Today, more than ever before, entrepreneurs are building businesses with people and the environment in mind. These professionals understand exactly how their work impacts the environment as well as how it can help the people around them and take steps to minimize the harm whenever possible. Perhaps more impressively, they do this while maintaining financial success in a variety of sectors.
In this article, we’ll explore the factors behind this trend and how entrepreneurs are changing the world for the better as they chase their dreams of business success.
Factors behind the growing trend
Why are more entrepreneurs prioritizing social and environmental impact alongside their financial success? There are a few factors to consider, but the most important of them is the consumer.
A few decades ago, the average consumer spared little thought for the social or environmental implications of their purchase. They were happy to find the right product at a good price, and that’s as far as the consideration went for many people. That’s not because they weren’t caring or smart, of course, but simply because the discourse surrounding consumer responsibility and impact wasn’t there. This has changed in a big way.
According to BusinessDasher, more than 72% of consumers have reported buying eco-friendly products, and global online searches regarding sustainable goods have gone up by more than 70% in the past five years. As the effects of a changing climate continue to intensify and society grows more and more diverse, this statistic is poised to increase even more in the next five years.
Additionally, around 90% of all S&P 500 index companies published a corporate social responsibility (CSR) report, answering consumer questions about where their money is going. Compared to the 20% of companies that published CSR reports in 2011, you can see just how dramatic the shift in public thinking over the past decade has been.
Because consumers are increasingly interested in the social, moral and environmental practices of the brands they frequent, entrepreneurs are going out of their way to building socially and environmentally conscious businesses with an emphasis on people over profits.
Rofino Licuco is a good example of a socially and environmentally minded leader in the business world focused on making a positive impact. Impact-driven business models have become the norm among this group.
Impact-driven business
When you think of corporate America, chances are good that you picture stern bosses with a ‘profits over all’ mentality. While this is certainly true in some cases, it was far more common in the recent past. Many of today’s businesses are trading an obsession over profits for a more balanced business model that weighs the social and environmental cost of doing business.
As the name implies, impact-driven businesses care about the impact their products and processes have on the world around them. This includes both the negative and positive effects felt everywhere from the environment to underserved communities and everything in between. The concern goes beyond pure profit, and many entrepreneurs are willing to sacrifice some of their financial success if it means having a net positive – or, at the very least, a net neutral – impact on the broader world.
There are three main impact-driven business models to understand:
- Cooperatives
- Direct impact-driven
- Impact catalyst
Cooperatives are ideal for smaller, community-focused businesses interested primarily in social impact. These organizations are value-driven and emphasize the democratic process. They involve as many of their members and employees as possible and foster a sense of passion among their workers. Cooperatives are typically focused specifically on environmental or social advancement.
Direct impact businesses are larger organizations than cooperatives and have a more traditional business model. Their goal is typically primarily to make money, but they also empower communities in the process. Think of a jewelry company that values artisanal skills and handmade products over mass-produced models. This kind of company typically reinvests a portion of their profits into their chosen communities.
Finally, impact catalyst businesses are not primarily concerned with environmental or social change. They have their own niches across a wide array of industries and often have traditional business models that place a lot of importance on financial success. They seek to weave sustainability into their business practices, however, and to trigger change as they do business. Larger organizations concerned with their impact on the world around them tend to adopt an impact catalyst model.
Investing for the greater good
As the trend of socially and environmentally focused entrepreneurs grows, so does the financial framework that supports them. These savvy professionals seek investors with similar passions and beliefs to invest in their businesses. This furthers the goals of both parties and sustains impact-driven businesses in the long term.
Are you concerned about social and environmental change? If so, you’re one of a growing number of consumers interested in the impact that their purchases and actions have on the world around them. Don’t be afraid to dig into the businesses you frequent and give your business to responsible entrepreneurs and brands.
