The impact network explained
5 May 2021 at 8:47 am
In the past few years, B Corporations, social enterprises and shared value have emerged as key players in the impact economy. But what exactly are they, and how can your organisation engage with them to create positive social and environmental impact? We take a look.
With the number of different players, the impact economy can sometimes feel a little noisy and confusing. It can be hard to navigate the best way to create impact in your organisation.
There’s often a sense that you need to pick one strategy over another, and stick to it. But that’s not actually the case. There are ways your organisation can engage with social enterprises, B Corps and shared value in different, yet complementary ways.
But first, what exactly are the three types of impact model?
Let’s start with social enterprise. The exact definition in Australia is still up for debate, but according to Mike McKinstry, the CEO of the certifier of social enterprise in Australia, Social Traders, a social enterprise is a business that trades as a mechanism to solve a social, cultural, and/or environmental problem.
B Corporations travel down a similar path to social enterprises. But rather than just supporting, for example, people experiencing homelessness by donating 50 per cent of their profits to a frontline homelessness charity, the business makes decisions that positively impact their workers, customers, suppliers, community, and the environment.
To become a B Corporation, businesses must undergo a “B Impact Assessment”, which is a tool that measures business performance and impact across the five pillars of governance, community, environment, workers, and customers. Businesses must receive a score over 80 to qualify and they need to reapply for their certification every three years.
There is some overlap between these two models. For-profit social enterprises can apply to become a B Corp, however B Corps don’t necessarily have to be social enterprises.
Anna Crabb, the head of partnerships and strategy at B Lab Australia and New Zealand, told Pro Bono News that signing up as a B Corp was a public commitment to purpose beyond profit.
“This isn’t just an operational certification… it’s really at the highest level of the governance of the business that’s making a legal commitment to purpose beyond profit,” Crabb said.
Shared value is slightly different. Based on an academic concept, it proposes that corporate success and improved social and environmental conditions are inherently linked. The strategy offers a way for organisations to imbed purpose into their business model and solve social and environmental issues profitably.
How can an organisation engage with these models to create impact?
One of the most common ways an organisation can engage with a social enterprise or a B Corp is through social procurement.
This might mean choosing a social enterprise or B Corp that employs and supports asylum seekers and refugees to cater your events; or buying your office supplies.
Shared value is a model that has traditionally been adopted by the private sector as a way for them to use resources and assets.
As an example, in 2013 NAB overhauled its collections department to set up NAB Assist, a service that helps customers experiencing financial hardship. It meant that financial outcomes improved for these customers, and created substantial cost savings for the business too.
Sarah Downie, the CEO of the Shared Value Project Australia and New Zealand (SVP), added that there were untapped opportunities for shared value to expand into the public and community sectors.
“There is an opportunity to work directly with the community and government sectors to start with the issue and use shared value as a tool and a framework to help them find private sector partners to help scale and support their initiative,” Downie said.
Can these impact strategies work alongside one another?
Yes, and the idea that they can’t is something sector leaders want to change.
Downie said that while organisations were keen to increase their impact, it wasn’t always a case of picking one type of impact strategy over another.
“I think often companies are saying, well, which one of these should I do? And that’s when we come back and say, well actually, you probably need to be doing a few complementary things to increase your impact,” she said.
McKinstry added that he believed organisations were aware and interested, they just needed to be pointed in the right direction.
“Doing socially focused work is not new for many organisations, but some of them need help and support in terms of diversifying that impact,” McKinstry told Pro Bono News.
“We [peak bodies] need to try and be clearer for the community to draw a distinction about the different approaches that are available to organisations to enable them to be successful.”
He said it was also important that the different streams of impact were not pitted against one another.
“At the end of the day, the three impact models are trying to jointly, collectively improve society,” he said.
“So if we can helicopter above that and keep the faith, that’s what will probably make maximum value.”