10 Breakthrough Capitalism Opportunities For 2013

From the rise of social impact investing to new advances in triple-bottom-line accounting, here is a look at ways that capitalism is shifting to make a better world for all of us in the coming year.

Over the course of this series, we have outlined a case for Breakthrough Capitalism. We successfully move towards our Breakthrough scenario when business, government, community, and entrepreneurial leaders work together to change the rules of the game in the key systems in which they operate. Among other things, this involves transforming how investors, suppliers, customers, employees, and competitors define, value, and pursue social impact.

Now we have an enormous amount of predictions about what 2013 will hold. Although we’ve been impressed with some of these lists, including one posted on Matthew Bishop and Michael Green’s Philanthrocapitalism site, we want to flag a series of breakthrough trajectories we see brewing in the market. Working with a range of partners, we aim to build the momentum in these areas through 2013 and beyond.

From corporate venture capital to setting breakthrough goals, here are 10 areas where the trajectories for change are starting to take shape:

Corporate Venture Capital

In 2012, BCG released a report on the growth of corporate venture capital across a range of industries, which found that 756 corporations have VC groups. Investing in innovation, internally and externally, should lead to a rise in scalable, high-impact breakthroughs. But this isn’t guaranteed: We must skew the process towards outcomes that will deliver a world that works for 9 billion people by 2050, within planetary boundaries. Some even see social impact investing as the new venture capital.

Collaboration

Partnerships are critical for breakthrough. Expect a new wave of joint ventures between business and social entrepreneurs, channeling lessons from now well-known case studies, such as Grameen Danone Foods. Growing business interest in all of this holds out the promise of greater investment of business skills and finance in social enterprises and incubators.

Competition

More businesses are working with their competitors in order to activate system-level change. The Road to Zero project brought together competitors in the apparel industry—including Nike, Adidas, and Puma—to tackle the discharge of hazardous chemicals in their shared supply chain. The finance, food, and technology sectors, among others, will need to follow this lead.

B-Schools

Business schools have lagged in this area, but some are experimenting with new curriculums that take into account the need for students to appreciate global system dynamics. Harvard Business School introduced its radical FIELD program this past year, in which students work with organizations to focus on new product or service developments. This helps them study business opportunities in emerging markets.

Exchanges

Social stock exchanges have been discussed more than they’ve actually launched, but with growing support from the funding community and appetite from investors for the services they provide, we expect to see them break through in cities like London in 2013. These exchanges will provide a much-needed secondary market for businesses with social aims.

CXOs

Post-Sandy and the Beijing toxic smog, 2013 could be the year that the global C-Suite truly wakes up to the challenges facing the planet. In past posts, we have profiled the work of leaders rewriting market rules who are using the power that comes with their roles to experiment with breakthrough strategies. CXOs—a label for all C-Suite members—must now work together to embrace an agenda so far mainly driven by CSOs (Chief Sustainability Officers).

Accounting

There is a potential breakthrough building in accounting, heralded by Puma’s release of its Environmental Profit and Loss statement. More companies now are signing up to this new model of accounting that tracks the value of natural capital used across value chains. When traditional financial profit and loss statements are combined with social profit and loss statements where social impact, as well as environmental impact, are quantified and valued, a full model of triple-bottom-line accounting will be at our fingertips.

Mapping

The World Economic Forum is innovating in systems thinking with its annual Global Risks report, including an interactive map showing how seemingly diverse global issues are connected.

Working with Marshall Clemens of Idiagram, The Tellus Mater Foundation is mapping capital markets to identify key leverage points that can help transform this system quickly. The foundation is using the maps to understand the complexity of the connections between financial and natural capital. Next up: focusing on getting pension funds to take action on climate risk.

Networks

In addition to Richard Branson’s new B-Team, there is the World Business Council for Sustainable Development, now led by former TNT CEO Peter Bakker, which is focused on building a network of CEOs with a shared commitment to building a sustainable future. Bakker’s decision to use the nine planetary boundaries identified by the Stockholm Resilience Centre could lead to market revolutions, because it will shrink the time horizons over which WBCSD corporate members go for stretch sustainability targets.

Goals

2015 is the deadline for the UN’s Millennium Development Goals (MDGs), and it signals the opportunity to create a new set of Sustainable Development Goals, increasingly championed by business leaders such as Unilever CEO Paul Polman. In 2013, we will see more discussion of how we can stretch our collective ambitions—and turn them into real-world action.

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