Today my breakfast was served with a copy of a new report we worked on together with Big Society Capital.
Before our research we didn’t have a clear picture of how common social investments were, either as a part of business strategy or of corporate social responsibility programmes. We had often heard of a number of leading examples, but usually the same ones cropped up in different conversations. What we found was a growing awareness and interest in the area, and that over half of the social impact initiatives surveyed could be thought of in some way as a social investment – one that is expected to generate both a financial and a positive societal return.
Research and interviews highlighted that that there is not a broad awareness within corporations of the many options to engage in social investments. We estimate that up to half of the companies in our set were keen to do more in this space, but didn’t fully understand well how to go about it. Many encounter barriers when attempting to create or grow their social investment portfolios. Hopefully this this report can help to raise awareness of the different types of social investment currently underway, and start to help corporations initiating and developing their social investment portfolios
A full version of the report is available here, where we go into more detail around the following questions:
- Why get involved in social investment?
Corporate Social Responsibility programmes typically focus on activities which support positive social and environmental outcomes and boost staff engagement, but are quite far removed from business strategy. Social investment provides an opportunity for corporations to go beyond this while at the same time creating shareholder value, reinforcing business objectives and promoting innovation; not to mention generating more sustainable social outcomes.
- What approaches to social investment are being taken?
There are a range of social investment vehicles available, with varying degrees of expected financial return. In our analysis of 557 corporate social impact programmes across 127 companies globally, we found that the most popular vehicles today are those targeted at internal commercial development – such as social funds, social impact bonds, and corporate venture capital – as opposed to those that directly fund the not-for-profit sector (see exhibit, below). As this market matures, expect further growth in the proportion of programmes yielding commercial benefits, following in the footsteps of JP Morgan, Centrica, and Telefonica, amongst others, who can be considered leaders in this space.
- What is the best way to engage in social investing?
Whether they are just starting to explore the concept, or already have it embedded within their organisation, corporations have challenges to overcome when it comes to social investment. New entrants may lack awareness of the investment opportunities available, or face internal cultural barriers for shifting to a new mind set. Frontier leaders may find it challenging to source a suitable pipeline, or have limited dedicated resources.
Depending on the appetite and existing level of engagement in social investment, corporations may choose to set up a pilot programme or establish a small social investment fund. They may also consider alternative vehicles such as joint ventures or social business units.
Our view is that the key to succeeding is to connect to the wider network of organisations involved in social investment, to promote idea sharing and collaboration in this relatively new field.
So, what next? As the concept of business that ‘makes money and does good’ (“Corporate Social Innovation”, “Shared Value” or one of the many other names this has been given) spreads to a wider audience, we believe that social investments in their various forms will begin to attract more interest, become more innovative, and help clear standards to develop, enabling it to achieve scale. It’s an exciting time to be involved in this field – get involved!