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Why Working with Social Innovators Advancing Racial, Ethnic Equity Is Smart Business

New Schwab Foundation research provides scalable lessons on how to drive value creation by addressing systemic socioeconomic exclusion at the local and global levels.

Published 6 months ago | About a 4 minute read

Image: Rebecca Hui (seated, right) created Roots Studio — one of six social innovators highlighted in the report — to cultivate an equitable marketplace for exchange between Indigenous artist communities and corporations through digitalization. | Roots Studio

A new report by the Schwab Foundation’s Global Alliance for Social Entrepreneurship — an initiative in partnership with the World Economic Forum — outlines a series of social-innovation solutions for integrating racial and ethnic equity into business practices and unlocking economic growth worldwide.

Innovating for Equity: Unlocking Value for Communities and Businesses — published in partnership with Echoing Green, the GHR Foundation and Dalberg — outlines pathways for collaboration between social innovators from racial and ethnically marginalized communities, governments and companies to harness largely untapped opportunities for the global economy.

“This report represents a call to action for leaders from across the public and private sectors to address racial and ethnic equity — not just as a moral imperative, but as a clear and compelling business case,” said François Bonnici, Director of the Schwab Foundation and Head of Foundations at the World Economic Forum. “By doing so, they can contribute to a more just and equitable society and unlock new avenues for sustainable economic growth and innovation.”

In the US alone, the widening racial wealth gap is estimated to cost up to $1.5 trillion in economic growth by 2028 — which translates to a cap on GDP growth of 6 percent. Racially and ethnically marginalized communities offer untapped potential for global economic growth. This new insight report takes a fresh look at the issue, focusing on how working with social innovators who are advancing racial and ethnic equity is a smart business decision.

To this end, the report features social innovators who have successfully partnered with companies and governments — providing clear, actionable lessons on how to drive value creation by addressing systemic economic exclusion. These cases illustrate examples of social innovators who are scaling solutions in ways that combine social value with commercial opportunity.

“Supporting these largely untapped areas of innovation and growth has the potential to include millions of customers, employees, entrepreneurs and investors in the global economy,” said Cheryl L. Dorsey, President of Echoing Green — a nonprofit dedicated to funding social entrepreneurship and innovation. “Economic equity can be a pivotal driver of growth in the US and globally. Now is the time for corporations, policymakers and innovators to come together and drive meaningful, system-wide transformation.”

Using six unique case studies, the report presents three scalable pathways for collaboration between social innovators, corporations and governments. Each of the three pathways combines a socially innovative approach to value creation that also addresses inequities at the root level:

Expanding markets: This approach highlights the value of providing products and services that better meet the needs of different communities. Through the examples of two innovators in disparate geographic contexts — sub-Saharan Africa and the US — the report shows how tailored delivery models can improve local business operations and sustainably grow and empower local communities.
Unlocking talent: This spotlights how more equitable hiring practices can unlock untapped talent pools; reshape employment opportunities; and remove existing barriers faced by individuals, businesses and communities. The case studies illustrating the way forward are two US-based social innovators who have strengthened their talent pipelines through efforts to dismantle racial and ethnic biases faced by Black and Latinx communities.
Broadening networks: This pathway focuses on the importance of building more diverse and inclusive supplier ecosystems that can help counteract entrenched historical marginalization. This is exemplified in the report by two social innovators who are connecting underrepresented Black and Indigenous vendors with global companies, bringing new markets and fair compensation to these vendors, and new and more authentic products to consumers worldwide.

Drawing on the six innovator case studies, the report highlights three distinctive characteristics that emerge in innovative models driving racial and ethnic equity:

Intersectional – Innovations treat customers as multi-faceted, with asset-based approaches designed across different elements of identity — from race to gender, from geography to culture.
Proximate – Innovators behind these models have deep familiarity with and proximity to the populations they are working with — allowing solutions to be rooted in the specific needs, preferences or characteristics of a particular location or group.
Inclusive – Innovative models leverage local entrepreneurs via structures that give them a stake in success — such as through community agent programs and rent-to-own financing.

“It is clear that the path to a fairer, more prosperous world involves working together,” Bonnici says. “This report outlines for businesses and leaders everywhere the clear economic and impact opportunity of making equity a core part of their operations, and shows that solutions and partnerships already exist to realize this untapped value.”