Over the course of the COVID-19 pandemic, many businesses stepped up their charitable efforts in the name of public health and well-being without seriously questioning their impact. It was simply the right thing to do in a moment of pressing need.
But as we’ve emerged on the other end of the crisis, companies are once again being pushed to make sense of their different social impact activities and to rationalize the range of efforts that have emerged. And more than ever before, they’re finding that they need to learn to manage a phenomenon we’ve come to term “corporate social impact sprawl.”
In a single organization, the sprawl might take the form of employee engagement programs, a “signature” social initiative driven by senior leadership, a corporate foundation giving strategic grants to a selected issue, “good citizen” sponsorships for local nonprofits, sustainability efforts tied to the company’s supply chain, and ESG goals integrated into the company’s overall business strategy—all at the same time.
In the face of this growing complexity, the natural reaction for businesses is to simplify and streamline social impact efforts. But this isn’t necessarily the right approach for dealing with corporate social impact sprawl. In our experience, attempts to scale back or search for unifying, silver-bullet solutions produce results that end up being both marginal for meeting business needs and marginal for generating social impact.
That’s because they miss the real driver behind today’s social impact fragmentation: the growing number of pressures from customers, investors, employees, regulators, and communities that require very different types of corporate responses.
Under pressure
The sprawl of corporate social impact, in many ways, is simply a natural consequence of the fact that the pressures driving these efforts are coming from so many different sources.
Historically, corporate social impact has been driven from the inside out: a company and its leaders seeking to give back to their community and leave a legacy of which they could be proud. This “inside-out” philanthropic spirit still compels many corporate social impact efforts today. But now companies are also facing a range of greater external, “outside-in” pressures that shape their social impact work:
- Strategic pressures, as companies seek out ways to create value and drive innovation by blending social benefit with corporate goals.
- Risk-mitigation and regulatory pressures, as companies wrestle with the public relations and legal consequences of their business practices. In a world where heightened public scrutiny, social media, and corporate watchdogs can turn negative externalities into negative “internalities” quickly and without warning.
- Investor pressures, as asset managers increasingly demand that companies receiving investment incorporate social and environmental consequences in their allocation decisions.
- Employee and recruiting pressures, as staff look for ways to find purpose and give back to their communities, and as corporate responsiveness to these demands becomes a key differentiator in attracting recruits, retaining talent, and forging strong relationships with contractors/gig workers.
- Customer and consumer pressures, as buyers increasingly incorporate social responsibility issues into their purchasing decisions and ubiquitous consumer data means that companies can better see and act on these preferences.
All of these pressures are here to stay. Each one has the potential to create high-visibility problems that can sink a business or open up entirely new market opportunities. But each type of pressure typically drives a very different social impact response from within a company. A human resource department might promote skills-based volunteerism programs to help increase employee engagement and satisfaction; branding experts might evaluate cause marketing approaches to attract socially conscious consumers; operations specialists might work to make supply chains more sustainable. Efforts like these all relate to a company’s social impact—even if the intent of each is to add value around a distinct business imperative.
But no single social impact solution inside a company can address all of the different pressures at once. Simplifying, consolidating, or cutting back social impact efforts won’t make the needs they are responding to disappear. Employee volunteer days may boost morale, but they aren’t going to make regulatory pressures to curb carbon emissions go away.
Embracing sprawl
Whether an organization likes it or not, the social impact genie can’t be put back into the bottle. Growing pressures from different directions mean that companies need a more complex portfolio of social impact efforts in response.
The inevitable fragmentation that comes from this development doesn’t mean you’re doing anything wrong. It’s natural. The world is changing and, more than ever before in the wake of COVID, companies will need to deliberately make an effort to think differently about the sprawl of social impact activities within their organizations. And we believe that—as we are learning in our own efforts at Deloitte—companies that embrace this shift will likely find they can create real opportunities and increase their impact over time by truly embracing, rather than fighting, the sprawl.
Gabriel Kasper and Kerri Folmer are managing directors with Monitor Institute by Deloitte, Justin Marcoux is a senior manager with Monitor Institute by Deloitte, and Dana O’Donovan is the Social Impact and Monitor Institute by Deloitte leader. Monitor Institute by Deloitte is the social impact strategy consulting unit of Deloitte LLP. Deloitte is a Fortune conference partner.
