April 20, 2020

The Rise of the Corporate Social Investor – Executive Summary

The full article relating to this executive summary will be published in the summer edition of Stanford Social Innovation Review (SSIR) Magazine on 14 May based on EVPA's research on strategic alignment. Download the infographic here.

EVPA Strategic Alignment infographic 2019 cover web small

Through their inherent relationship with a company, corporate social investors (CSIs), such as corporate foundations, corporate impact funds, impact accelerators or social businesses, have a unique vantage point between the non-profit and the business sector. Therefore, a growing number of CSIs across Europe are exploring how they can use their relationship with a company to enhance their own social impact by seeking strategic alignment.

At the same time, CSIs have an emerging importance for companies as a catalyst for business reform. CSIs can be an ideal partner to give advice on socially relevant issues, identify and set ambitious goals, or even develop early-stage and innovative social solutions with potential business relevance.

While strategic alignment between a CSI and its affiliated company has become a commonly pursued strategy across Europe, there is in fact no consensus around howthese two can align. Alignment is oftentimes regarded as a uniform and self-explanatory concept, failing to acknowledge the varieties of alignment strategies pursued and the consequences for the CSI’s social impact.

The article addresses this challenge by introducing the first alignment typology, which is the result of a qualitative study conducted by EVPA, involving 45 practitioners from CSIs, experts on corporate social investing and inclusive business strategies. The study unravelled four different types in which a CSI and the affiliated company can align:

Business Alignment is pursued by CSIs that aspire to have a direct positive influence on the company’s social and environmental business practices. CSIs do so by aligning their mission with the company’s purpose or long-term (inclusive) business strategy.

Industry Alignment is pursued by CSIs that want to advance best practices or set new standards within the company’s entire industry. CSIs do so by aligning their mission or core focus areas with social issues of special concern in the industry.

Thematic Alignment is pursued by CSIs that want to connect with employees of the company and call attention to societal challenges that exist beyond their business perspective. CSIs do so by aligning their mission or core focus areas with social issues that are materially important to the company.

Non-material Alignment is pursued by CSIs that want to enhance their ability to operate more effectively, without having to align their mission or core focus areas. CSIs do so by aligning their operations with nonmaterial areas of the business, such as the business’ geographical presence.

The article introduces each alignment type in detail, using illustrative examples from European CSIs. Then, it explains how each alignment type can enhance the CSI’s social impact, directly or via the company, as well as the inherent challenges each alignment type bears. For instance, not all alignment types can or should be pursued by all CSIs.

The alignment typology has various benefits for practitioners. First, it helps practitioners to better structure and understand the corporate social investing space. Second, practitioners from CSIs can evaluate whether their current alignment type matches their aspirations and goals. As the alignment types are not static, the typology might inspire CSIs to transition to a more suitable alignment type. Lastly, the alignment typology can offer corporate executives’ insights into how market-based and non-market-based strategies can be combined to achieve social impact.

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