Action Guide

Authentically Invest in Communities

Environmental Defense Fund

Authentically investing in communities is crucial for corporate sustainability programs. This involves investing in local community efforts that create opportunities and positive impacts and following best practices such as conducting a community needs assessment, developing an investment strategy, building partnerships with local organizations, measuring and reporting impact, and continuously improving. These practices foster shared value creation, strengthen the social license to operate, and generate lasting benefits for all stakeholders.

As sustainability becomes an increasingly important aspect of corporate responsibility, investing in communities has emerged as a critical strategy for medium and large companies in the US. It’s no longer enough to simply focus on reducing environmental impacts and improving workplace practices. To truly make a difference, companies must also invest in the communities where they operate. This means going beyond traditional philanthropy and taking a more holistic approach that involves authentically engaging with local communities to understand their needs, priorities, and aspirations. By investing in local communities, companies can help create jobs, stimulate economic growth, and support social and environmental initiatives that align with their values and business objectives. This can lead to an improved brand reputation and a stronger connection to the communities, which ultimately result in greater customer satisfaction and loyalty and increased sales and revenue over time. 

Authentically investing in communities requires a commitment to building long-term relationships and creating shared value. This means investing in local community efforts that create opportunities and positive impacts for all stakeholders, including employees, customers, suppliers, and the wider community. To do this effectively, companies must follow best practices such as conducting a community needs assessment, building partnerships with local organizations, developing an investment strategy, measuring and reporting impact, and continuously improving. 

Best Practices for Community Investment 

  1. Conduct a community needs assessment: Start by conducting a thorough assessment of the community’s needs and priorities. Engage with community leaders, local community-based organizations (CBOs), and residents to understand their perspectives and learn about their values, culture, and history. This information will help you identify investment opportunities that align with the community’s needs and priorities.  
  1. Build partnerships with local organizations: Partner with local organizations and invest in community-led projects that promote social and environmental sustainability. These partnerships can help you leverage the expertise and knowledge of local organizations to create meaningful impact, build trust, and achieve shared goals. It is important to work with CBOs that have established relationships with the community and can help you navigate local norms and customs. 
  1. Develop a community investment strategy: Use the information gathered from the needs assessment to develop a community investment strategy that aligns with your company’s goals and values. The strategy should identify investment opportunities that promote social and environmental sustainability and create long-term value for the community and the company. Examples could include investing in long-term projects lead by CBOs that improve both the natural and built environments locally or investing in community development financial institutions (CDFIs), which help to bolster the local economy by providing banking services and loans to low-income, often marginalized community members. 
  1. Measure and report impact: Measure and report the impact of your community investments on the community’s social, environmental, and economic well-being. These metrics should be determined while creating your company’s investment strategy to ensure that they are relevant and meaningful to the community and the impact that the company is hoping to create. It is also key to transparently share your results and progress on a specific cadence (quarterly, annually, etc.). This will help you demonstrate the value of your investments and build trust with the community by holding your company accountable to disclosing its progress. 
  1. Build long-term relationships: Companies should continuously improve their community investment strategy based on their progress toward identified metrics, as well as create a bi-directional system in which the company both learns from community feedback and experiences, and proactively shares knowledge with the community to foster collaboration and build long-term relationships. Investing in the community is a continuous process, and companies must engage regularly and be responsive to the community’s needs and priorities.