“Change takes time. We’re sitting here at a university literally built on profits from the tobacco industry and yet I am looking at a sign that says ‘tobacco-free campus.’ Would anyone have imagined that 100 years ago?”
That was a comment from one of our Board members at our recent CASE and CASE i3 (Initiative on Impact Investing) Board meeting. It was a powerful reminder that, although it may not always feel like we are making progress, change is indeed happening. Within that context, we asked the Board members to reflect on the impact trends that we should be paying attention to as we work to build momentum towards change. Five of the trends we discussed included:
The woke capitalism culture wars
Board members expressed concern about the continued politicization and polarization of impact, specifically Environment, Social and Governance (ESG) issues. The “woke capitalism” backlash has been gaining traction and the forces behind it have figured out how to make it a large tent bringing together various culture wars. As one Board member stated, “It is alarming that in an environment where Congress is not passing much, they were able to pass something related to woke capitalism.” This then prompted the first very first veto from President Biden.
Meanwhile, Board members expressed concerns that the pro-ESG community has been too fragmented to find an effective counter-narrative (though some progress is being made). This fragmentation is only being made more challenging by some entities moving away from the term ESG given its politicization (e.g., examples of investors shifting away from the term “ESG” to “responsible investing”, or Larry Fink’s recent annual investor letter avoiding the use of the term ESG at all). Our collective work to come will be to reclaim the narrative and align on shared definitions that will drive to sustainable impact.
Moving beyond ESG
Speaking of ESG, we discussed the continued explosion of corporate ESG commitments but too often the lack of clarity on how to achieve those commitments or the standards to be held against. Similarly, the explosion in ESG-related jobs but a need for better training to prepare employees to do that job well (an important note for business schools and the work we are doing to train the next generation of leaders!).
But even with all the news around ESG, the Board was careful to note that while they believe ESG is becoming table stakes – something investors and companies will have to respond to as more regulation is passed – it is just the floor that we will come to expect. Those of us that believe in business as a force for good, need to push beyond ESG and “doing less harm” and elevate and study more innovative approaches to achieving greater impact for all.
Equitable distribution of federal funds
Of course, climate change and economic development were topics that we discussed and elevated as critical issues to focus on in the year(s) to come. But we went deeper to talk about the trillions of dollars of US federal money currently flowing into infrastructure, climate, and development (notably the CHIPS and Science Act (CHIPS) which Fuqua professor Ronnie Chatterji has been instrumental in shepherding, and the Inflation Reduction Act (IRA), one of the most significant climate bills to date).
While these bills mark substantial progress here in the US (and similar efforts globally), ensuring that those funds flow equitably to the communities that need them the most is the critical next challenge. If the distribution can be done effectively, there is a real opportunity to create more resilient communities and take steps towards a more just transition. Without effective distribution, progress could be stalled or made worse.
Technology’s role as a force for good or…
In a post-COVID world, the conversation around mental health, wellness, and resilience continues to be a critical trend to track. There is also a recognition that the mental health crisis is driven, in part, by social media and technology so an impact trend to track is how technology will play a role in the future. Will AI help or hurt? How can we leverage technology as a force for good – democratizing access to information; creating solutions for high touch and high tech approaches to credit; breaking down rather than building up echo chambers; leveling educational access, and so much more.
The continued search for purpose
Recruiting and retention of talent continues to be top of mind for employers. And, even in the midst of tech sector layoffs and fears around recession, we are still seeing what one Board member called “an impact talent boom” – more people, young and old, proactively seeking purpose driven and values aligned careers. As another Board member said, “people are seeking transformation, not transaction.”
This trend is captured in the 2023 Edelman Trust Barometer which reported that nearly 70% of respondents believe “societal impact is a strong expectation or a deal breaker when they are considering a job.” Organizations are recognizing that purpose and impact are critical recruiting tools, while employees are increasingly holding their employers accountable for their statements around purpose.