The Road to Corporate Sustainability is Through Social Entrepreneurship
A new paradigm is emerging for corporations and social enterprises to drive impact at scale. Post-2020, companies have woken to the fact that minimalist models of corporate social responsibility (CSR) and merely managing environmental, social and governance (ESG) risk strategies, no longer serve. Well-intended CSR strategies not tied to a company’s core business, or those where positive social impact is missing or hangs by a thread on obscure ESG criteria, have become passe. Unlike previous economic retrenchments where corporate sustainability was quickly tossed into the back seat when profits took a hit, customers now expect companies to look for innovative ways to integrate social equity and impact into their business models. Partnerships with social entrepreneurs is a path to do this.
As Larry Fink, Founder and CEO of Blackrock, notes in his 2021 Letter to CEOs, companies with better sustainability and inclusion profiles perform better than their peers. This “sustainability premium” is reflected not only in broad-based indexes, but within industries across the board. Dots have been connected between corporate commitment to social justice, inclusion, climate action, and “success,” whether measured in terms of profits, social impact, sustainability or high-performance teams. Sustainability and inclusion are the new “growth strategy.” There is increased recognition by corporations that they must play a leadership role to ensure society’s fabric is intact.
Corporate partnerships with social enterprises — which have solutions to environmental and social problems baked into their DNA — are a potent lever for corporations to not only meet consumer demand and embrace the emerging opportunities, but also meet strategic, sustainability and impact goals. Indeed, the bond between corporates and social enterprises can be synergistic. Social enterprises are best positioned to help companies play a leadership role in this new landscape and advance the United Nations Sustainable Development Goals (SDGs). Corporations are often in the best position to help social enterprises scale, both their business and societal impact.
Social enterprise accelerators like Miller Center have an important role in this new paradigm and can support a number of value propositions for both social enterprises and companies who want to partner.
Build More Sustainable and Diverse Supply Chains
On the social enterprise side, Miller Center can grease the skids for social enterprises to partner with corporations by bolstering their business and impact models, so they can attract appropriate capital, speed their time to scale, and meet corporate supply chain requirements. The World Economic Forum, through its COVID Response Alliance for Social Entrepreneurs, has provided the opportunity for leaders in this space like IKEA SE, Yunus SB, EY, SAP, Acumen, Agora Partners, and others to build a framework to connect corporations to social enterprises interested in integrating sustainability into their supply chains and procurement spends. The framework will support social enterprises in meeting those unique corporate demands, as well as address corporate challenges when working with social entrepreneurs. As a social enterprise accelerator, Miller Center is building a ready pipeline of scalable social enterprises advancing the SDGs and can provide high-touch mentorship to help those enterprises become “corporate-ready.”
Gain Access to Market Intelligence and Emerging Innovation
For corporate partners, Miller Center can be a conduit to access existing scalable social enterprises — or for greater impact — it can co-create programs with companies interested in curated, customized pipelines of social enterprises solving social or environmental problems in communities where they operate that align with strategic sustainability or social justice goals.
For example, these pipelines put companies in touch with market intelligence on emerging innovations to get in on the ground floor of new markets, like technology-enabled food solutions in Africa, which can inform a corporation’s or corporate foundation’s future direct investments or next product line. 2020 brought a wave of corporates engaging as impact investors in social enterprises, investing in mission-driven startups aligned with corporate strategic priorities, aptly described by Macpherson, Emeott, Gustavsen and Choi. Most of the pioneers in this space — Amazon, Autodesk, Microsoft, Salesforce, TELUS, Citi and Unilever — are using their balance sheets for venture investments to de-risk markets for cutting edge solutions, like Amazon’s Series B financing of Rivian electric trucking and delivery or Autodesk’s investment in Factory OS, a prefab housing affordability company which uses innovative software platforms to streamline construction.
Avenues to Community Economic Development, Investment Readiness, and Employee Engagement
A pipeline of accelerated social enterprises can provide high-impact, innovative solutions to poverty that, for example, spur economic inclusion or provide access to energy, water, or climate-smart agriculture. Investments in the acceleration of local social enterprises demonstrates a corporate commitment to improving livelihoods in communities where companies invest — providing license to operate as well as demonstrating shared interests with key stakeholders, both national and local. (See Miller Center’s recent partnership with Chevron to scale enterprises providing climate-smart solutions that scale and help transition Asia Pacific economies to reliable, affordable energy and a low-carbon future.)
Corporations can work with Miller Center to co-create a program to scale a portfolio of enterprises that empower women leaders, reach marginalized communities, or advance SDGs relevant to a company’s core business. Research demonstrates that inclusion improves performance at both the individual portfolio company level and for overall fund returns. Companies such as Apple, PepsiCo, Starbucks, Netflix, Twitter, and Square, among others have established funds to invest in social or environmental justice. Miller Center can partner with these corporations to prepare pipelines of community-led social enterprises for fund investment. And all of these examples provide opportunities for companies to engage their employees in rewarding social impact work as mentors to social entrepreneurs, which develops leadership skills. These opportunities can tie directly to a company’s core business, providing valuable learning about emerging business models and market trends.
There will be a day when all corporations have a social purpose, and what Larry Fink and other visionaries have observed will be par for the course. But until that day, partnerships between corporations and social enterprises — albeit perhaps requiring the long view — is the ticket to solve for sustainability, impact, and inclusion in real time. It’s a concrete step we can take today that gets us closer to surmounting the monumental environmental and social challenges we face.
To learn more about how social enterprises can help you meet your strategic and sustainability goals, contact Jeri Jensen, Director of Partnerships for Social Justice, email@example.com