This report examines the UK experience of social business to develop a new framework for understanding the approaches to protecting social impact.
Business lies at the heart of society – as an employer, a provider of goods & services, a wealth creator and an innovator. In return, society gives business a licence to operate, offers its labour and consumes its goods and services. A healthy society relies on a healthy relationship with business, and vice versa. This interdependence creates a covenant between business and society. Business has historically been the greatest driver of economic prosperity and social progress. However, recent history indicates that if business does not honour the covenant between business and society, it risks destroying value for both parties. Defining success in business in exclusively financial terms has introduced exactly this risk. It has made the question of how to better align the interests of business and society a pressing issue of our time. It is therefore timely and welcome that the Social Impact Investment Taskforce has been established under the UK presidency of the G8 to examine this, alongside other related issues. This paper outlines thinking and practice at the frontier of this field. It is relevant to everyone who invests in, is employed by or operates a business. It is tactically relevant because any loss of licence-to-operate is an important risk for businesses to understand. It is strategically relevant because successfully addressing this question has the potential to create substantial value for both shareholders and society as a whole.