SOCIAL IMPACT

COVID-19 has demonstrated wide open inequalities in the system.  Businesses, Investors, and Philanthropy no longer focus on showing positive impact to hide their negative impact on people and the planet.  They must account for both positive and negative social impact.

POSITIVE IMPACT

• Improving youth outcome measured based on a holistic evaluation
• Improving a profitable coffee supply chain financial and social outcomes
• Increasing gender equality through financial inclusion

From a philanthropy perspective, there are many examples. Following examples are extremes of social impact both positive and negative social impact

SOCIAL CHALLENGES

• Employment vs unemployment
• Livelihood vs wealth
• Education and training vs Digitial Divide
• Skills, knowledge, and competences vs Low-skilled labors
• Health and physical wellbeing vs Obesity and Chronic Disease
• Wellbeing vs continuously depressed or mental health
• Privacy, safety, and security vs Insecurity, unsafe

The effect of an activity on the community's social fabric and the well-being of the individuals and families. The social impact landscape is full of a maze, many frameworks, many tools.

This article will learn about different social impact methods and understand how they differ from each other. Before we dive into understanding them, let’s look at the popular rating system in a financial industry called MorningStar. MorningStar measures standardized metrics such as profit, revenue, and other important benchmarking between different business enterprises. The nearest equivalent to social impact in the social sector is MIX Markets for Micro-finance and IRIS for SGB/SBA. IRIS is the catalog of generally-accepted performance metrics that leading impact investors use to measure the social, environmental, and financial performance of their investments. Investment Funds report data for an individual investment through a B-Analytics that can be reported in IRIS format, which can later be used to communicate and benchmark various social impact. Frequently these self-reported data can be falsely reported because of wrong intentions and lack of proper interpretation. If an organization uses standardization data, context is frequently lost, making data irrelevant.

One hundred corporations in the world stand for 71 percent of all industrial carbon emissions on this planet. 

The financial ecosystem is broken, public services fail to deliver and improve the quality of life, and poverty and inequality subsist in the developing markets. Today businesses are using their capabilities to optimize their positive impact on people and the planet alongside their financial return.

On the other hand, investors and social investors use capital to optimize business impact by adding and creating value beyond what would otherwise be achieved.

The momentum is now and urgent to generate financial returns alongside measurable social and environmental impact to address global complex challenges.

Good Social Impact

Impact investments seek a financial return across the spectrum, from below-market-rate to risk-adjusted market-rate returns. Unlike philanthropy and non-profit, businesses and investors aim to generate both financial and social returns - ultimately delivering shared value.

As capital mobilized to pressing challenges in delivering social innovation and a growing adoption globally, the evidence is encouraging, bringing increased capital flows towards those Sustainable Development Goals or other globally accepted goals.

Financial returns, listening to stakeholders' voices, and a commitment to impact transparency and integrity give relevance and credibility that the impact ecosystem needs to thrive.

Sustainable investing (also known as ESG investing) and impact investing are often confused, and rightly so. However, they are pretty different from an investment approach.

Sustainable investments are primarily aligned towards business looking to improve operations and improve positive Environmental, Social, and Governance (i.e., ESG) metrics and reduce the negative impact.

Sustainable investment is often confused with impact investing. In reality, they both have completely different parameters to work with. Impact investing often focuses on multi-dimensions of stakeholders. Impact investing focuses on products and services a company is offering, directly impacting sustainability and social welfare. An impact investing do often have also to build strong environmental, social and governance practices. However, they primarily focus on selling solutions, products, and services that align with sustainable development goals.