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 for making our economy and business more sustainable and social. That support is among employees and customers of companies. But also in society a clear support for change, words are increasingly becoming real actions.
Scientists show time and again the negative impact of, for example, skewed income distribution, CO2 emissions or the effect of the disappearance of part of biodiversity. But scientists also show that companies that are among the top performers in terms of sustainability in their sector also achieve the best business results. Numerous causal links can be made between direct and indirect effects of business operations and their social impact.
Governments, local, provincial and national are investing in a sustainable and inclusive society. COVID-19 support funds get sustainable framework conditions, as far as possible. The EU Green Deal is going to provide a green transition. Because that a transition needs to take place seems to be understood by everyone. Whereas sustainability and expensive, were often still seen as synonyms, the association has increasingly become “better. And although the finger is still pointed at someone else, we see important developments that point to the transition.
I think a very relevant development is the financial sector. Banks, insurers, institutional investors have transformed from conservative to boosters in the last 1-3 years. More and more economists and financially driven people understand very well that transformation must take place, simply for financial reasons. The term “resilient” and “sustainable” seem to be linked. And certainly for risk-averse institutions, this is a very important connection. Many banks are ‘converting’ and positioning themselves as increasingly green and social. Whereas the sector was 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 sufficient to bring the huge transformation from “old” economic thinking and action to the “new” sustainable and inclusive economy. At least not fast enough. I’ve argued it before, we need evolution, not revolution, because we want lasting change. But when evolution is visibly not moving fast enough, impatience also increases. Impact measurement 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 cite a bank example, what is the impact of providing a green mortgage? Sustainable because there are energy label requirements attached to the mortgage. But also social because someone can buy a home. Quantifying such a transaction for impact makes little sense, but when it comes to all transactions in this area from a mortgage provider, the impact suddenly becomes a lot clearer. With this, the impact of the transition from the “old” mortgage form to the “new” suddenly becomes visible and valuable. And by tracking this impact over time and even sector wide, it becomes clear how far along we are with the transition.
Based on impact valuations, social goals and commercial goals of an organization can coincide and eventually even add up. Every organization should calculate their social impact and steer toward it. Publication is not necessary, but it is inspiring. That will encourage more organization to interpret their transformation from “old” to “new” economy.