Social investment by the world's 100 largest companies exceeded USD 12.2 billion in 2013, which is equivalent to France's annual foreign development aid budget, according to the report “Unlocking the value of social investment”, published by KPMG International.
However, only 20% report on the impact of this expenditure on the people they are trying to help and quantify it using metrics. In addition, 32% of companies talk about a detailed investment strategy.
On average, these companies and their foundations invested the equivalent of 2.5% of their pre-tax profit in programmes to tackle social and environmental challenges such as access to education, health or assistance in natural disasters.
According to KPMG, pressure is growing for companies to manage these investments in a similar manner to their commercial investments and to demonstrate that they generate acceptable returns.
The Indian government was the first in the world to request companies with net profit equal to or greater than USD 1 million to invest 2% in Corporate Social Responsibility projects and it is possible that other governments will follow in their footsteps.
The consultancy firm states that social action not only benefits society but also creates opportunities for businesses, secures a social licence to operate, improves reputation, attracts talented employees, increases workforce engagement and can help to develop new products and markets.
In the report, KPMG provides guidelines and examples for companies to improve their social action and quantify its impact.