Case study: Social enterprise emerges stronger after climate action ‘winter’
Posted on 11 Oct 2023
By Matthew Schulz, journalist, Institute of Community Directors Australia
Impact Sustainability is a Melbourne-based social enterprise helping businesses measure their impact on the environment.
But its difficult path to success is a lesson for others about the importance of patience, belief, and sticking true to your mission.
When director Hayley Morris established the business in 2011, she was already well equipped with business skills and experience honed at global share registry Computershare, established by her father, Chris Morris.
She had proven business smarts and experience, then, and every reason to believe her new venture would be a success. A foundation of her business model was work she expected would be generated by the then Labor government’s carbon trading scheme.
The company won the financial backing of a handful of angel investors – including her father, who had a minority shareholding – who were prepared for a potentially lengthy wait for dividends in exchange for long-term growth and positive environmental impact.
Axing of ‘carbon tax’ hit hard
“Impact Sustainability was started in a market that was very enthusiastic about corporate sustainability,” Morris says. “The ‘carbon tax’ was put in place not long after we launched, and business confidence in this space was growing.”
But changes in the political landscape soon forced her and other carbon-linked businesses into a major rethink: the Abbott government scrapped the tax in 2014. Suddenly Impact Sustainability was left struggling to convince businesses to adopt its sustainability premise, let alone pay for its services.
“You were selling sustainability before you were even selling your service ... and that sell got harder as business confidence about this dropped.”
In a business-style response, Morris stripped costs out of the business, focusing on the strength of the software, while winding back consultancy work and putting the aim of achieving B Corporation certification on hold. Eventually, just Morris herself remained to maintain the business.
Impact Sustainability’s aim shifted to survival, and effectively went into hibernation. In 2017, Morris said Impact Sustainability would be ready to expand again when the political and economic environment changed.
Several years on, the political environment changed dramatically.
Morris says 2020 marked a “pivotal change year” defined by major Australian bushfires and the global pandemic.
The bushfires put climate change back on the agenda in boardrooms around the country, while the pandemic’s forcible “time out” prompted many business leaders to refocus on their intention to act on climate change.
Several large clients got in touch and were not put off by Impact Sustainability’s then bare-bones website. All were seeking help with the work of measuring their carbon impact.
Morris approached the organisation’s investors to fund a major website revamp and to hire staff again.
The renewed interest in climate change culminated with the 2023 federal election which delivered a Labor government much more interested than the Coalition had been in taking climate action.
Since “reigniting” the company’s climate action ambitions, Morris has split off the strategic sustainability consulting arm of its business into a new entity, known as the Rewild Agency. It was a move aimed at enabling the two businesses to focus on their key missions.
Altogether, the two businesses now employ a dozen staff, not including Morris herself.
Competition is fierce in the sustainability sector
Morris said the burgeoning demand for the services of Impact Sustainability is reflected in the rapid growth of competitors, many of who have stepped across from the financial sphere or data analytics into carbon measurement.
“In the past 18 months to two years we’ve seen things shift dramatically. There is a new competitor every week either in Australia or globally,” Morris said.
Yet she believes that as one of the longest-standing firms in sustainability measurement, and one with a powerful commitment to social good, her social enterprise retains a distinct competitive advantage in attracting organisations which want to establish their ESG (environmental, social, governance) credibility.
For Impact Sustainability, that commitment includes continuing to pursue B-Corp (benefit corporation) accreditation and establishing its own ESG credentials.
Morris also hopes to build on the company’s partnership with the environmental not-for-profit, Sustainable Table, which she also founded. This will include connecting businesses with “on the ground” regeneration projects.
The latest challenge is now less about the political environment, and more about working in the highly competitive and fast-paced business technology arena.
“We were founded on social enterprise principles, but now we’re in a highly competitive tech space, so there’s a tension that comes from staying true to our principles while coping with the stress that comes from being competitive and making our business profitable.”
“But we want to provide an affordable and usable platform to support businesses to measure their emissions and actually reach net zero.”
“We’ve been around the longest, and we plan to be here the longest.”
More information
Read our social enterprise newsletter special edition (October 2023)
Advice from social enterprise expert: Hayley Morris
Understand the political and economic landscape, and be ready for it to change. Providing a service that’s in demand is one thing. But in an emerging market you may face the “double sell” of convincing people to buy a new kind of product while also hoping they’ll embrace a newly formed social enterprise. Tricky, but if you’re ahead of the curve and you are patient, you may find your solution is (eventually) exactly what people want and need.
"Don’t get stuck on your original idea," Morris says. A social enterprise must be prepared to “pivot” its model, even if it’s already underway. You’re not failing if your original idea is not what you end up doing. If you’re learning, adapting and changing, you’re being successful. “If it’s a new thing ... you’re allowed to fail. That’s what businesses do.”
You can’t achieve everything on day one. A social enterprise is a long-term proposition. And manage the expectations of your investors and stakeholders so they don’t expect returns or results in just a few years.
Seek advice, especially from the business sector, which has a lot to offer a social enterprise trying to launch.