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Goal 17 Media produces content spotlighting private companies that are contributing to positive social and environmental impact; we call them Impact companies, and along with like-minded consumers and investors, they make up an ecosystem we refer to as the Impact economy.
We know that there is a lot of confusing information out there about this space. What is “Impact”, really? What does the term “ESG” mean, and how does it relate to Impact companies? What about “sustainability”? What is a social enterprise?
Goal 17 Media’s purpose is to help you answer these questions and better understand the Impact economy as a whole. Through our original media content, we aim to clarify the Impact economy and its actors. By listening to our podcasts, you will gain a nuanced understanding of the space in which corporate actors are making efforts to help people and planet—including which of those efforts are more effective than others. As a first step, this page acts as a primer to help you learn about the history of the Impact economy and understand some of the key terminology you’ll hear used in our media content.
Origins: 1970s
The modern Impact economy has its roots in investing trends dating back to the 1970s and 1980s. Beginning in the 1970s, shareholder activism became a viable tactic for influencing corporate policy decisions and pressuring companies to act in the interests of the common good and the environment. Shareholder resolutions on social issues had previously been banned by the Securities and Exchange Commission (SEC), but a federal court in the late 1960s reversed this stance, allowing a shareholder resolution challenging Dow Chemical’s production of napalm for use in the Vietnam War. Shortly thereafter, in 1970, Ralph Nader famously introduced shareholder resolutions at General Motors which would have allowed shareholders to investigate GM’s handling of minority hiring, pollution, and other issues.[1] Though the resolutions failed, developments like these helped to set an early precedent for consumer-investor power dictating corporate policy.
As shareholder activism within corporations became increasingly widespread, the constituents of institutional investors realized they wielded the power to urge their institutions to have a positive impact on the world. Religious institutions, banks and insurance companies, labor unions and pension funds—all different kinds of investors began to receive pressure from their constituents to avoid investment decisions that might lead to negative social impact. This trend began in the early 1970s, with some religious organizations, foundations, and universities choosing to divest from companies that were profiting from the Vietnam War.[2] This was the dawn of what would come to be known as Socially Responsible Investing (SRI).
Development: 1980s
In the late 1970s and throughout the 1980s, the SRI movement continued to grow, focused in large part on pressuring companies not to do business with South Africa’s racist Apartheid government. During this period, grassroots campaigners induced universities, cities and states, major pension funds, and other institutional investors to divest from companies that did business in South Africa. This divestment campaign, whose peak spanned the years approximately 1977-1989, was instrumental in the development of the SRI movement. Divestment advocacy successfully pushed businesses to withdraw from South Africa in order to avoid further divestments, and the resulting economic pressure on South Africa helped bring about the fall of the Apartheid system in 1994.
As the divestment campaign developed during the 1980s, investment firms recognized that individual investors wanted a way to invest in companies that aligned with their personal beliefs and ethical values. SRI pioneers like Calvert Investment Management and Pax World created mutual funds tailored toward investments in socially responsible companies. These funds, and others like them, created investment screens that restricted them from investing in companies that did not implement progressive Environment, Social, and Governance (ESG) policies.
ESG is a now-common term that refers to a quilt of criteria by which corporate actions are judged. Environmental criteria relate to the quality of a company’s stewardship of the Earth; social criteria pertain to a company’s business practices vis-à-vis its employees and the members of its wider community; and governance criteria are related to corporate governance issues, especially regarding the diversity of company leadership and the transparency of business practices. The terms SRI and ESG investing are now used largely interchangeably, and simply refer to investing that aims to support only those companies which utilize responsible ESG policies. Both terms are also commonly lumped together under the umbrella term sustainability, which refers to business practices that support “ecological, human, and economic health and vitality.”[3]
SRI Investing Today
Since the 1980s, the SRI field has proliferated dramatically. What began as a niche corner of the investing world has become a major focus for investors, corporations, and consumers. $12 trillion in assets under management in 2018 were managed using sustainable investing strategies in the US, a 1700% increase since 1995; these assets represented more than 25% of the $46.6 trillion in total assets then under management in the US.[4] In 2018, the Forum for Sustainable and Responsible Investment identified nearly 500 institutional investors, nearly 400 money managers, and more than 1,100 community investing financial institutions pursuing ESG incorporation strategies.[5]
In addition to a major increase in total assets under management, individual SRI funds have witnessed stratospheric growth—Calvert Funds has over $16 billion under management today, and Pax World has $4.4 billion. Evidence also suggests that ESG and SRI strategies carry “no financial trade-off in the returns of sustainable funds compared to traditional funds, and they demonstrate lower downside risk.” Additionally, there is “strong statistical evidence that sustainable funds are more stable” during volatile market periods.[6]
Corporations Embrace ESG
Alongside the growth of SRI as a viable investment strategy, corporations and manufacturers have also increasingly embraced ESG principles. You will have seen the effects of this change everywhere. Owing to a consumer backlash against single-use plastics, investment in domestic glass production is increasing. Consumer concern over fossil fuel emissions has spurred Lyft to introduce electric cars, and allow riders to request rides in electric vehicles exclusively. Cosmetic retailers like the Body Shop have integrated commitments to avoiding any negative social or environmental impact into their core principles. Food processing giants like Ben and Jerry’s have placed values like racial justice and fair trade at the center of their business operations. Even some of the world’s largest public corporations have committed to making all of their worldwide operations carbon negative. Social enterprises—for profit companies that have a specific aim to produce positive social or environmental impact—are growing rapidly, with 60% of those in the US formed since 2006.
A 2018 study by Deloitte puts it best: “businesses today are entering a whole new paradigm … one which considers a business less as a “company” and more as an “institution,” integrated into the social fabric of society.”[7] Indeed, much like institutional investors, corporations have come to realize that consumers now expect their business practices to minimize damage to the planet and to benefit people everywhere. This is no longer optional; to the contrary, it’s an integral part of doing business today. The Impact economy is the new economy.
Goal 17 Media and the Impact Economy
At Goal 17 Media, we call this entire constellation of actors—individual consumers and investors, institutional investors and financial services providers, and public and private companies—the Impact economy, and we refer to their joint commitment to social and environmental good simply as Impact. But whatever you call this movement—ESG, SRI, sustainability, purpose driven. corporate social responsibility—the notion that public and private corporations and institutional investors should commit to bettering the world is now a squarely mainstream idea.
Our programing may feature a small solar panel company focusing on rural electrification in Africa one week, and a board member from a Fortune 500 company the next. This is part of Goal 17 Media’s big tent approach to defining Impact. To us, if a company evinces a genuine commitment to producing positive social and environmental impact, it is an Impact company.
Crucially, our content is directed at entrepreneurs, consumers and investors because they are driving the rapid growth of the Impact economy. Just like those people who sought to divest from companies profiting from the Vietnam War or Apartheid, today’s Impact economy has resulted from an increasingly vocal base of investor-consumers who refuse to patronize companies that are negatively affecting the earth and its inhabitants. The data supports this. 1/3 of consumers are already choosing to support brands they believe are doing social or environmental good, and majorities of consumers in both emerging and developed markets report feeling better when they purchase sustainably produced goods.[8] A majority of consumers in the UK, US, India, Brazil, and Turkey also report feeling better when they buy products that are sustainably produced.[9]
Goal 17 Media’s reason for existing is to inform the individual investor and consumer about the Impact economy, and in turn empower them to wield their dollars as a tool for social and environmental change. Consumers and investors have driven an incredible shift toward a more compassionate private sector in the last three decades; Goal 17 Media wants to help accelerate that shift even further. By engaging with our programming, our audience will stay abreast of the latest trends in Impact and learn to identify which Impact companies share their values.
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[1] Barman, Emily. Caring Capitalism: The Meaning and Measure of Social Value. Page 101. Cambridge University Press, 2016.
[2] Barman, Emily. Caring Capitalism: The Meaning and Measure of Social Value. Page 102. Cambridge University Press, 2016.
[3] “What Is Sustainability?” UCLA Sustainability Committee, https://www.sustain.ucla.edu/about-us/what-is-sustainability/.
[4] “Report on US Sustainable, Responsible and Impact Investing Trends.” The US Forum for Sustainable and Responsible Investment. 31 Oct. 2018. https://www.ussif.org/files/US%20SIF%20Trends%20Report%202018%20Release.pdf
[5] “Report on US Sustainable, Responsible and Impact Investing Trends.” The US Forum for Sustainable and Responsible Investment. 31 Oct. 2018. https://www.ussif.org/files/US%20SIF%20Trends%20Report%202018%20Release.pdf
[6] “Sustainable Reality: Analyzing Risk and Returns of Sustainable Funds.” Morgan Stanley Institute for Sustainable Investing. 2019. https://www.morganstanley.com/pub/content/dam/msdotcom/ideas/sustainable-investing-offers-financial-performance-lowered-risk/Sustainable_Reality_Analyzing_Risk_and_Returns_of_Sustainable_Funds.pdf
[7] Bersin, Josh. “The Rise Of The Social Enterprise: A New Paradigm For Business.” Forbes. 3 Apr. 2018. https://www.forbes.com/sites/joshbersin/2018/04/03/the-rise-of-the-social-enterprise-a-new-paradigm-for-business/#6ae26b9671f0
[8] “Report shows a third of consumers prefer sustainable brands.” Unilever. 5 Jan. 2017. https://www.unilever.com/news/press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.html
[9] “Report shows a third of consumers prefer sustainable brands.” Unilever. 5 Jan. 2017. https://www.unilever.com/news/press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.html
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