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Businesses Should Invest More in Society. Here's Where to Start.

Benefiting society is a competitive advantage.

Opinions expressed by Entrepreneur contributors are their own.

Much to his surprise, billionaire executive ' announcement of a $2 billion fund was met with immediate skepticism. Commentators saw irony comparing his philanthropy work and 's less generous practices -- namely, reports of extremely overworked delivery drivers, employees having to sleep in tents because they can't afford rent, and the company pressuring Seattle's city council to drop a proposed tax to fund local affordable housing. To many observers, there was a clear and fundamental disconnect between the noble intention of Bezos' global philanthropy overture and the reality of documented labor practices tied to corporate bottom lines. Instead of letting businesses dig holes and relying on philanthropy to fill them up, we need to demand more from businesses than just profits.

Caiaimage | Sam Edwards | Getty Images

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In short, we need to demand that businesses create a positive impact on society. Meanwhile, investors -- who are becoming increasingly attuned to social and environmental issues -- should zone in on startups with a specific mission, whether it's to tackle common societal hurdles like closing workforce or digital skills gaps, or to eradicate the world of impactful afflictions like Alzheimer's disease. Here's three ways business owners can create more sustainable and, over the long-term, more profitable companies.

1. Invest in companies with vision beyond profits.

Socially conscious investors should research and pursue companies that develop clear benchmarks for what real impact looks like to them -- and have metric-supported plans to meet their standards. Another unusual criteria is how we approach our investment opportunities from problem first, solution second. We need to understand the problem from the customer side.

At MaRS Catalyst Fund, we frequently look at storage companies, because without storage, our ability to use renewable power is limited. With limited renewable power storage, we can't make a dent in solving CO2 emissions. But if we can scale a handful of energy storage companies that can make renewable energy available 24/7, we can massively reduce CO2 emissions by replacing fossil burning fuels. Our portfolio company, Hydrostor, is working on solving just that. We expect ventures to continue to iterate on how they are solving the problem over time, but expect that the problem endures and the solution changes.

The approach we take is not for every investment firm, but I do think there are lessons for the broader VC community looking to launch social impact funds, as well as noble startups in pursuit of crucial early funding. For VCs, committing to specific sectors helps them create a social impact practice centered around subject matter expertise and a shared commitment to improving human and environmental conditions. For startups, a VC firm with clear areas of focus -- and a social impact investment track record that backs it up -- helps them understand where VCs are coming from. It also lets them know whether or not their social impact-oriented activities fit into an investor's wheelhouse, saving both parties time and resources if that's not the case.

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2. Impact investors need new metrics.

Currently, only a handful of impact funds actively quantify portfolio progress and investment goals. However, I think more should hold themselves accountable and focus on their core missions, quantifying investments that show real world impact -- from reducing manufacturing carbon footprints by 5 percent to retraining 250 blue collar workers to code every year. Indeed, numbers carry a significant psychological effect. If you apply economic calculations to a specific environmental problem, suddenly it seems real, tangible and important. It's why news programs offer the latest stock market numbers every evening, even though they're not a great proxy for the health of the . It's also why businesses measure their success based on profits, margins and operation costs.

When I meet potential ventures, I focus on measurable results from the work of these companies and whether they reflect our fund's values. Once we invest, we set clear mutual impact goals, benefits and metrics. Investment funds with clearly defined impact goals also help company executives, who may not be used to considering these factors in depth, understand where they are coming from.

For instance, my colleagues and I launched MaRS Catalyst Fund with the specific aims to reduce carbon emissions by 32 million tonnes, improve the health of 16 million people, save health systems $16 million and advance job-related skills for 16 million people to ensure sustainable and long-term careers. At the outset, we devised these goals based on how our portfolio companies forecast impact across three sectors: cleantech, energy and healthcare.

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3. Hold VCs and portfolio companies accountable.

If a company's motto is "do no evil," yet it proceeds to put harassers before women, then investors have to look deeper than the company's website if they want to change bad business practices and bad behavior. The good news is that a metrics-driven impact investment approach will help VCs avoid startups that wade into ethically murky waters. Investors and VC firms looking to increase social impact have an opportunity to lead by example and hold themselves to higher standards. This process begins with aligning overall activities, establishing reachable goals and reviewing current portfolio companies to select sectors for early social impact efforts. Ultimately, social impact isn't a liability for today's ventures or investors. It's actually a competitive advantage.

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