A commentary by John Mathers, Chair of the British Design Fund
We are often asked by investors what trends we are seeing in the businesses applying for funding from the BDF. One such trend is design for social impact. We have seen a steady increase over the past two years of businesses embracing the potential of design to address pressing social and environmental challenges. This is far from green-washing, rather it’s seeking to address real needs in people’s lives by creating products that also deliver a clear and compelling benefit to society.
In fact, as the name suggests, social impact design is about helping people and the planet. But at the British Design Fund we do not believe that is at the expense of making a profit, the two things are not mutually exclusive. We believe that by addressing the real needs of people and the planet we can create businesses which make a difference and are commercially viable. In other words, rather than profit being the purpose, profit comes from pursuing a purpose that benefits society.
One of the ways we assess potential investment opportunities is to ask whether they are ‘purpose-led’. There is now a growing expectation from investors that every business should be clear about its purpose. Larry Fink, the Chairman and Chief Executive of BlackRock, the world’s largest asset manager, was unequivocal when he wrote to his CEOs: “without a sense of purpose, no company, either public or private, can achieve its full potential.” This is supported by growing evidence that purpose-led businesses deliver better long-term performance and are better able to attract, motivate and retain talent, especially among the millennials who will soon account for three quarters of the global workforce.
In 2022, Big Society Capital, a leading social impact-led investor in the UK, reported that the amount of social impact investment in the UK has grown nearly ten-fold over ten years, from £830 million in 2011 to £7.9 billion in 2021. This clearly is a trend that continues to grow.
Whether one uses the term “purpose-led” as we do here at the British Design Fund, or “social impact-led”, the indications from both start-ups and investors alike is that businesses which align their north star metric with profitable purpose and impact-led solutions are far more likely to catch the eye of their customers and go on to drive positive change and build shareholder value.
Watch this space over the coming months for more purpose-led design and manufacturing start-ups making a positive impact and a real difference in the world.