The Trial of "Social Impact" and an Era of New Challenges

I feel that the concept of "social impact," which has gained momentum in the worlds of business and investment over the past few years, may be approaching a turning point.

The reality of a reshaped international order, diversifying values, and social division (I don't like using that word, but I couldn't find a better one...) seems to me to be forcing us to rethink "social impact."

The Transformation of the International Order, the Shrinking Scope of "Society," and Changing Standards of Value

Looking at the recent state of international politics, the form of contribution to the international community that developed countries have traditionally made is changing significantly, as symbolized by the suspension of USAID (the United States Agency for International Development) activities in the United States.

In addition, the rise of new political forces in the EU and growing nationalism in various countries show that the foundation of values once shared among developed countries is wavering.

This situation seems to indicate a growing tendency for a country to no longer regard other countries as "a society to which it belongs and to which it contributes." In other words, you could say that the range each country regards as "society," that is, the scope of society, is changing.

This is not a matter of news that is "far from us"; it also seems to be a problem directly connected to social enterprises and business.

Specific Impacts on Social Impact

First, the shrinking scope of the global "society" makes the "global market" smaller. The global market, which until now was thought of as a single market, is being split into several parts by coalitions of opposing countries, or, even if not completely split, the friction of crossing national borders is growing because of tariffs and other measures. This has a major effect on companies that earn much of their revenue overseas.

It also has a direct effect on businesses that champion social impact. For example, if the flow of funds from developed countries decreases, a startup working to eradicate malaria in developing countries will see its prospects for financial returns worsen. As a result, it will become harder to receive investment from investors, and launching such businesses will become more difficult.

It is not only an international matter. Domestically too, as the division of "those people are not members of society" grows, the money flowing to them will decrease.

It is not only the scope. The standards of value on which there had been a certain degree of agreement are also changing.

For example, the consensus that "decarbonization is an agenda that should be pursued as a priority" is weakening, and investment in environmental technology has also begun to be affected.

The measurement of social impact depends on the (vaguely) shared standards of value about what is highly valued in a given society. This is because activities that the people who make up society recognize as "socially good" are highly valued, and funds flow to them.

However, if the standards of value of "society" change and its scope shrinks, the market for businesses related to conventional social impact will also narrow, and the funds in circulation will decrease.

When that happens, investors who entered out of the motive that "social impact is profitable" will react sensitively to the change in circumstances and withdraw their funds. This is because it becomes harder for them to sense a large society and a large market that could bring profits.

I think that, to some extent, we have drawn in large amounts of capital by linking social impact with capital markets, but it is quite possible that this could go into reverse.

The Wavering of Implicit Assumptions, and an Opportunity to Propose a New Vision of Society

What has been taken as an implicit assumption in talking about social impact has been the advance of globalization and the sharing of liberal democratic values. The "social good" on which much of social impact relies also seems to have been largely premised on these. But this assumption is now being pressed for review.

Where things used to function without deeply questioning the definition of "society," we must now question it from the start, and then build social impact on that basis.

This does not mean that it would be better to quit businesses that champion social impact.

Rather, efforts to reconcile and rebuild "society" will become more important than ever (even though they will become more difficult).

And I think that this is also an opportunity to propose a better vision of "society."

To achieve better social impact, we need to think anew about how to make "society" broader and more inclusive, and to actually build a "society" that includes diverse people. For example, if one is to call for global social impact, it is only possible with a foundation that can produce local social impact.

If we succeed in expanding this society, larger business opportunities will also arise. Conversely, if the division of society advances, the market for social impact business itself will shrink.

I think we are standing at the starting point of that change.

Now, precisely when the concept of "social impact" is entering an era of trial, the importance of thinking again about both society and impact, and of attempting to build a new vision of society, new ideas, or mechanisms through which many people can be happy, is increasing. (At the same time, I think we will also need the strength and position to appeal to that in international public opinion... unfortunately.)

I think it is very difficult to achieve, but... still, thinking about it anew is, I believe, the new difficulty and challenge for us in talking about social impact.