Given the current instability in the world, I think it would be useful to take a step back and look at the current landscape of social and sustainable business to remind us of how far we’ve come and what will be required of us as we push forward with the transition to an economy that better serves all people and our planet.

Now that we’ve talked about the important “why” of social and sustainable business, alongside…

• Lessons learned with respect to how we arrived at the current state of the world with its many pressing social and environmental issues.

• Missed signals about the importance of taking a conscience approach to capitalism.

• High-level solutions for addressing today’s social and environmental problems going forward, including via hybrid economic forms.  

• Tangible social business practices organizations can start employing today to unlock more social and economic value in their organizations, which are detailed in our Expertise In Action and Why It Matters series.

…I think it would be valuable to take a step back and look at the landscape of the transition to a social and sustainable global economy – who is involved, what is required and where we are today. From my perspective, a simplified but useful view of who is involved and what is required looks like this (you’ll notice that the Grace & Goode website is also organized along these lines):  

• Funders: Funders are people and organizations that invest money in programs related to or organizations participating in the global economy at various levels – including but not limited to 1) individuals, family offices and foundations engaging in philanthropy, 2) governments funding projects and programs and 3) global investment firms and large institutional investors investing in businesses. 

• Impact Organizations: Impact organizations are non-profits, social enterprises, public service mutuals and other emerging hybrid and non-hybrid organizational forms that are focused on solving social and environmental issues while also, in some cases, generating a profit; these organizations play a critical role in transitioning our economy to one that better serves people and planet.

• Business: Business here refers to traditional businesses that operate for a profit and don’t have any explicit social or environmental goals; these businesses currently make up the largest portion of the global economy and hold substantial amounts of capital and assets.

Today, interactions between these stakeholders are largely defined by philanthropists making charitable donations, governments funding (often faulty) public programs and investment firms investing in traditional businesses. However, what is needed in the new economy is a dynamic and interconnected ecosystem that sees: 

• Charitable donations evolve into strategic philanthropy and other emerging philanthropic models, such as restorative and regenerative philanthropy and trust-based philanthropy, which are focused on funders, non-profits and beneficiaries working together to identify and develop solutions for the underlying causes of complex social issues, such as economic inequality, in ways that don’t perpetuate systemic injustices. Melinda Gates’ foundation, Pivotal Ventures, is a remarkable working example of this kind of philanthropy.

• Governments re-evaluate their approach to governance and program delivery with a focus on effectiveness and high-quality public services, along with integrity and trust building, rule of law and social progress. Technology, regulatory and policy innovation also need to play a pivotal role in transforming government. For example, in 2014 the UK government launched public service mutuals, independent employee-led service delivery organizations that spin out of government, as a way to increase civil servant engagement and improve program quality and effectiveness. Public service mutuals have grown substantially since they were first introduced and research has shown that they have increased quality and service innovation, reduced bureaucracy and led to better decision making.

• Traditional investing evolve into impact investing. According to the Global Impact Investing Network (GIIN), the industry’s leading body, impact investing is investing that intentionally seeks to generate a positive social and/or environmental impact alongside a financial return. Naturally, impact investing involves investing in impact organizations; however, current dominant systems aren’t always enabling to organizations focused on impact. Therefore, it is also important that the enabling environment and business systems also evolve to support the scaling and success of impact organizations. Systems such as incubators and related networks (Ashoka, Acumen, etc.), legal frameworks (social purpose corporations, benefit corporations, etc.) and measurement and reporting (impact measurement and management, triple bottom line accounting, etc.).

• Ongoing research, policy development and education be prioritized to support traditional businesses as they evolve into impact-focused organizations re-strategizing their long-term competitive advantage for the transitioning economy. In my opinion, the strategic framework of Shared Value, put forward by Michael Porter and Mark Kramer of Harvard Business School, effectively outlines the fundamentals of how and why businesses can and should build their competitive advantage through social impact. They acknowledge, however, that there still exists material challenges to the widespread adoption of this approach – most notably the need to shift mindsets, see beyond conventional business boundaries and develop broader approaches to working collaboratively.

Again, this is a simplified view of who is involved and what is required to transition the global economy to one that is more social and sustainable – but I find it useful to conceptualize the landscape. With respect to where we are with the transition today, you’ll see from the above discussion that each key area of change has its leaders and champions. However, in many ways these leaders and champions, while making tremendous progress, are not advancing at their desired speed or scale because they are often challenging the status quo and pushing for transformative change. The kind of change that is often met with resistance (most notably from those that benefit most from the existing systems) and that can be viewed as introducing unnecessary complexity – but this is exactly the kind of change we desperately need right now. Maintaining momentum is critical and involves continuing to build networks of likeminded people working together within and across conventional boundaries to learn how impact happens and, overtime, to develop the knowledge, skills and infrastructure necessary to embed positive impact generation into the global economy.

One such leader and champion is Amit Bouri, CEO and co-founder of the GIIN. I recently had the pleasure of listening to Amit on the Impact = podcast presented by British International Investment, the UK’s development finance institution, in which he talks about the growth of impact investing and the challenges it faces in scaling. Amit’s journey, mindset and approach as a changemaker reflects exactly the kind of thinking and action that needs to be adopted by us all as we push forward with this transition. In particular, Amit discusses how…

• The GIIN was initially formed by communities of people around the world interested in the various ways capital can intersect with impact (community investing, social finance, microfinance, natural capital, development finance, etc.), ambitiously coming together to create the architecture for a larger vision of, and global platform for, how impact can become a central part of all capital investments.

• Early adopters of impact investing were very much swimming against the current because investment markets weren’t setup to handle these kinds of investments at scale. This created a high degree of friction, but it also highlighted the importance of the work. While Amit acknowledges it was difficult, by coming together and focusing on how investors could put capital to work for the greatest impact, their network was able to build the scale necessary to develop a high-functioning and efficient marketplace.

• Today, the market size for impact investing is $1.5 trillion USD, which is formidable but still nowhere near where it needs to be to achieve global targets such as the UN Sustainable Development Goals and the Paris Climate Accord. Therefore, the GIIN continues to build off the momentum it has created and has its sights set on how it can continue to progress the role investment plays in moving the needle on solving social and environmental problems at scale, leveraging its network-based approach to accelerate collective learning to mainstream impact investing. And underscoring that simply growing the market size of impact investing is not sufficient, but rather that real change in the underlying system is required because of the systemic nature of the issues we are facing, which are, frankly, the direct result of failures of the existing system.

The experience of the GIIN makes clear that the work of transformative change is not easy – in fact, it’s very hard – but it is doable when we focus and work together.

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