Article written by Lisa Hehenberger and Andrea Cuartero
Covid-19 has highlighted the limitations of today’s economic system: pre-existing economic, social, gender and ethnic inequalities have become worse. As UN Secretary General, António Guterres, said during the annual tribute to Nelson Mandela in 2020, “the economic fallout of the pandemic is affecting workers in the informal economy and SMEs, and also persons responsible for care-giving tasks, most of whom are women.”
Against this backdrop, companies, organisations and governments must consider how they can use existing resources – scarcer in circumstances like those of the present – to ensure the greatest possible social impact on a global population with increasing needs. In other words, how they can effect change to a social issue by taking specific action.
Impact investment and strategic philanthropy, i.e. the philanthropy practiced by companies and organisations, can be powerful instruments for the social and economic reconstruction required in the wake of the pandemic. Impact investment, for example, can help by investing in innovative companies trying to remedy major problems.
Impact investment and strategic philanthropy can be powerful instruments for the social and economic reconstruction required in the wake of the pandemic
The aim should not, however, be simply to fund specific companies but for financial markets to factor impact into their equations and measure the impact made by the companies receiving the investment.
Impact metrics matter because they help define the specific scope of part of the problem to be remedied more precisely, and can also be used to draw up impact indicators, define specific goals and take action.
Despite their importance, impact metrics are relatively new in Europe. The academic and applied research we are conducting in universities is helping them become more widespread.
Impact metrics matter because they help define the specific scope of part of the problem to be remedied more precisely
In this respect, here at the Center for Social Impact – part of the Esade Entrepreneurship Institute – we are conducting a survey to define the scope of this sector in Spain and understand the key figures of the national ecosystem of impact investment in order to see how to attract more resources.
We have published another study about the experience of foundations pioneering social impact management and metrics in Europe. We have also created a community of practice where European and Spanish foundations can share their knowledge, work together and more.
For companies and organisations to regularly factor social impact into their investments and new projects, future generations of leaders must receive training, have values instilled and be linked up with agents in the impact economy ecosystem. In this respect, we universities play an important role too.
Here at the Center for Social Impact, for example, we have launched two ventures to train leaders more committed to social wellbeing: Impact Community, a network of students, professionals, teaching staff and researchers seeking to employ their knowledge of business and finance to maximise sustainable social impact; and Social Impact Lab, a specialisation for MBA students which entails attending events about this subject or creating a collective project.
In short, the academy plays an essential part in generating knowledge to improve the practices of companies, organisations and governments, and thus help them make a positive impact at a time when this impact is more important than ever and is also fundamental for ensuring that social impact is part of the investments made in coming years by training future professionals for this sector.
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