Can South African companies become impact investors? 

Forward-thinking companies in Europe and the United States of America have long adopted impact investing to support their sustainability strategies, build more resilient supply chains and scale their social impact spending by recycling capital or by bringing in like-minded funders who share their mission.

Global companies such as IKEA, Danone and Rabobank have a strong track record of using impact investing to align social spending with core business values.

In 2018, an article titled ‘Innovative financing: Why it’s time to change the way we change the world’, first published in the Trialogue Business in Society Handbook, examined how companies could use innovative financing to take a more active leadership role in development.

This article revisits the idea, examining how companies are engaging in impact investing across corporate social investment (CSI), enterprise and supplier development (ESD) and core commercial divisions – often without labelling it as such.

Drawing on local case studies, we examine how companies are linking business objectives to social outcomes, who is already active in this space, and what is holding others back from fully embracing innovative financing approaches, especially within CSI and other social impact funding.

Why impact investing? 

South African companies are already among the most powerful architects in the country’s economic and social landscape.  

Collectively, they control and deploy trillions of rands each year, shaping everything from supply chains and infrastructure to access to jobs and financial services. Every investment decision – whether building a factory, extending a loan or selecting a supplier – influences how value flows through the economy and who ultimately benefits. 

Yet much of this influence remains disconnected from corporate social investment. CSI, ESD funds and other social initiatives are often separate from core business strategy. While these interventions can make a meaningful difference at a local level, they are rarely sufficient to ‘move the needle’ and address deeper structural challenges, such as inequality, youth unemployment, and climate vulnerability. This is particularly stark in a country where unemployment exceeds 30%, and inequality is among the highest globally. 

The result is that companies’ commercial activities have far greater impact – positive or negative – than their social programmes, yet those programmes are rarely designed to harness the full power of the business. Social investment is still often treated as a cost centre rather than a strategic asset, and can even compete with regulatory pressures or sustainability requirements, rather than reinforcing them. 

This is where impact investing – and, more broadly, innovative finance – offers an alternative. Now a well-established practice, it provides a set of tools and strategies to align financial returns with measurable social and environmental outcomes.  

By building these outcomes into core business value, it offers perhaps the most direct way to close the gap between “doing good” and “doing business”.  

Arguably, CSI sits closest to the organisation’s intent to create social value. Yet our research shows that impact investing and innovative finance activity is being driven by many different parts of the business – not just corporate foundations or CSI. In South Africa, institutional investors, development finance institutions and corporates are beginning to understand that solving systemic challenges – energy insecurity, youth unemployment, climate vulnerability – can also unlock new markets and competitive advantage.  

Globally, the impact investing market has surpassed $1 trillion in assets under management (AUM), and Africa is emerging as a critical frontier for this capital. The opportunity is to harness this capital to de-risk entry into new markets, strengthen supply chains or scale existing programmes. 

Corporate impact investing strategies 

For companies, impact investing does not always mean setting up a fund. At its simplest, it refers to deliberate efforts to direct commercial and investment activity towards positive social or environmental outcomes. Indeed, companies and corporate foundations in South Africa are already applying this logic in different ways.  

A scan of local case studies suggests four broad approaches, shaped by context, objectives and where the mandate for impact sits: (1) optimising impact (2) scaling impact (3) value chain impact, and (4) systemic impact. These strategies sit along a spectrum – from strengthening existing programmes to coordinating across ecosystems – but all reflect a more advanced level of intent to align business and impact.  

In this sense, they form part of a broader shift in the evolution of CSI – from traditional grant making (CSI 1.0) to more strategic, business-aligned approaches (CSI 2.0), and now towards integrated, outcomes-driven models (CSI 3.0), where social impact is embedded in how value is created, not treated as an add-on.   

Strategy #1: Optimising impact – coordinated programmes and funding sources  

The most immediate starting point for many companies is not to launch new initiatives, but to better align what already exists.  

In practice, this means being more deliberate about how different programmes, funding streams and business units contribute to shared social outcomes. 

One approach is to consolidate existing funding – such as CSI grants and ESD spend – and direct this in a more coordinated way. The aim is not simply efficiency, but to generate clearer, more measurable impact from what has already been deployed.  

Standard Bank’s OneFarm Impact provides one example. 

This model brings together CSI and ESD funding behind the OneFarm Share platform, while maintaining separate nonprofit (NPC) and commercial (Pty) Ltd. structures for compliance. This enables consolidated management, reporting and verification of impact, while preserving the integrity of each funding stream.  

The benefits are twofold. At a basic level, coordination reduces duplication and optimises the impact of every rand spent. More importantly, it aligns different parts of the business around a shared objective, creating opportunities for collaboration that may not have arisen otherwise.  

Old Mutual has taken a similarly integrated approach, channelling corporate funds into targeted impact initiatives through several specialised arms, including Old Mutual Alternative Investments (OMAI), the Masisizane Fund and the Old Mutual Foundation. These structures focus on areas such as social infrastructure, affordable housing, education, and support for small, medium, and micro enterprises (SMMEs), with the aim of driving sustained economic growth.  

Oversight for this approach sits within Old Mutual’s group-level impact and social investment functions, enabling better coordination across different mandates. 

Strategy #2: Scaling impact – from grants to strategic asset allocation 

Another approach is to rethink grant programs so that they can sustain themselves over time.  

Rather than treating grants as one-off disbursements, companies are beginning to use impact-investing mechanisms – such as recoverable grants, endowments and step-down financing – to recycle capital and extend the life and reach of their interventions. 

Pele Energy Group offers one example. Beyond its compliance obligation to channel funds to local economic development programs, Pele set up an endowment funded through an equity stake gifted by Pele shareholders; as equity value increases, an equity-linked mechanism allows excess value to be available for disbursement as grants via Knowledge Pele.  

This approach shifts social investment from a finite resource to a more durable funding stream.  

Beyond providing beneficiaries with greater certainty, it allows companies to deploy more strategically and reduce long-term reliance on pure grant funding.  

Scatec’s work in the Northern Cape points in a similar direction

Through its socioeconomic development (SED) funding, the company partnered with Blue Sky and the Onseepkans Development Company to support a local, 100% black-owned organic raisin farm. Early-stage, patient funding, combined with technical support, gave the enterprise time to stabilise operations, grow revenue, and transition to certified organic production. The result is a more viable business, with direct economic benefits for the community members who were part of the cooperative. 

Strategy #3: Value chain impact – building resilient supply chains and markets 

Companies are already deeply embedded in value chains, which gives them significant influence over how value is created and distributed. Many have long used concessional finance or direct investment to support local suppliers, accelerate technology adoption and open up new markets. 

Tiger Brands’ Dipuno Enterprise and Supplier Development Fund provides an example of this. The R100m+ initiative supports Black-owned agricultural enterprises by combining low-interest loans with technical assistance and access to the company’s supply chain. In doing so, it aims to strengthen food security while building a pipeline of viable suppliers. 

However, direct equity investment into SMMEs remains relatively uncommon in South Africa. Companies are more likely to channel funding through intermediaries, often as part of their Enterprise and Supplier Development (ESD) commitments. In practice, this means pooling capital into ring-fenced funds and partnering with specialist impact fund managers, such as Impact Amplifier or Edge Growth, to deploy a mix of debt, equity and blended finance. These structures can support high-potential suppliers to expand operations, upgrade technology or scale production.  

Corporate foundations can also play a role, even when they operate independently of the core business.  

Aséli Impact Capital operates as an independent ‘permanent capital vehicle’ established by the Anglo American Foundation to address the financing gap faced by early-stage green-economy enterprises. Although distinct from the corporate entity, the fund design drew on Anglo American’s commercial and legal expertise, illustrating how corporate capabilities can still shape independent impact vehicles.   

Strategy #4: Systemic impact – catalysing ecosystem coordination 

Some challenges – especially in areas such as education, health and employment – cannot be addressed by a single actor. Increasingly, companies are participating in collaborative models that bring together government, funders and delivery partners (including competitors) to structure outcomes-based solutions.  

South Africa has seen early examples of this through social impact bonds. The Bonds4Jobs initiative, for instance, channels upfront capital from investors to Harambee, a youth employment accelerator, to train young people. The Tutuwa Foundation was an early-stage funder of this model. Outcomes funders, including the Jobs Fund and the Gauteng Provincial Government, repay investors only if employment outcomes are achieved. The structure shifts risk away from the public sector, while tying funding directly to measurable results.  

More recent models extend this approach to environmental outcomes. A nature-linked bond across several divisions of the First Rand Group supports The Nature Conservancy (TNC) in restoring critical water catchment areas by removing invasive plants and increasing streamflow into dams.  

The structure brings together multiple roles within the group. FirstRand acts as issuer, project agent, and conditional funding donor, while RMB serves to arrange, structure and distribute funds. Ashburton Investments participates as a bond investor, and the FirstRand Foundation plays a dual role as both an anchor outcomes-based funder and the coordinating public benefit organisation (PBO) in the structure.  

The model links financial returns to environmental performance, with funding tied to the successful restoration of ecological systems and improved water availability.  

Finding the right home for impact investing activity 

Alongside strategy, companies face a practical question: where should impact investing sit within the organisation? This often depends on the department, team or executive driving the impact investing agenda.  

Embedding it within a company’s core operations can create stronger alignment between business activity and social outcomes. This is particularly relevant where impact relates directly to supply chains or ESG priorities.  

Woolworths’ Farming for the Future reflects this logic.  

By investing in supplier training and soil health technologies, the programme strengthens the quality of produce in the long term while building a more resilient supply base. These costs – such as audits and technical support – are absorbed as part of normal supply chain operations, rather than treated as separate social spend.  

Positioning impact activity within a corporate foundation offers a different set of advantages. Independence can create space for experimentation, allowing capital to be deployed more flexibly and with longer time horizons. 

Aséli Impact Capital illustrates this model. Its independence allows it to pilot more flexible financing approaches while still drawing on Anglo American’s commercial and legal expertise where needed.  

A third route is to invest via intermediaries. As seen in earlier examples, this remains a common approach in South Africa, particularly for Enterprise and Supplier Development (ESD) funding. In practice, companies partner with specialist fund managers or blended finance vehicles that pool capital and deploy it across a portfolio of enterprises. Even when companies play a founding role, these structures operate as independent platforms designed to attract additional investment.  

Taken together, these models raise a broader question: what role can CSI – and other social impact funding – play in making impact investing more mainstream? Increasingly, innovative finance is not replacing CSI but providing a mechanism for scaling and integrating it into core business activity.  

What is holding companies back?  

 If the models exist, what is slowing wider adoption? 

Part of the answer lies in complexity. Impact investing sits at the intersection of commercial and social objectives, and combining the two is rarely straightforward. Designing interventions that deliver both financial returns and measurable social outcomes requires new capabilities, new partnerships, and often new ways of working.  

Organisational structure is another barrier. In many companies, impact remains fragmented across departments – CSI, sustainability, procurement and core business units – each with its own priorities and sometimes competing incentives. These internal silos can limit collaboration and make it difficult to align capital around shared outcomes, even where the intent exists. 

Incentives also matter. CSI teams, in particular, often operate within reporting and compliance frameworks that prioritise outputs or predefined categories of spend. This can discourage experimentation with approaches that are harder to measure in the short term, but potentially more impactful over time. 

Research in South Africa suggests that CSI activity still tends to default to narrow project boundaries with limited levels of integration as opposed to transformational approaches. 

Finally, there is a persistent divide in how organisations frame impact and business value. While impact investing aims to bridge this gap, it requires a shift in mindset – from viewing social investment as a cost centre to recognising it as part of value creation. Until that shift happens, impact activity is likely to remain peripheral rather than embedded. 

Opportunities for corporate South Africa – and why social impact funding can be the catalyst 

Globally, leading organisations are already demonstrating how impact investing can be embedded across the corporate ecosystem.   

In many cases, it evolves naturally from existing social and environmental functions. Unilever, for example, has used its sustainability platforms to support inclusive supply chains and smallholder financing, strengthening both impact and commercial resilience.  

Microsoft has deployed corporate capital through its Climate Innovation Fund to back technologies aligned with its carbon commitments and to open new markets. Corporate foundations, meanwhile, often take a longer-term view, as seen in the Ford Foundation’s commitment of a portion of its endowment to mission-related investments.   

For corporate South Africa, the question is less about capability than about positioning. CSI and other social impact functions are typically small relative to the overall balance sheet. Yet they can play an outsized role in shaping direction – acting, in effect, as a rudder rather than the engine.  

Impact investing provides a mechanism to translate that influence into broader organisational change, linking relatively modest pools of capital to much larger flows within the business.  

There is a strong foundation to build on. South Africa has long been associated with leadership in socio-economic development, from the evolution of CSI to the adoption of governance frameworks such as the King Codes and integrated reporting. These reflect a business culture that has already embraced a broader definition of value and accountability. 

The opportunity now is to extend that tradition into impact investing. 

The tools are available, and early examples already exist. The challenge is to move from isolated initiatives to more systematic adoption – aligning capital, incentives and strategy in ways that deliver both financial returns and measurable social and environmental outcomes at scale.  

What comes next? 

For impact investing to move further into the mainstream, a few priorities stand out. 

Companies will need to build internal capabilities to design and manage more complex interventions, including stronger measurement frameworks that link impact to financial performance. There is also a need to rethink incentives, particularly within CSI, so that teams are rewarded for long-term outcomes rather than short-term outputs. 

Equally important is collaboration. Many of the most effective models – whether in supply chains or outcomes-based financing – depend on partnerships across sectors. Creating the conditions for these partnerships to work will be critical to scaling what is still, in many cases, a fragmented set of experiments.  

Ultimately, the question is not whether South African companies can engage in impact investing. It is whether they choose to do so at the level of ambition their resources and track record make possible.