What the Social Capital Market Means for Business
- It’s not just about reputation anymore. In an era of responsible business, touting the fact that you are responsible is no longer distinctive. Corporate philanthropy is more expected than heralded. As a result, the primary driver for corporate social strategy is no longer reputation—it’s results. Investors, employees, and consumers in the SCM value real social impact and real business results.
- It’s okay to expect an economic return for doing good. The advent of socially responsible investing, microlending, cause-related marketing, and sustainability strategies has made it socially acceptable to link the concepts of profit and social impact. It is no longer shameful for executives to require a business justification for social investments and strategies. This mind-set has only been reinforced by the acceptance of social entrepreneurship as a viable nonprofit strategy, the affirmative support of policymakers for an expanded corporate role in solving social problems, and the wave of new businesses focused on environmental sustainability.
- Social strategies must become business strategies. The tremendous value placed by the SCM on social and environmental impact requires that companies create new models for social engagement that are specifically designed to produce business results. Justifying traditional approaches like philanthropy, volunteering, and environmental compliance in business terms is not the same as creating real, tangible business value.
- Measurement must become a core competency. The SCM can’t value what it can’t measure. And the more capital—in terms of money, time, and effort—that pours into the SCM, the more people are asking, “Is this really making a difference—and if so, how much?” Management, consumers, investors, and others are holding corporate social responsibility (CSR) data to a higher level of scrutiny, studying data from financial statements, analyst reports, and other sources more carefully. It’s no longer just about having reports, or metrics; it’s about proving that meaningful social and business value is being created.
The SCM is challenging businesses to find new ways to create value. Think of the SCM as a huge “social arbitrage” opportunity for companies—indeed, social change may be the last great untapped business market. It is home to some of the largest profit pools today: insuring the uninsured, delivering alternative sources of energy, eliminating food deserts, alleviating poverty, and eradicating disease. Businesses that want to grow must find new ways to address these needs and to profit from doing so.