Driving corporate growth through social impact has been saved
Driving corporate growth through social impact
Four corporate archetypes to maximize your social impact
Social impact has evolved from a pure PR play to an important part of corporate strategy to protect and create value. In our recent study, we identify the four social impact archetypes companies typically fall into.
Social impact and growth strategy
It’s not often that a beer company is recognized for its efforts to change the world. In this case, however, SABMiller, the world’s second largest brewer, is one example. With growing water scarcity – some estimate as much as a 40 percent shortfall between water supply and demand by 20301 – SABMiller is investing in methods to reduce water usage per hectoliter of beer, while also promoting sustainable water management in the communities where it operates.2
Just outside of Cali, Colombia, for example, the brewer has partnered with The Nature Conservancy to raise a $15 million fund to protect the Cauca River, the water source for its local beverage production.3 The fund pools money from municipalities, utility companies, and donors to support local projects with farmers, ranchers, and community groups that will conserve water and protect against contamination of this valuable current and future resource. Although the initiative requires significant upfront investment, SABMiller recognizes that coordinated action between local stakeholders is the shortest route to uninterrupted access to safe, clean water for all.4
The path SABMiller has taken highlights three trends we’ve seen affecting diverse companies in various industries. First, there has been a noticeable shift in the past 10 years in the way that public companies think about the social impact of their businesses as a strategic driver of value. Per Figure 1, across industries, companies are using a social impact mindset to build differentiated products, explore new markets, secure a sustainable supply chain, attract and retain millennial talent, or transform once-contentious regulatory relationships.
In short, social impact has evolved from a pure PR play to an important part of corporate strategy to protect and create value. It is a trend driven largely by millennial consumers and enabled by social media tools that have taken accountability and transparency to new heights.4 Second, we observed that there were major differences industry by industry in terms of the level of investment in and type of social impact pursued. Third, we recognized that ‘one size’ does not fit all, and social impact models vary based on a company’s geography, customer set, and corporate and business unit strategy.
Much of the recent writing on social impact centers on the 5 percent of companies that are “market leaders” in social impact (e.g. Danone and Unilever). While certainly worth understanding, we wanted to explore how companies broadly speaking, including the other 95 percent, prioritize and integrate social impact. Our research suggests that while many companies are active in some form of social responsibility (e.g. volunteering in the community or donating funds through corporate foundations), only a third currently see social impact as core to their strategy – although we believe this is quickly shifting.
"Across industries, companies are using a social impact mindset to build differentiated products, explore new markets, secure a sustainable supply chain, attract and retain millennial talent, or transform once-contentious regulatory relationships."
The four social impact archetypes
Deloitte recently examined the social impact practices of the 2014 Fortune 500 global public companies. These companies range from $28-233 billion in market cap, represent 6 industries and 53 sub-industries, and hail from 40 countries. We evaluated these companies across 60 metrics, with an interest in understanding:
- How integral is social impact to the business’ strategy?
- Where does social impact fall within the organization’s structure and processes?
- What is motivating the company’s action on social impact?
- How is the company perceived publicly as it relates to social impact?
We observed four archetypes that companies typically fall into, which reflect social impact trends and how companies stack-up against competitors (see Figure 2).
The four social impact archetypes include:
- Shareholder Maximizer: The primary motivation of the Shareholder Maximizer is short-term shareholder value. Their strategy emphasizes risk mitigation.
- Corporate Contributor: Social impact for the Corporate Contributor is driven by external factors, including key stakeholder relationships. Their strategy is siloed within the firm.
- Impact Integrator: For an Impact Integrator, social impact is integrated within firm strategy and across business units.
- Social Innovator: Social impact is an integral piece of the overall strategy for a Social Innovator. Their business creates socially-conscious goods/services and markets.
Three take-aways for executives
Our preliminary research suggests three tak-aways for public company executives when thinking about social impact and growth.
1. Understand where you are today
As shown in Figure 2, each archetype carries with it a different set of risks and opportunities. While Shareholder Maximizers need to focus on regulatory and reputational risks, Impact Integrators need to clarify business and social impact success metrics. As we move forward, we are beginning to engage with clients on the right “playbook” for each archetype profile, and differentiating these “plays” by C-suite function (CEO, CFO, CMO).
2. Understand where you sit versus others in your industry
As shown in Figure 4, each industry has a different distribution across the four archetypes, and when looking at more detailed cuts of the data there are key conclusions for specific industries and categories. Some corporates have positioned successfully by being consistent with the dominant industry archetype (e.g., ExxonMobil) while others have intentionally differentiated from it (e.g., Suncor Energy). Some have even used social impact as a driver for transformational growth that bridges industries. So, it is important for executives to understand where they fall within their industry. If we are correct that social preferences are also driving a significant shift from Corporate Contributor to Impact Integrator, it is also important for executives to understand not only where their industry is but where it is going.
3. Be intentional about your archetype
Once a company’s position and that of its industry is understood, executives should ask themselves: Is this where I’m meant to be? Does this position help me create or protect value for my company? Social impact is increasingly becoming part of a company’s growth strategy and executives should be intentional about their choices.
Figure 4: Distribution of companies by industry and archetype
The final word
As today’s business landscape is increasingly influenced by the evolving pressures and preferences of consumers, regulators, and stakeholder groups, social impact plays an integral role in helping firms remain competitive and find new growth opportunities.
While there is no single 'ideal' archetype, there is a most appropriate position for each company, given its internal and external context.
Companies should engage in this dialogue to be forward-looking and intentional with social impact strategy.
About this research
Deloitte conducted a quantitative study of the Fortune 500 global public companies to understand the distribution of social impact integration. The research provided an aggregate view of social impact trends across companies and industries. Guidance from internal and external practitioners allowed Deloitte to refine the research and coding methodology, and ultimately, to quantify each company’s social impact model to arrive at a final “score.” Each company was evaluated across four dimensions, 16 sub-dimensions, and 60 metrics.