SEATTLE — The traditional model of Corporate Social Responsibility (CSR) is one that looks simply to comply with national or international norms of ethics. It is a self-regulatory system that aims for long-term gain through maintaining a positive public image. The real social impact of CSR is thus understandably limited to ventures that produce reputational benefits.
But matters in the world of corporate responsibility are shifting. Where corporations used to focus their CSR efforts on volunteer work and resources on charity donations, four megatrends have emerged to prove that sustainability is a better investment in value creation.
Maximilian Martin, founder and managing director of Impact Economy, published a report specifically on these four megatrends and their impact on CSR, titled “Driving Innovations through Corporate Impact Venturing.” They are described as follows:
- There are currently 4 billion people with incomes less than $3 thousand a year. Still, they represent a $5 trillion economy. Lifting these people out of their impoverished state and into more prominent roles as producers and consumers has the potential to greatly expand the economy.
- The market for Lifestyle of Health and Sustainability (LOHAS) consumers is currently at $546 billion and growing at a rate of 10 percent every year. Investing in LOHAS initiatives will appeal to the virtuous consumer market, benefiting people, planet and profit.
- A green path to economic growth using sustainable, natural resources is emerging with the expectation of culminating in a circular economy. Investments in clean energy assets are currently at $195 billion and expected to grow more than three-fold by 2030 because of its cost-saving opportunities.
- The welfare state is currently at variance with the reality of the people it serves, fiscally and demographically. Reconfiguring the approach to welfare leads to new market opportunities for the private sector.
These megatrends have effectively reworked the pathways of business innovation. Suddenly social impact is emerging as a relevant consideration in corporate venture capital and expanding the possibilities of CSR. The two previously separate business strategies are merging into one.
The result of the merge is Corporate Impact Venturing (CIV). Companies like Danone and Uniqlo have already launched CIV projects, partnering with Grameen Bank, a bank for the poor, to produce affordable versions of their products. CIV projects like these have the potential to serve impoverished consumers and thus help stimulate global development.
In 2013, corporate venture capital invested $29.4 billion globally into startups and emerging companies with the potential to transform the specific industries of the investors. With the new outlook CIV pushes, encouraging corporations to select socially impactful clients, while simultaneously promoting internal growth, consider the vast possibilities they can contribute to human development.
– Alexis Viera