How do you ensure that the old economy actually transforms into the new green economy? I think that is the most important question of the next 10 years. There has never been so much support to make our economy and business more sustainable and social, as now. This support is found among employees and customers of companies. But there is also clear support for change in society, words are increasingly becoming real actions.
Academic researchers demonstrate time and time again the negative impact of, for example, a skewed distribution of income, the emission of CO2 or the effect of the disappearance of part of the biodiversity. But researchers also show that companies that are among the top performers in the field of sustainability in their sector also achieve the best business results. Numerous causal connections can be made between direct and indirect effects of business operations and their social impact.
Governments, local, regional and national invest in a sustainable and inclusive society. COVID-19 support funds have sustainable preconditions, as far as possible. The EU Green Deal will stimulate a green transition. Everyone seems to understand that there must be a transition. Where sustainability and expensive were often seen as synonyms, the association has become more toward ‘innovation’. And although the finger is still being pointed at another, we see important developments that point to the transition.
I think the financial sector is a very relevant in this development. Banks, insurers, institutional investors have transformed from conservative to boosters over the past 1-3 years. More and more economists and financially driven people understand very well that a transformation must take place, simply for financial reasons. The terms “resilent” and “sustainable” seems to be connected. And certainly for risk-averse institutions, this is a very important alliance. Many banks are “around” and position themselves as increasingly greener and more social. Where the sector was still blamed for the crisis in 2008, the same sector is now taking the lead.
The end of the tunnel
But all this together does not seem enough to bring about the massive transformation of “old” economic thinking and acting into the “new” sustainable and inclusive economy. At least not fast enough. I’ve argued it before, we need an evolution, not a revolution, because we want lasting change. But if evolution is not fast enough, impatience will also increase. Measuring impact is an answer to that impatience and shows the light at the end of the tunnel.
This applies not only to the social challenges we face, but certainly also to the performance of companies in this area. To use an example from a bank: what is the impact of providing a green mortgage? Sustainable because there are energy label requirements for the mortgage. But also social, because someone can buy a home. Quantifying such a transaction on impact makes little sense, but when it comes to all transactions in this area from a mortgage lender, the impact becomes a lot clearer. This makes the impact of the transition from the “old” mortgage form to the “new” suddenly visible and valuable. And by monitoring this impact over time and even sector wide, it becomes clear how far we are with the transition.
Based on impact valuation, social goals and commercial goals of an organization can coincide and eventually add up. Every organization must calculate and direct their social impact. Publishing is not necessary, but it is inspiring. That will encourage more organizations to show their transformation from “old” to “new” economy.