and shareholders). It is profitable for brands to focus on building a corporate-purpose program aligned with pragmatic solutions.
Brand Strategy for Innovation
- Attract talent and reduce churn by focusing on global improvement.
- Encourage open programs and autonomy in investing in marginalized communities.
- Expand audience segmentation and build brand love organically.
- Stand out in a competitive market through market differentiation.
Are CSR and social impact the same? It really depends on the brand. The words are all used interchangeably, measured, and aligned with corporate purpose. The outcome is the same, which is to be good corporate citizens who maximize value creation. There are substantial regulatory pressures to operate with trust and transparency in alignment with corporate purposes. This is where a brand narrates their corporate purpose publicly and deploys creative problem-solving to societal issues to score well on ESG, leading to better returns for investors. Purpose-driven strategies are complex and require more than one solution.
Why hire a strategic consultant?
- Training for skillset gaps.
- Expertise in environmental science, accounting, risk management, and investments is preferred.
- Stakeholder interdependence.
- C-Suite executives can fail to connect with the business.
- Global awareness, ESG reporting, regulatory impacts across industries, and investing experience can be beneficial.
- On-demand strategists with financial acumen, sustainable business solutions, and risk management experience can minimize exposure to the business.
Technology has revolutionized our worldview, influencing businesses’ decisions to be conscious of their impacts on the environment and profitability. When global, purpose-driven brands aspire to create impact through the production and sale of goods produced both domestically and internationally, it can be challenging to be patient for long-term value ahead of short-term victories. Social impact programs consider the issues impacting the community in which we live and work, including ESG, climate change mitigation, supply chain impacts, cultural differences, and human rights.
References
The Economist
Business Roundtable
IAIA
