Our Thinking

Social impact — it’s good business


Abe Louw, Strategist

27 July 2018

Social impact — it’s good business

“The man who dies rich dies disgraced”

 

These words from Andrew Carnegie’s 1899 essay, The Gospel of Wealth, were especially radical for the time. Industrial America was booming and with it came the precursor to the elusive American Dream — characterised by glamour, status and wealth. Over 100 years later, it seems far more at home in light of the rise of social impact investing.

The premise and the promise

In his work, Carnegie argues that in every successful businessperson lies an obligation to actively use their capital for good, and not just to accumulate it to be passed on once you kick the bucket. Enter social enterprise. Its simple premise of ‘doing good while making money’ used to be the annoying promise that businesses had to make to address every aspect of their triple bottom line. Now social impact has started to move to the core of many business models and has attracted the investment to match.

Asset managers and investment firms such as Bain Capital, Blackrock and Goldman Sachs have all launched impact investment funds. Goldman has US$7bn invested in ‘impact’ businesses. According to the Economist, this is partly due to the transfer of wealth to women and the youth, whose investment goals transcend mere financial results.

The satellite connection

However, too many businesses still view their corporate social responsibility (CSR) as a satellite extension of their core, and merely as a redistribution of income. This is, sadly, the most-common form of how most businesses in modern economies tick the CSR box on their reviews.

Nevertheless, some businesses have engrained ‘good’ as an integral part of their DNA. Lumkani seeks to address the challenge of shack/slum fires in urban informal settlements in South Africa and across the globe. The Hippo Roller, a business created to help provide access to clean water, has carried about 16bn litres of water and has more than 500 000 direct beneficiaries. The Awethu Project invests in South African entrepreneurs who wouldn’t have access to capital and helps them set up their businesses.

Mind the gap

For any third-world country marred with high inequality, social enterprises have a pivotal role in closing the gap between the country’s rich and the poor. If we built SA as Carnegie envisioned, imagine what the country would look like today?


Originally published on Marklives.com