5 Impact Themes That Blossomed in 2020
Impact in 2020. Well didn’t go quite as planned, did it? The year will forever be defined by the major crises that affected us all, made us think, made us change our ways. The year, from the beginning, was peppered with crisis and human disaster starting with the Ukraine Airline Flight 752 being shut down to the ongoing global pandemic to the social justice and equity movement that followed the murder of Georg Floyd to the Indian Farmer protests. The ricochet of actions impacted all of us, our institutions, and our companies across borders and across ideologies. But how did it really playout for the impact narrative and social purpose in business?
At the outset of 2020, Greta Thunberg's message of climate change action continued to echo loudly across the world exposing our role in climate change and our response to it(or lack thereof), the arrival of the pandemic derailed many conversations, funding, and even initiatives around this work. Nonetheless, Greta didn't give up, and climate change didn't go away, making the need for the work in impact even more prevalent and important for the future, but for 2020 it showed us something very important. The world needs social purpose in business, it in fact requires it.
For the first time, the majority of individuals recognized the importance of doing good. And if we do have an impact, wouldn’t we want it to be positive? Supporting people, planet, and profit? This was so amplified through the buy local movement across cities and towns like never before in an attempt to support mainstream businesses once the pandemic lockdowns made a massive economic impact. But it was also felt across companies internally by employees, from massive layoffs, furloughs, and a redefinition of working from home, how companies responded was telling of their valuation of their employees over profit, and simply an ethos of doing good without doing harm. The irony is that it took a global pandemic for us to see that even short periods of time with massive change in our activities could have detrimental effects on our climate, our air, and our waters.
Throughout the year throughout the darkness, new possibilities flourished and impact took center stage - once and for all redefining the purpose of business. That purpose moving away from the Milton Friedman greed is good mentality to a more equitable model, one representative of consumer demands and what we need to do to pave the way for a brighter future. A model focused on social purpose, human value, environmental preservation, causing good not harm, and breaking down our mental models of what a business has to be to succeed. It was fitting that it was both the 50th anniversary of Milton Friedmans and the one-year anniversary of the Pledge to Change Culture of Business by the Business Roundtable showing us how far we have come yet how far we have yet to go.
A truly historic year of the impact that set apart the social purpose leaders, and the laggards continuing to hold on to old notions of success. Most of all it exposed the cracks in systems, in outdated thinking, in the inequities that exist deeply even in the social innovation sectors, and shedding light on individuals and organizations true colors in times of crises and need.
Let’s explore the themes that truly stood out in 2020.
It is not cancel culture - it is accountability
If the markets are going to take impact seriously impact has to get serious. What you believe, what you say, what you stand for, what you do, - it all matters. Impact and sustainability are not just about doing one piece, fixing one issue, focusing only on DEI or impact investing, if it going to work it has to be all-encompassing. 2020 demanded companies and startups to stand for something important and those that didn't were called out or faltered in the cracks. Some called it cancel culture but we call it accountability. For the first time companies and leaders were being held accountable to higher standards and some cases even standards they had created themselves but were clearly not meeting. Leaders were exposed, companies fell as casualties - Bando, Away, Coinbase.
In the end it all matters. Accountability is critical especially when you made mistakes or didn't see your own blind spots, hiding behind company veneers will no longer be accepted. In fact, many companies and leaders were able to - by identifying and acknowledging their mistakes, missteps, and behaviors, and then setting commitments (real ones) were able to course-correct. The fear of cancel culture is real but the only one that has control over this is you as a leader and as a business, you can in fact choose how you react, and how you hold yourself accountable at the end. Markets and consumers are listening, watching, - you can no longer hide behind shiny reports and CSR strategies. Words have to follow action, and action has to be prolific across behavior, design, strategy, experiences, and transparency. Be accountable, live the purpose.
From CSR to Social Purpose
We are seeing companies fully embracing the concept social purpose beyond just CSR strategies but expanding across previously siloed functions such as DEI, impact investments, non profit support, governance structure. Those pressures built internally for companies through their employees and externally through forces such as Nasdaq introducing a new Diversity Board Governance rule for any companies listed on the index.
Employment is a big indicator of the movement of the sector and in particular strategic sustainability and impact roles, moving from mere analyst, coordinator or manager roles into director and VP levels, signaling a shift in the perspective and significance of social and environmental impact and purpose within a company structure. This indicator substantiates the move of CSR beyond reporting, and into a thriving ecosystem, while at the same time offering (finally) a new generation coming up into the workforce opportunities for more diverse and upward trajectory careers in climate, purpose, and sustainability.
As we see the evolution of Corporate Social Responsibility into social purpose at the core to being an all-encompassing strategy across complex organizational structures, teams, and business outcomes, we anticipate we will start seeing this be passed on to the consumer in a positive way as impact will be a two-way conversation and relationship as we see with purpose leaders such as Patagonia and Ben and Jerrys.
Next Generation of impact consumers demand change
To say that generations starting with millennials are politically engaged, socially aware, and driven by purpose is an understatement - they are the true eco-warriors of our times. They are demanding change, and often just creating it on their own terms. But they are also demanding change and action for the companies they are loyal to or they follow, and that was amplified in 2020 as authentic action was rewarded and poor choices called out. As Millenials and in particular, Gen Z-ers grow up represent an even higher purchasing power and career representations there will be an even larger shift than in 2020 towards conscious consumerism, sustainability, inclusivity and action.
And companies better pay attention as we continue to see a secondary trend (last 3 years) of young people starting up their own businesses and startups not as a means to build the fastest growing startup but rather to go back to artisanry and conscious consumption basics, and counterattack the effects of major polluters.
Money in impact bloomed
Impact funds and investments started to bloom in 2020 with major focuses in clean tech, tech for good, and consumer products. For the first time, we saw a true directive for diversifying funds new and old ones. The long-term effects and ROI are still to be determined but 2020 despite a global pandemic saw lots of promising data from impact-focused investments including record highs for sustainable bonds, increasing ESG investments, and impact funds popping up left right, and centre.
At the same time, we saw significant movement and support for Indigenous, POC, and Black founders on both sides of the border. Although major players like Google, A16z, Softbank made significant commitments to serve underrepresented founders, the stars of the show were (and continue to be) the funds and founders that had been in this space well before Summer 2020 such as Backstage Capital, Harlem Capital, Collab, Color.
Although we know impact investment is not the only piece of the puzzle, it is a vital one to redirect economic capital and wealth for purpose, impact, and equity.
We have a long way to go
Yes, this is a theme and we will continue to repeat ourselves. As we see impact and social purpose being more comprehensively adopted into corporate nomenclature, culture, and rhetoric we must face the truth - we still have a long way to go. Even when we look at the progress across markets Yes there are many companies who are finally recognizing the power business has on the world and taking action to evaluate and adjust their operations to meet these higher purposes they have finally moved from their blind spots. Some have gone further certifying as B Corps or even creating their own Social purpose subsidiaries and impact investing funds, and some continue to lead the way on every aspect of being a business that is good for people, profit and planet - hello Patagonia. But when we look at the landscape of business across North America, across the globe the majority still continue to operate as normal and often utilizing CSR strategies as crutches to moving beyond tasks and check lists. This became blatantly obvious as the pandemic hit the world (and continues to wreck havoc in our lives), action or lack of action has been an indicator where purpose lies for many.
So how do we move forward?
Impact is not a one-trick pony and requires a continuous commitment to learning and adjusting. As much as we have moved forward, as much as we have created innovation, and purpose, there is much work to be done. What 2020 has taught us above all else that anything is possible, we are resilient, better together than apart, and if there is a will for change there is always a way. Let's commit to bigger change in 2021 and beyond so we can see brighter prospects for our future, not just bottom lines.
