Entries in social capital (12)


Responsible Business Forum -- Watch the Videos

A wide selection of videos from the event are now available for viewing on our Events page. Enjoy them and join the conversation.

-- Bruno Roche


Ashoka on ingredients for social intrepreneurship

We found a recent Forbes article on social intrepreneurship and changemaker companies interesting.

According to Ashoka, a changemaker company, one that is inclusive, adaptive and agile, is the "good soil" that is needed for social intrapreneurship to succeed. A changemaker company is a corporate ecosystem that nurtures new ideas, enables connections with external networks of co-creators, and allows for all employees to understand, recognize and engage in social innovation.

The changemaker company, Ashoka argues, incorporates the following three components:

  • A strong mandate and executive alignment towards creating social value, coupled with institutional infrastructure that prioritizes training and talent development needed for social innovation;
  • Integration of social impact objectives directly into corporate strategy, addressing the "charity" stigma associated with social good initiatives that generate revenue; and
  • Professional development and social impact engagement opportunities offered to employees at different levels of the organization, which include training in problem solving, empathy, innovation, resilience and creativity.

What are your thoughts -- are there other requirements for companies to be changemakers and/or foster social innovation? What about the role of sustainable performance?


Measuring social impact

Traditional measurement of the social impacts of investment focuses narrowly on counting the total number of units distributed or the number of beneficiaries supported, says Pablo Anton Diaz, a development effectiveness consultant at IDB's Opportunities for the Majority Initiative. While not discounting that data, he states it fails to determine the true benefits of intervention and contains no analysis into how to improve the impact's effectiveness as well as operating efficiency. That's because the standardized metrics of management information systems (MIS) are not only limited but are reliant on self-report data, which contains an inherent bias. Diaz points out the randomized control trials (RCT) and impact evaluations, though more expensive both in money and time, offer more insights into what outcomes are attributable to the investment.

He believes the best information comes from striking a middle ground between MIS and RCTs, and cites his own example of Ecuador as an example. Diaz explains that local financial institutions work directly with beneficiaries, either on small economic development or larger infrastructure projects. Leveraging that relationship, he was able to mine valuable client-level data, such as income level and savings amounts. He also discovered efficiency disparities between projects when he compared the different costs among projects that were for very similar uses and scales.

We have seen great work done in the area of RCT by some of our fellows and partners, and we are interested to hear your thoughts about the best ways to measure social impact.


Sustainability and performance -- data challenges conventional wisdom

A paper written by a team of professors from the Harvard Business School and the London Business School argues that companies can institute high social and environmental standards without sacrificing shareholder value. In fact they go further than this, stating that "high sustainability" companies achieve greater returns for their shareholders, suggesting that this is a long-term competitive advantage.

We provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market as well as accounting performance"

Adopting high sustainability standards has implications for corporate operations and governance. The researchers found that the boards of directors of these companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics.

Looking at the cumulative stock market performance of a portfolio of high sustainability companies compared to the performance of a control group portfolio of "low sustainability" companies, the researchers found that the high sustainability group "significantly outperform" the others. Further, the data suggests that high sustainability companies in the consumer-facing business sectors benefit relatively more than those in the B2B sectors.

The paper explores possible explanations for this result. They suggest that while companies adopting high sustainability standards are more constrained in their actions, they may outperform the control group because they are able to :

  1. Attract better human capital
  2. Establish more reliable value chains
  3. Avoid certain costly conflicts and controversies
  4. Be at the forefront of product and process innovations that align with high social and environmental standards

This work looks at important issues associated with our exploration of the Economics of Mutuality, and suggests many interesting areas for further exploration.

-- Clara Shen


Jubilee economics

The economy is a complex system, not a series of separate functions -- meaning that initiatives to grow and improve it require systemic approaches. One such approach was outlined in a recent Guardian op-ed.

In that piece, Alex Evans and Richard Gower promote the idea of a new civic campaign -- based on the Jubilee Debt Campaign that helped foster the UN Millennium Development Goals (MDG) in 2000 -- that promotes environmental sustainability and the reduction of economic inequality. The MDG debt campaign has been tremendously successful, as low-income countries’ debt has fallen from 69% of their national income in 2000 to 29% today.

Evans and Gower make the case that the inspiration for the 2000 campaign, the biblical tradition of the Jubilee, involved more than just debt relief.  The Jubilee required resting agricultural lands, granting freedom to all, and re-allocations of long-term assets every 49-50 years. Drawing parallels with the present, they note

"Living within environmental limits, ensuring everyone can meet their basic needs, and keeping inequality from getting out of hand – are at the heart of the sustainable development agenda."

What do you think of this concept? Our Economics of Mutuality initiative is also based on the principle that business can and should create mutual benefits across a full spectrum of measures: financial, social and environmental. We are interested in understanding the most effective way to engage and promote these ideas;  is a civic initiative based on Jubilee traditions the way to go?

-- Bruno Roche