Navigating the profit with purpose landscape
Impact and profit are proving to be natural bedfellows, writes Vinay Nair.
A decade ago, every third-sector conference was guaranteed to feature plenty of debate on one hotly contested topic: “What exactly is a social enterprise?”
The next concept to be subjected to (often tortuous) deliberation was “impact investing” – indeed, even the term was questioned. Was it “social investing” or, after the G8 summit in 2013, “social-impact investing”?
The focus has now turned to trying to pin down “beyond profit” and “profit with purpose”. Rather than getting tangled up with precise definitions, my sense has been there is clarity emerging on understanding “beyond profits” as capturing a wide-reaching movement.
They represent a range of private companies from startups to multinationals, all focusing on more than just a financial return: consciously seeking to also make a social or environmental impact.
It’s been exciting to see the area achieve incredible growth in recent years, spurred, perhaps, by the financial crisis and an increased sense of inequality, combined with a surge in digital interconnectivity and its rapid sharing of ideas.
As the Social Impact Investment Taskforce report was unveiled in 2014, UnLtd’s then-CEO Cliff Prior announced that we were on the threshold of a social business revolution: “The new profit-with-purpose business model allows startups to access the equity investment they need, and at the same time allows them to be social, stay social, and prove it by showing their results.”
And, notably, a survey compiled last year by Harvard Business Review Analytics and EY’s Beacon Institute found that those companies able to harness the power of purpose “enjoy a distinct competitive advantage”.
Interestingly (and refreshingly), it’s not just an urban-centric, millennial phenomenon – its power has captured people’s imaginations all over the globe, from major Western cities to towns in the developing world.
At Lightful, we work with lots of organisations classifying themselves this way, striving to make a social difference on a truly international scale. A case in point: one of our partners, Impact Hub, a network of 90 co-working spaces and business incubators with more than 15,000 members, all focused on that sense of profit with purpose, spans an impressive 55 countries across North America, Latin America, Europe, Africa, Asia Pacific and the Middle East.
The rise of B Corps – for-profit companies that have been officially certified by B Lab for their social and environmental performance – also reflects this cultural shift towards redefining business success. There are now more than 2,100 certified B Corps from 50 countries and 130 industries, and these numbers are growing all the time.
Adding to the sense of booming growth, large corporations are also getting on board. In 2011, for example, French railway operator SNCF joined forces with Total, Air Liquide, Michelin and Orange to create Ecomobility Ventures, a shared corporate venture capital fund, becoming the first of its kind to team up with startups to revolutionise methods of transportation, from car-sharing to drones.
According to Charmian Love, founder of Corporate Impact X and entrepreneur-in-residence at Saïd Business School, Oxford University: “Through their corporate venturing activities, corporations invest for both financial and strategic returns.”
She goes on to say: “The teams engage with entrepreneurs as a way to bring new ideas and energy into the business. The corporates are looking to future-proof their businesses, and areas such as clean energy, healthcare and agribusiness – which can create positive outcomes for both the business, society and the environment – are clearly of interest.”
At a conference over the summer – “We, The Creators: Technology and Disruption“, hosted by WeWork – the conversation reached far beyond the bland (and over-prevalent) “Uber for X” or other generic, often London-centric topics.
The variety was great; I was inspired by people who spoke from Trouva, an online marketplace for small, independent boutiques which uses technology to empower them to compete on a global scale, and Pockit, a company offering banking services to customers who are otherwise financially underserved.
Their work – and its diversity – emphasises that beyond profits are increasingly visible all around us, and we're seeing more and more organisations for whom it’s very natural to place purpose alongside profit.
Whatever the size of a business, whether it’s urban, rural, artisan or hi-tech, it’s clear that impact and profit can not only coexist – they can work together to create some incredible success stories.
Vinay Nair is the CEO and co-founder of Lightful, a new social media and campaign management platform, built specifically for charities and social enterprises.