A Venn of Virtue
I’ve spent some of the last year or so working with Social Enterprise UK and partners like Co-operatives UK and the Employee Ownership Association, as part of our General Election campaign. This time we called it the Future Economy Alliance. while at previous elections, a similar coalition called itself the Social Economy Alliance. We also talked about mission-led business quite a lot, to reflect Labour’s language of missions. In the end, Labour made a manifesto commitment to support diverse business models.
Each of these terms – social enterprise, social
economy, future economy, mission-led business and diverse business - have
various merits and problems. Others talk about democratic business, the social
and solidarity economy, purpose-led or purpose-driven business, or inclusive
business. Some of these terms seem to work better symbolically, for instance, while
others are practically more useful. As it happens, social doesn’t
translate that easily in some languages, and solidarity comes with quite
a lot of baggage in certain parts of the world.
This can be confusing and frustrating. But each of these terms has appeal and we can see why some people hold them dear. This is inevitably a messy Venn diagram and - while we should resist the arrival of any needless new terms - none of these are going away anytime soon. I have wondered if illuminating the four corners of the Venn diagram might help, focusing on profits, purpose, power and practice. For example:
- B-Corps might behave well in practice but can still enrich already wealthy owners;
- Co-ops are built on democratic power but may not focus on an environmental or social mission;
- Social enterprises are driven by a purpose but one or two individuals may hold the reins; and
- Even non-profits can behave badly.
Perhaps our work, collectively, is to usher people
into this messy landscape and then encourage them towards the heart of the Venn.
Those with social or democratic ownership, fairer wealth distribution,
purposeful or mission-driven intent, and responsible or ethical business
practice, can take centre stage.
The End of Impact?
Yet one term that has risen in popularity in
recent years seems different - impact. Why?
- In terms of its underlying meaning, impact is neither intrinsically good nor bad, just like innovation, noise or temperature. If something has value, then that’s positive. Benefit is positive. But impact is not intrinsically positive.
- Symbolically, impact is rather aggressive and violent. Someone does something to someone else - the dynamics are a little troubling.
- The logic of impact is linear and mechanistic, cause leads to effect. How does this fit in an era where systems thinking has emerged with all its interdependencies, loops, uncertainty and complexity?
- Impact is especially baffling language for the non-initiated. Have you tried telling your mum you work at an impact business? This suggests perhaps you have a new job in demolition, weapons manufacturing, or even worse, marketing. While some people may not believe that ethical banking or responsible investment are actually things, at least they can get the idea.
- Practically – while you can test if something is a co-op or where the profits go, measuring impact remains as elusive as ever. Maybe one day, AI will help us out here. But for now, impact measurement still seems stuck down around the blind alley it’s been loitering around aimlessly for at least a decade.
So why do some people use the language of
impact? Where has it come from?
The language of the impact economy or impact
business has arrived with the advent of impact investment. This is a
term introduced by investors, that works for them, not a term that bubbled up from
communities or among entrepreneurs, or was even handed down from academics,
experts or policymakers. It’s the language of capital.
This might not be a problem if the term actually
made sense, brought good vibes, aligned with current ways of thinking, your mum
understood it, and if it was useful. But of course, like impact investment,
from where it hatched, it’s not clear if it’s actually any of these. Impact
investment is neither intrinsically good nor bad, the power dynamics don’t look
great, the logic is pretty linear, it can be baffling beyond an exclusive club, and its
seemingly impossible to measure the merits.
Finally, well, it seems the game’s gone. Our
new government announced this week that the new National Wealth Fund is an “impact
investor”, and described Blackrock and Barclays as “impact investors”. That’s fine guys and good luck
with that. But it’s not really what we are talking about over here.
So perhaps it’s time we stopped talking about the
impact economy and impact business? We have enough words already
to describe the change we want to see. If businesses - and investors - are owned
more equitably, profits distributed more fairly, if they are governed in the interests
of people and planet, and behave well as they go about their business - that’s
what we’re talking about.