Wednesday, March 09, 2016
The Case for Social Impact
When it comes to tackling our most pressing social issues, we recognise that Government cannot solve them alone. By harnessing the innovation and capital of the non-government sectors we can deliver better outcomes for the most vulnerable people in our community – NSW Government
The world is changing rapidly, and it is this generation that has the power and tenacity to bring about social change for the better. With various nomenclature thrown around like “social impact bonds”, “philanthrocapitalism” and “impact investment”, what does it all mean and why is it relevant to us? What role can we play as business leaders in finance to contribute towards a stronger community and a more richer and inclusive Australian society?
Business Schools like AGSM declare “the world needs a different kind of leader” and invites prospective students to “change the world”. Right now the global economy has never been so connected. International Business School Hult while referring to the Millennial generation points out that today’s “business school students want to achieve more than good management practice, they are socially-minded young people, more so than previous generations, searching for greater meaning in their careers.” When I commenced my MBA, it became apparent to me how business skills and return on investment can be turned on its head into a social context where profit is important but only one metric of success.
And it is not just the Millennials driving action, I recently read Richard Branson’s book “Screw Business As Usual” and he talks about the role that socially-conscious businesses can have in partnering with governments to combat corruption, business stakeholders to mitigate environmental impacts of burning fossil fuel which can be achieved through more efficient technology, and the positive social benefits to villages and communities of educating and empowering women so that they may themselves be more entrepreneurial, such as in India. Communicating this message of success to shareholders and media is in itself incredibly powerful, particularly in an age where increasingly activist consumers exploit social media to unleash viral messages against global organisations perceived to be acting “unconscionably”. For a brand, perception can be extremely damaging, as a number of global businesses have experienced just from being at the wrong end of a hashtag.
Another good story of outcomes focused philanthropy is The Gates Foundation, which is the largest publicly transparent private foundation in the world, has been focused on fighting AIDS and malaria in Africa and South-East Asia, the impact of which through the availability of cheaper medicine and better research, improves cross-border trade, reduces global poverty and contributes towards a better future. So why should corporates get involved? After all, their accountability is to their shareholders and their focus is typically financial returns. Branson identified in his book that the most valuable asset of a business is its brand, and a brand that reflects an organisation’s vision and its actions reflect its purpose which has the power to create positive impact on the communities in which it does business, therefore more customers are going to want to interact, employees will be more engaged and governments more welcoming, and increasingly, shareholders want to invest in corporations which they resonate with.
If social investment in the future is as important as financial returns to businesses, the social outcome must be measurable and not complex. The not-for-profit sector in Australia spends billions a year on support services for those at risk, above and beyond what Governments across Australia are already spending on intervention, education, welfare and support services, yet still there is a pervasive “gap” with so many falling between the cracks and suffering social disadvantage, in particular indigenous Australians, but nor can Government or Philanthropy provide all the solutions and all the funding. But nor can Government afford to continue to fund programs, in addition to its welfare program, which are failing to achieve the desired outcomes or do so but fail to be replicated, scaled and shared. We do continue to read in every newspaper and hear about on every medium, a virtual “revolution” of impact investing increasing in profile in Australia. The Australian Advisory Board on Impact Investing expects the Australian market which is exceptionally mature, to exceed $32billion in a decade.
In 2016, with all our technology and wealth, we are still failing to meet the needs of tens of millions who continue to be in poverty and with 2015 remembered as the highest refugee influx across Europe since WWII, and with budgets the world over in crisis situations, we can’t afford to neglect the most needy nor can we be complacent or continue to operate, in the words of Branson “business as usual”. We are all connected.
Author BioJason Duarte is Head of Corporate Banking ACT for Commonwealth Bank. Jason is a member of the AICD, IPAA, and has over 15years of financial services experience. He holds a Bachelor of Economics, Master of Law, Master of Applied Finance and is currently undertaking his MBA. #socialimpact