Social Enterprises are Changing the Economy: Here's Why Corporations Should Embrace Them in 2021

Not a week goes by that a big company doesn’t make some new, audacious claim about how they are going to become carbon neutral, an equitable employer, and/or operate fully on renewable energy. With over 6,000 publicly traded companies placing a greater emphasis on environmental, social, and governance (ESG) factors – and ESG funds seeing record inflows from investors – we can expect a lot more of these announcements from companies over the years to come.

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This shift has been accelerated by the global pandemic, and in the depths of last year’s COVID-19 crisis, we wrote about how economists are betting on social enterprises to help create a more sustainable and equitable global economy. In its Leaders on the Front lines report, the World Economic Forum proclaimed, “We call on all actors to stand by social entrepreneurs as frontline responders to the COVID-19 crisis and as pioneers of a green, inclusive society and economic system.”

To figure out how the private sector could best partner with the social sector to drive change on a global scale, we interviewed over 50 CSR leaders, as well as 25 other corporate, impact investing, social enterprise, and government leaders. We compiled our findings into the new research report “Can Capitalism Lead a More Sustainable and Equitable Recovery?,” which you can access here.

Check out the key takeaways below, and for even more in-depth analysis, we invite you to join us for a  live read-out and Q&A on March 24th.

Here’s a high-level overview of what we found:

1. Driven by consumer, employee, and investor demands, companies are increasing their investment in ESG factors: at the time of this writing, 96% of G250 companies report on ESG.

2. Most corporations are still approaching ESG with outdated philanthropic and “winners take all” mindsets. A more strategic approach to ESG that moves toward a circular and regenerative economy represents “the biggest business opportunity of all time”.

3. The most effective CSR Leaders in the future will be the ones who collaborate with business executives & boards to integrate CSR into core business operations. Currently, less than 10% of Boards have task forces for ESG, and only 1% of publicly traded companies have a C-level sustainability leader.

4. Success in the post-COVID world will require corporations to adopt a human-centered design approach and a network leadership mindset.

5. Social enterprises should spend less time chasing investors and more time selling to corporations (and governments) who are increasing investments in “social procurement.” SAP, for example, has committed 10% of its spend to “buy social”. 

6. Impact investors and accelerators can (and should) use their networks to help social enterprises access potential buyers (i.e. pitch days for corporate investors vs. rooms of reluctant investors)—ideally helping source RFPs.

Find more insights in our full report, including specific recommendations for business leaders, corporate social responsibility professionals, impact investors, social enterprise leaders, and government representatives to help facilitate the shift towards a more equitable and sustainable future.