The social function as a business model

The social dimension of corporate sustainability is increasingly important. It no longer has to do with avoiding harm, but about generating real value for people and communities. Let’s talk about it.

About the author

Pablo Cerezal

Writer

Pablo Cerezal is a writer, editor, scriptwriter, and lyricist with an extensive career that includes articles and reports for numerous outlets such as Ethic, FronteraD, Zenda, and La Razón (Bolivia), as well as two personal blogs on cultural topics.

In addition to his literary and journalistic work, he has led communications for various third-sector organisations in Spain and Bolivia, specialising in articles and features on corporate social responsibility and the Sustainable Development Goals.

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For years, the emphasis in corporate sustainability has been on the environmental and governance dimensions, while the "S" of ESG (Environmental, Social, and Governance) criteria —related to the impact of companies on people and communities— has been relegated to a lower priority. This scenario is changing thanks to a new corporate vision that prioritises the social function as a fundamental part of projects. It is no longer just a question of offsetting negative impacts, but about generating real and measurable value for people and communities where projects are carried out.

What will I read in this article?

From corporate philanthropy to sustainable strategy
ESG criteria: global standards
Going for the "S" of ESG: the social function of business
The idea of leaving a positive balance of well-being in society

The concept of Corporate Social Responsibility (CSR) has been deeply rooted in the business world for decades. Since then, more and more private organisations have developed programmes aimed at managing their economic, social, and environmental impacts more responsibly.

The origins of CSR are attributed to the American economist Howard R. Bowen, who coined the term Social Responsibility of a Businessman in 1953. Along with the term, Bowen created a foundation for executives to start taking social responsibility into account in the design of their strategies. These beginnings were somewhat forced by social pressure on companies to operate ethically and responsibly. This pressure caused many companies to undertake purely philanthropic actions to improve their external image. Corporate volunteering programmes and financial donations to third sector organisations multiplied.

From corporate philanthropy to a sustainable strategy

By the end of the last century, the concept of CSR began to undergo necessary changes, driven by growing social and environmental challenges worldwide. That was when the term sustainability came into its own, broadening the business perspective beyond reputational issues to cover economic, social, and environmental aspects in an integrated manner. This approach led to the emergence of the first international reporting and assessment frameworks, such as the Global Reporting Initiative (GRI), which proposed standardised criteria for measuring and communicating the sustainable performance of companies.

This paradigm shift has prompted managers in the vast majority of private entities to realign their policies towards corporate sustainability, incorporating what are known as ESG (Environmental, Social, and Governance) criteria as a tool for financial analysis and decision-making regarding investments.

ESG criteria: global standards for sustainability

When implemented collectively, the management of natural resources and the impact on climate change, the defence of human rights in the workplace and business relations, diversity, inclusion and equality, as well as transparency in decision-making are ESG criteria that are already part of many corporate strategies. They also serve as key indicators in risk and profitability assessment processes.

On the occasion of the eighth anniversary of the Sustainable Development Goals (SDGs), the United Nations released a study examining the positive impact on the bottom line of businesses’ commitments to society and the environment. The adoption of business plans aligned with the SDGs and the principles of the 2030 Agenda is proving to be a fundamental pillar of a new business model that is not only sustainable but also profitable.

Attaching importance to the "S" in ESG: the social function of companies

Nowadays, some companies with a higher international profile incorporate the evaluation of potential social, environmental, and economic risks associated with their activities right from the start of their projects. This preventive approach enables the identification of critical factors in advance, such as the project's location, the presence of vulnerable communities, potential social conflicts, or environmental impacts on surrounding areas. By understanding these realities from the outset, it is possible to design context-specific social action plans that not only mitigate negative impacts but also generate real development opportunities for local communities. In this way, companies take on an active role in the positive transformation of the environment, consolidating themselves as drivers of cohesion, inclusion and social regeneration.

Indeed, any business project that has a direct impact on a community needs to consider the demographic, economic, educational, health and access to basic services factors of the affected community, as well as the environmental context. This enables a direct dialogue with the community to implement measures to improve people’s well-being.

A paradigmatic example of the development of a company’s social function is the construction of Line 6 of the São Paulo Metro in Brazil. This public-private infrastructure project is developing a new metro line, estimated to be used by 633,000 passengers daily. In order to optimally manage the social impact of such construction and enhance social opportunities, the company responsible for construction has launched a series of projects aimed at increasing women’s employment, youth employability or promoting environmental awareness, among other objectives.

To achieve this, the company has been in direct contact with the local communities, leading to initiatives such as ACCIONA for them, focused on training and education for women in vulnerable situations in alliance with local NGOs, or ACCIONA in Schools, where company personnel share their knowledge with schools in the project's area of influence, sometimes implementing programmes to support young people as they enter the world of work. The company develops projects that favour the educational development of young people in outlying areas and reduce the environmental impact of construction work through reforestation, recycling and reuse.

The idea of leaving a positive balance of well-being in society

Undoubtedly, the path to corporate sustainability involves maintaining a holistic view of the activities carried out by private entities, as part of a vision in which economic, social and environmental aspects are basic pillars that harmoniously complement each other.

It is not only a matter of reducing impacts, but also about generating shared value and promoting initiatives that strengthen the social fabric and collective well-being. The real challenge for companies today is to become agents of transformation and regeneration, able to connect their business objectives to the needs and aspirations of the communities where they operate. In other words: an approach based on active listening, co-responsibility, facilitative leadership, sustainable innovation and inclusive participation, capable of building sustainable models that leave a positive balance in society.