We at Yulu are the heart and minds behind Impact Relations, a new standard for authentic communications. Our “Guide to Impact Relations” blog series will explore what Impact Relations means today and how it has evolved over time, along with providing a framework for consulting, measuring, and communicating the impact of our communications strategies.
To demonstrate how Impact Relations differs from CSR, global impact firm Palladium shares this perspective in its report on the “Birth of the Impact Economy”:
“Beyond Corporate Social Responsibility:
Corporate social responsibility, or CSR, whereby businesses engage in activities with positive social or environmental outcomes, has become widespread over the past several decades. Today, it is not uncommon to see commercial enterprises lending their support to philanthropic efforts or participating in carbon offset programs. CSR is without a doubt a step towards the impact economy, but it is not that – yet.
CSR initiatives are usually ancillary to the existing business model. They do make positive impacts – at a minimum, they can mitigate a business’ negative impact on an environment or community. Critics may dismiss these initiatives as empty “goodwill” gestures, but no matter what the motivation, they do create positive results.
In the impact economy, however, organizations go beyond CSR to create shared value, a term coined and explained by Michael E. Porter and Mark R. Kramer in their 2011 Harvard Business Review article. Whereas CSR is ancillary, shared value is mainlined into, and at the heart of, the business model.
By engaging in practices that create value in a broader sense – value for the community, for the environment, for the employees, as well as financial returns – organizations fundamentally re-think and change the way they do business.
These practices are not ancillary to the core business or a trade-off that the business chooses to make, sacrificing potential profits in favor of social or environmental welfare. Instead, these organizations operate so that the creation of stakeholder value, the improvement of bottom line profits and the growth of shareholder value are mutually reinforcing.
The Industrial Revolution was so significant in part because it did more than redistribute wealth – it actually grew the economy so that there was more wealth overall. Businesses in the impact economy have the opportunity to repeat this process, and to do it deliberately. We call this deliberate march into the impact economy profit with purpose.”