Laying the foundation for businesses to pursue social and economic good

More than half a century ago, Milton Friedman wrote that a business’ only social responsibility is to increase its profits. Although the doctrine became mainstream in academia and business, a growing movement is starting to prove otherwise. Social innovators, businesses, investors and other market actors are redefining economic success to advance towards an impact economy.

They are concerned with their overall impact on society and the environment, in addition to profits. Other terms — such as the stakeholder economy, fourth sector, B Corporations (certified for their social impact) and regenerative economy — refer to different movements within the same overall push for an impact economy.

In a world characterized by polycrises, it is easy to feel overwhelmed when striving for a more inclusive and environmentally secure economy. And yet, there is room for optimism. Latin America has seen an exponential growth of certified B Corporations, social innovators and other types of businesses that strive to do good while doing well for their owners.

Looking back, we are inspired by the shifts resulting from the decade-long collaboration between IDRC and Sistema B — the B Corporation movement builder in Latin America — to improve economic systems.  

New laws for business incorporation and public procurement policies

Change is rarely linear. Time and again, we witness how real-world transformations rely on gradual gains, often only fully understood in hindsight. The partnership between IDRC and Sistema B is an excellent example of this gradual yet impactful transformation. The fruit of our collaboration, Academia B, engaged thousands of educators, researchers and students from over 35 countries. This effort produced a rich body of research, teaching tools and public policies to transform economic practices and mindsets.

This research and advocacy played a pivotal role in advancing benefit corporation laws across Latin America. Five countries have enacted this kind of legislation to enshrine the ability to pursue social and environmental objectives alongside profit in business corporation laws. Three more countries are in the process of passing similar legislation, embedding purpose-driven business models deeper into the region's economy.

Our partnership’s influence, together with the Inter American Network of Government Procurement, also extended to sustainable procurement policies in six countries, encouraging governments to adopt purchasing practices that prioritize sustainability. These legislative achievements reflect the power of collective action in driving systemic change on both national and international levels.

Tools and knowledge to balance purpose and profit

In collaboration with B Lab and the United Nations, the partnership supported the development of the Sustainable Development Goals (SDG) Action Manager — a free tool helping businesses measure their contributions to the goals of climate action, decent work and economic growth and gender equality. To date, over 20,000 companies globally have used the tool to assess their social and environmental impact. This practical resource illustrates how the partnership empowered businesses to align with global sustainability goals and help scale impact.

One of the standout achievements of this partnership was its contribution to the new field of study focused on regenerative business models (also known as agroecology) to address climate change. By integrating these emerging areas into academic discourse, IDRC and Sistema B catalyzed research exploring how businesses can remain profitable while contributing to regenerating our planet, and how these businesses can contribute to addressing structural gender inequalities. 

Academia B underscores the vital role education plays in shaping future business leaders who prioritize social and environmental impact alongside financial success. It also underscores the role of research to sustain with evidence a new movement — that of business as a force for good.

Breaking boundaries and fostering collaboration

A core strength of the IDRC-Sistema B partnership was its ability to unite diverse stakeholders — researchers, corporate lawyers, policymakers and entrepreneurs, who would have limited opportunities to connect without both organizations’ convening powers. IDRC’s strong academic ties bridged research and practical applications, while Sistema B’s credibility in the impact economy connected with businesses pursuing social and environmental goals. By pooling resources and networks, we reached thousands more stakeholders, driving progress more effectively than either could have done alone.

By building networks across these sectors, the partnership fostered knowledge exchange and collaboration, advancing the impact economy. Many researchers, previously unengaged with the movement for a new economy, were mobilized to contribute their expertise. At the same time, corporate lawyers and policy experts worked with entrepreneurs to craft public policies supporting sustainable business practices.

Scaling impact in the Global South

This partnership serves as a powerful model for how collective action and cross-sector collaboration can tackle complex challenges and foster inclusive growth.

We believe the groundwork for the impact economy has been laid over the past decade. The rise of purpose-driven businesses globally reflects a growing recognition that traditional economic models are unsustainable. These businesses are leading the way in building economies centered on social equity, environmental stewardship and long-term resilience. As the partnership enters its next phase, the focus is on scaling impact across the Global South. 

Together, we are not just imagining a better future; we are actively building it.

Read more about the key outcomes from the IDRC and Sistema B partnership