Top 5 Reasons Your Startup Should Think About Social Impact
Thinking about social impact might feel like a luxury — something you are planning to think about once you are funded, once you are profitable, once you don’t feel like a startup anymore. But considering your social impact or “purpose” now will better position your company for the future.
Data for startups is limited. But companies with dreams of an IPO should note the findings of a recent report on publicly traded companies - social responsibility has the potential to:
- Increase market value by 4–6 percent
- Increase shareholder value by $1.28 billion over 15 years
- Increase price premium by up to 20 percent
- Reduce staff turnover by 50 percent
- Increase employee productivity up to 13 percent
Need more convincing? Here are our top 5 reasons why your startup should think about social impact:
- You’ll position yourself for funding from the growing number of investors who care about social and environmental impact.
Experts compare today’s flourishing impact movement to the 1970s explosion of venture capital that forever changed the face of entrepreneurship, and helped unleash a wave of innovation. Impact investments, which target positive social or environmental impact alongside a financial return, continue to grow and gain public interest.
- According to the Annual Impact Investor Survey released by J.P. Morgan and the Global Impact Investment Network (GIIN), impact investment assets totaled $77.4 Billion as of the end of 2015. The GIIN’s Impact Investing Trends report shows finds assets under management growing by 18% compounded annually from 2013 to 2015.
- The Case Foundation predicts the impact investing market exploding up to a trillion dollars by 2020.
- Huge, traditional players like BlackRock, Bain Capital, Morgan Stanley, Bank of America, Goldman Sachs, Citi, JP Morgan Chase, UBS, HSBC, and more major financial service firms are flying into the impact investment sector, which promises even more astronomical growth
- Generations X and Y will inherit an estimated $41 trillion from the Baby Boomer Generation over the next 40 years, promising even further impact investment expansion. The 2016 Deloitte Millennial Survey of 7,700 Millennials across 29 countries showed almost nine in ten (87 percent) believe that “the success of a business should be measured in terms of more than just its financial performance.”
2. You’ll have an opportunity to improve sales and profits
- 66% of global respondents say they are willing to pay more for sustainable goods, up from 55% in 2014 (and 50% in 2013), according to the 2015 Nielsen Global Survey on Corporate Social Responsibility.
- A study conducted by YouGov and GT Nexus shows 52% of consumers are willing to pay more for food or beverage products produced ethically and sustainably in the US, and 45% of consumers would pay more for responsibly produced clothing and footwear.
In fact, you may find new markets and models that will grow your business beyond what you originally considered.
3. You’ll attract and retain talent, perhaps at lower cost, especially among Millennials.
- 58% of US college students surveyed would take a 15% pay cut to work for an organization whose values are like their own, and 45% would do the same to take a job that makes social or environmental impact, found Net Impact’s Talent Report: What Workers Want in 2012.
- 59% of millennials would deliberately seek out employers whose corporate social responsibility values matched their own, according to the Millennials at work: Reshaping the workplace survey released by PwC.
- 64% of Millennials consider a company’s social and environmental commitments when deciding where to work, and 83% would be more loyal to a company that helps them contribute to social and environmental issues (vs. 70% U.S. average), according to the 2016 Cone Communication Millennial Employee Engagement Survey.
4. You’ll increase workplace engagement, commitment and satisfaction.
- Job satisfaction jumps by 47% among employees who engage in skills-based volunteer (SVB) programs, a True Impact Report showed.
- 74% of employees say their job is more fulfilling when they are provided opportunities to make a positive impact at work, found Cone Communications in its 2016 employee engagement survey.
5. You’ll save yourself the time, energy and headache of trying to change the mindset of your employees if you incorporate social impact into your culture from the get-go.
So don’t delay. Stewarding your social impact now can strengthen the fundamentals of your business now — and create huge benefits later, for your company and for the world.