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Are you an impact business?

By Linda Jackson on 15 December 2016

We have to say we were utterly intrigued when Lady Bonin tea signed up on our website recently. We're so excited by each new subscriber and make a point of checking out the company and what they do!

This is where we came across the term “impact business” and we had to find out more. We hope this article challenges you too!

Are you an impact business?

Impact business is an umbrella term that comprehends all possible ways for corporations to intentionally contribute to solving social and environmental challenges. Lady Bonin say that impact business works on the concept that profits can be on par with value systems.

An impact business would be a businesses or non-profit organisation that directly address social needs through revenue-generating commercial activity. So there are two key components: a focus on social impact (the common good) and revenue generation (leading to greater sustainability).

According to Granito Partners, this definition means it represents a step ahead from the traditional belief that the only way to address social problems is either through governmental action or philanthropy and the only purpose of companies is to leverage their profits.

Regardless of their size, geography and industry, all companies have the potential to make a contribution to a more developed and sustainable society without sacrificing its returns. But then there is the next level. For an Impact business, profit, turnover and growth serve as a means to get sufficient capital from investors and to sustain the positive impact generation of the company – they are subordinate to creating maximum positive impact.

These are companies that produce services and products that represent a direct contribution to economic and social development. Their CSR policies are not parallel to their operations but represent their core business. They are what we call impact-driven companies.

So how to be an impact business?

CEOs and shareholders that want to transform their businesses to Impact Enterprises must first redefine their missions and objectives, trading in profit maximization for impact maximisation. It would include impact investing, an approach to investing in which investment opportunities are not only evaluated on financial return but on social and environmental return too. There are initiatives like the United Nations Social Impact Fund that specifically invest in these kinds of organisation.