Investing in social impact is an increasingly relevant and crucial practice for companies looking to strengthen a responsible image. According to the GIIN report, social impact investments totaled $1.1 trillion worldwide in 2022. Additionally, Alfi, the Luxembourg fund industry association, estimates that the demand for investments in assets with environmental, social, and governance purposes (ESG in English acronym) among European investors is expected to grow by 15.9 trillion euros — approximately $21 trillion — by 2026.
At the end of 2023, European institutional investors had already allocated a total of 3.7 trillion euros in ESG assets, and the forecast is that this value will reach 19.6 trillion euros by 2026. The universe of startups focused on entrepreneurs developing businesses with social impact reached a record growth in the investment market last year. According to data from Halcyon, an American incubator, investments surpassed the $1 trillion mark, driven by a wide range of investors, such as venture capital funds, angel investors, and foundations.
According to Karla Suarez, CEO of ColetivA DELAS, specializing in DEI, creative economy, and fundraising, the benefits of private social investment go beyond the positive impact on supported causes, also contributing to building a positive corporate image, engaging employees, and connecting with stakeholders. The problem is that many of these organizations do not know where to start. “Companies play a fundamental role in social and environmental transformation. Investing in social impact is not just an ethical choice but also a business strategy that adds value to the brand, strengthens stakeholder relationships, drives innovation, and sustainability. You just need to know where to start,” she emphasizes.
For organizations looking to start or enhance social responsibility initiatives, Karla Suarez lists five essential steps:
1. Establishment of Private Social Investment (PSI) policies
“The first step to developing a social impact strategy is the creation of a private social investment policy. This should establish clear guidelines that define priority areas of action, such as education, the environment, or social inclusion, always aligned with the company’s values and purpose,” Suarez points out. Additionally, the specialist emphasizes that it is essential to determine a dedicated budget, covering both financial and human and material resources, to sustain initiatives over time. It is also important to establish clear criteria for the selection of projects and partners, ensuring that these choices are in line with the company’s mission, guaranteeing coherence and effectiveness in program implementation.
2. Development of a Corporate Volunteer Program
A corporate volunteer project is essential to engage employees in the social causes supported by the company. “This program should offer various opportunities for employees to participate actively, from specific actions to continuous volunteer activities,” says the specialist. To promote this engagement, it is advisable for the company to provide training and incentives, such as specific training and recognition for volunteer work, which can come in the form of time off dedicated to volunteering or internal awards.
3. Mobilizing the internal audience for social causes
To ensure the involvement of all employees in social impact initiatives, it is important to engage the internal audience through campaigns focused on social impact. The objective of these campaigns is to raise awareness among employees about the importance of the causes and to encourage them to actively participate in company actions. Creating spaces for dialogue and participation, such as forums or discussion groups, also allows employees to suggest projects more directly. This strengthens the sense of belonging and promotes a culture of social responsibility within the company, increasing engagement and adherence to initiatives.
4. Sponsorship of socio-environmental impact projects
Sponsoring socio-environmental impact projects is an effective way for the company to reinforce its social engagement. To do this, it is crucial to identify projects that align with the company’s areas of interest and have the potential to generate significant positive impact. Establishing strategic partnerships with organizations that already operate in these areas can enhance results. It is important to implement mechanisms for evaluating and monitoring sponsored projects to ensure that objectives are achieved and that the company’s investments are generating the desired impact.
5. Communication
Transparency in communicating the results of social actions is essential to strengthen the company’s credibility and amplify the reach of initiatives. “It is recommended that companies publish annual reports, newsletters, or even use online platforms to share the results obtained,” Suarez concludes.
