Innovative Approaches to Corporate Social Responsibility

A recent article in the Harvard Business Review suggests an innovative approach to funding CSR (corporate social responsibility) projects. The unique approach is particular because it seeks to appease two kinds of shareholders–those that want to engage directly in social initiatives through a company and those that choose not to risk capital–capital that can be used to generate more value for the company. The suggestion is to create subsidiary entities that focus on social change rather than financial gain. This particular type of subsidiary would appeal more to social investors that want to directly invest in a social initiative. If the social initiative proves successful, then the social investors, the company and the shareholders-at-large win. If it is unsuccessful, then only the social investors loss their capital.

This approach will offer a choice to those investors that want to encourage a company to engage in social initiatives. It will also offer them an opportunity to do good while still standing to gain financially.

Innovative approaches such as this are already gaining traction in Canada. A partnership between Social Innovation Generation and MaRS is already paving the way for an emerging discipline called, social finance. Some recent accomplishments include the creation of a high-level report for policy development in social finance, a rich knowledge database for social investors and organizations that wish to attract social investors, and several advocacy and consulting organizations (Social Venture Exchange, SocialFinance.ca, etc.)

The question remains whether this new field will make substantial gains in social progress for society-at-large. Should more funds be directed to social service organisations to accomplish social initiatives or is it time to give the business sector a chance to fulfill greater social purposes? Either way, the union between ‘social’ and ‘finance’ have begun their grand experiment.