Every month more than 500,000 new businesses are started in the United States, disrupting industries, providing new jobs, and offering innovative new products and services to consumers around the world.

Every month more than 500,000 new businesses are started in the United States, disrupting industries, providing new jobs, and offering innovative new products and services to consumers around the world.

Launching a company is not easy. About 90 per cent fail in their first couple of years. Despite this risk, some entrepreneurs go beyond selling a product or service and are redefining what business success means in the process.

These visionaries are managing their businesses in ways that benefit people and the planet while being commercially successful. This ranges from entrepreneurs like Ben Rattray founder of Change.org, the for-profit company helping to make online advocacy easier for millions of people, to Brian Chesky of Airbnb, which benefits local economies by enabling individuals to provide overnight accommodation, without building new infrastructure.

Entrepreneurs that integrate purpose-driven business models can gain a competitive advantage. Studies have shown that recruitment and purchasing trends are changing, and companies that demonstrate their positive role in society are better able to recruit and retain millennial talent and customer loyalty.

In a world where the climate crisis is taking a toll on our ecosystems, and one in nine people on the planet do not have enough to eat, these new business models can help address our biggest social and environmental challenges and help to create a transition to a more just and sustainable economy.

Institutional investors like CalPERS represent constituencies who value long-term social and environmental measures. But purpose-focused investments can also deliver short-term returns. DBL Partners’ success in taking SolarCity, Pandora Media and Tesla Motors public is a good example.

Given that pension funds often contribute to venture capital funds, investing in social and environmental impact is a good alignment of shorter and longer-term interests.

But out of the approximately 77 billion venture capital dollars invested in 2015, very few investment strategies included social and environmental criteria as a core element.

This is in part because we lack a standardised method to evaluate social and environmental impact.

There is general consensus around financial health metrics – whether positive EBITDA or strong revenue growth – but we don’t yet have agreement on what constitutes broader stakeholder return.
The success and growth of B Lab is a hopeful sign. This non-profit provides a certification for companies that align their governance structures with social and environmental values. If more start-ups publish the social and environmental metrics required for B Corp certification, investors can obtain the data needed to evaluate strong purpose-driven investments.
Success is possible, and it doesn’t demand revolutionary changes. By mainstreaming just and sustainable business and investment models, together we can transform the private sector’s contribution to society and the world’s path to sustainable development.