How North American Businesses are Innovating for Social Impact

More and more businesses rely on solutions that, in addition to giving financial benefits, contribute to the betterment of today's society. In this perspective, social innovation is positioned as a tool that benefits both business success and people' well-being.

Innovation and social entrepreneurship are effective tools for attaining the SDGs. Credit: Pexels/Snapwire

Did you know that the poorest half of the world's population owns only 2% of total wealth, while the top 10% owns 76%? The findings of the Word Inequality Lab's Global Inequality Report 2022 are paired with additional data given by the United Nations Development Programme (UNDP), which predicts that climate change would raise mortality in three out of four developing countries. This situation will occur in one out of every three G20 countries that are the most polluting.

Climate initiatives, such as carbon taxes, have the potential to affect low- and middle-income people while not changing the purchasing habits of the wealthy. Inequality exists, and organizations can play an essential role in addressing it.

As a result, an increasing number of organizations see social innovation as an opportunity to not only improve their operations, but also to have a good impact and contribute to the resolution of these issues.

But what exactly is social innovation, and why is it so vital for organizations?

A new way of thinking.

According to the World Economic Forum, social innovation is "the application of innovative, practical, sustainable, and market-based approaches that benefit society in general, particularly low-income and underserved populations." Social innovation requires going above and beyond. Providing access and possibilities for millions of people necessitates more strategic, ambitious, and collaborative thinking.

Cristina Moreno, Innovation Network Expert at Opinno Mexico, defines social innovation as "a set of methodologies and tools that help address the world's most pressing social, economic, and environmental problems, without ignoring corporate governance and economic benefits for organizations."

Organizational involvement in social issues is not new

Companies have traditionally employed a range of tactics to influence society, such as Corporate Governance and Corporate Social Responsibility (CSR). However, businesses still have work to do. "Although the word sustainability has begun to take hold in corporate strategies, the vast majority are not aware of social innovation's potential," Moreno tells me.

According to a report on the results of a corporate sustainability assessment, nearly half of Spanish businesses are implementing some type of sustainability-focused innovation that aligns with the Sustainable Development Goals (SDGs), but only 16% claim that all of their innovations are oriented in this direction. According to the same survey, many corporations (51% of the total) are still not implementing this type of innovation, with the majority of these businesses lacking a thorough understanding of the United Nations 2030 Agenda.

The statistics speak for themselves: many organizations fail to acknowledge and profit on their contributions to sustainable development. As a result, keeping the 2030 Agenda in mind is crucial for aligning business goals with expected global trends and opportunities in the years ahead. Innovation and social entrepreneurship are effective ways for furthering the SDGs. In this regard, an increasing number of organizations see the importance of not only adapting their production techniques, but also going above and beyond to make the current economic model more efficient and purposeful.

To achieve this purpose, company strategies must be modified. A genuine disruptive change is required to carry out more ambitious actions such as, for example, incorporating a contribution to the 2030 Agenda and compliance with the Ten Principles of the Global Compact into corporate strategy; establishing public and quantifiable objectives based on the SDGs; integrating a culture of sustainability into all organizational areas through training and awareness-raising; or carrying out responsible supply chain management.

"Social innovation allows us to put all of our efforts to bridge the gap between where we are and where we want to go into action and make them real. Moreno believes that social innovation provides organizations with tools and approaches for defining an organization's purpose, developing and launching new business models, leveraging open innovation for long-term goals, and influencing culture and leadership.

A Culture of Impact.

To become more competitive, businesses must address social impact and sustainability. As a result, it is vital to create an organizational culture in which teams are willing to take risks, develop collaborative processes, and promote an open attitude and working style towards new goods and services.

In this context, one of the benefits of integrating social innovation into businesses is the ability to attract and keep bright employees

"Companies that develop social innovation work with a purpose, which motivates employees and involves them in the business culture," says Mr. Moreno.

Furthermore, a Deloitte survey revealed that 90% of Generation Z and millennials want to reduce their personal environmental impact. As a result, many employees are placing pressure on their companies to take action. Tomorrow's workforce views company success differently than their parents did, prioritizing long-term sustainability over short-term profit growth.

Having a staff that is aware of the impact of its operations and fosters social innovation enables firms to rethink their business models, looking beyond profit generating to explore new solutions and collaborate with people in terms of their societal impact. Moreno argues that this increases competitiveness and allows for the development of new models that improve the organization's performance.

Companies benefit from both financial and long-term competitiveness gains, as well as access to new markets or consumers, stronger supply chains, and, as previously noted, attracting and retaining talent.

In short, corporations have the ability to join the social and environmental cause as a critical technique of distinguishing themselves from the competition and becoming a key actor in achieving the SDGs.