Lucy Findlay MBE, Managing Director of Social Enterprise Mark CIC, explores degrowth in the context of social investment.
What is Degrowth? Is it something you're familiar with? Keep reading and I'll explain what it is and why it's important for the social impact sector.
Social Impact Investment can be a confusing term as lots of people have different interpretations of what social impact investment actually entails and sometimes that can be a bit of a barrier. Sometimes, this barrier is especially pronounced for women or marginalised groups such as organisations led by ethnic minority people. There are also those who will ask questions such as “why can’t I just go and get this investment from a bank?” or “why do I need this type of investment and what does it mean?”
Therein lies the problem. A common challenge with going to the bank is that they don’t always understand the social sector, or charity / social enterprise business models. Social Investors tend to have better understanding of these different types of business models, but does social investment as a tool solve the root cause of the problem? In my view, the root cause is the way, the narrow way, that business has been defined over the years (as well as the narrow group of people that define it).
Most specifically, there are certain pre exisiting perceptions and assumptions around the word‘growth.'
For this reason, my antennae are being increasingly attuned to the term ‘growth’ and I find myself questioning what that means. For most, it automatically equates to getting bigger financially and greater financial return for shareholders and other investors.
What else can be considered growth? / Do we need to change the way we think about growth? Other examples of organisational growth include reaching a higher number of potential users / customers or perhaps for more socially-minded businesses, increasing the amount of impact you can deliver. Perhaps as a sector and as a society, we need to think about changing the way we think about growth.
Is Green Growth just "another" wealth creator?
More recently the term ‘green growth’ has gathered momentum – as a more palatable version. In simple terms, green growth refers to economic development, while ensuring natural assets can continue to provide resources and environmental services, which are essential for our wellbeing.
The assumption that some make about this term is that we can invest in green technologies and the green economy which will help tackle climate change and also keep on growing the financial bottom line at the same time i.e. we can have it all. However, in the midst of record summer temperatures and rising utility bills during a cost of living crisis, this is not the reality that we are seeing.
Climate change targets are not going to be hit. This is largely because the aims of businesses, profit and financial growth are still the main drivers when it comes to growing an economy. Is Green Growth therefore just another wealth creator? Should we be questioning the use of the word growth here, what are we really growing? I'll let those questions sit with you.
Degrowth: what is it? And why do we need to talk about it?
We need to think completely differently about growth to create sustainability – a system change. I was pleasantly surprised to see that some in the investment community are beginning to engage and embrace this idea. I came across an excellent seminar this week on the concept of ‘Degrowth’.
Degrowth is a concept that recognises that we need to put social and environmental concerns before profit, and create business that work in harmony with society and the environment, rather than fighting it on the fringes through tick box mitigation measures whilst carrying on with the same financial growth trajectories and assumptions.
This requires a complete rethink of what business is and how the concept of degrowth may apply. We need to think radically about how we design a different ecosystem led by those centering sustainability and striving for the type of growth that does not result in harm to the environment or to people and communities.
What does degrowth mean for charities and social enterprises? It’s important to consider the impacts of your business model and how your organisation puts people and planet at the centre of what you do. Crucially, how will you measure the impact this will have on the users you serve? The Good Finance Outcomes Matrix tool is designed to help you plan, measure and communicate your social impact to investors - give it a try today.
Some organisations who embed great sustainability practices for inspiration: