We were pleased to Chair the Working Group on the Social Business Frontier for the UK Advisory Board to the G8 Social Impact Investment Taskforce. Our report, along with the main Taskforce reports and the reports of the National Advisory Groups and other Working Groups were all launched yesterday by Chancellor George Osborne and Sir Ronald Cohen at an event in Downing Street, and can be found here. This is from the introduction to The Social Business Frontier Working Group report:
What is the purpose of business? What is it there to do? Who is it for?
Business lies at the heart of society – as an employer, a provider of goods & services, a wealth creator and an innovator. In return, society gives business a licence to operate, offers its labour and consumes its goods and services. A healthy society relies on a healthy relationship with business, and vice versa. This interdependence creates a covenant between business and society.
Business has historically been the greatest driver of economic prosperity and social progress. However, recent history indicates that if business does not honour the covenant between business and society, it risks destroying value for both parties. Defining success in business in exclusively financial terms has introduced exactly this risk. It has made the question of how to better align the interests of business and society a pressing issue of our time.
It is therefore timely and welcome that the G8 Social Impact Investment Taskforce has been established to examine this, alongside other related issues. This paper outlines thinking and practice at the frontier of this field. It is relevant to everyone who invests in, is employed by or operates a business. It is tactically relevant because any loss of licence-to-operate is an important risk for businesses to understand. It is strategically relevant because successfully addressing this question has the potential to create substantial value for both shareholders and society as a whole.
Commenting on this report, James Perry said: “The legal and regulatory environment for business and charity in the UK was established in an analogue age where profit and social good were conceived as separate. Certain sectors of business and charity have now moved into the digital age. Entrepreneurs, investors, charities and governments are collaborating and aligning to create profits with purpose – delivering measurable social value alongside financial value. New structures, such as Benefit Corporations, Social Impact Bonds and Community Interest Companies, are being conceived and adopted around the world, and offering the promise of a step-change in the ability of charities and businesses to create social value . The time has come for a strategic response in the legal and regulatory environment so as to support, rather than inhibit, these developments”.
It will be interesting to see how policy makers respond to the substantial recommendations made by the Taskforce. More on that later.