The answer to the world’s problems? Impact-driven businesses!
The world appears to be terribly broken. Trump. Brexit. Social and racial inequality across the globe. The constant battle against climate change and environmental damage.
There are countless reasons to get into a mode of resignation. It appears that the way the world has worked for the last century is falling apart.
It seemed all so easy in modern capitalism’s early days : Companies are meant to maximize their profits and serve their shareholders in maximizing their invested capital. This growing capital is then re-invested in the economy, leading to growth, new jobs & prosperity for all.
Grow, grow, grow & prosper: Back when pure capitalism still worked
This model worked exceptionally well in many western countries, leading to wealth and a growing and a prosperous middle class in the 1950’s and 60’s. It’s likely if you are a millennial living in Northern America and Western Europe that all that your parents ever experienced was that things seemed to get better year by year.
Soon the environmental and social movements emerging across the globe in the 60’s were bringing a major issue to attention: All that great wealth and growth went to the expense of environmental damage and first proof of human-made climate change emerged. At the same time much of the growth seemed to happen at the expense of the global poor, which was left completely out of reach for the West’s growing wealth.
The obligation to do good: Wouldn’t it be great if all companies took responsibility?
A lot has changed since then: NGO’s have become more powerful and effective through a growing influx of money and improved methodology of distributing funds.
Major Companies, at the same time, have almost without exception instituted CSR departments aimed at driving positive social and environmental impact internally. At least on paper.
The reality is that CSR has mostly been used to greenwash & distract from the fact that businesses still mostly operate in inherently environmentally and social unsustainable ways. The prevailing message still is: „Yes, we are an Oil Giant, but we also help disabled kids in rural Kenya and we put up some filters into our refineries, so we are actually the good guys. Don’t worry, you don’t need to feel bad buying our product“.
CSR is not enough. It’s even counterproductive on a way towards an impact-driven economy
This approach is simply not enough anymore. Positive impact can no longer be regarded as an afterthought of doing business. Contributing a small share of funds towards positive social and environmental impact is nothing more than a nice PR move aimed at distracting from what really needs to be done. If 95% of your companies activities result in no or even negative impact while the 5 people in your CSR department organize corporate volunteering days your company is still not a „good“ company. You still suck at achieving any impact beyond profits.
Still think maximizing profits and positive impact at the same time is impossible? You have already been proven wrong!
At the same time there is a new emerging movement of profit-driven companies that prove everybody wrong who thinks that capitalism and doing social & environmental good are incompatible. Many business leaders have become aware that sustainability needs to become a core part of their business.
The examples for this are countless. Startups such as The Ocean Cleanup and Wefarm have found ways to both achieve tremendous scalable impact and build a profitable business model on top of that. The Ocean Cleanup collects plastic out of the world’s oceans, with 50% reduction of the Great Pacific Garbage Patch expected in 5 years. The valuable resource is then sold and recycled. Profit & impact are inherently connected. Wefarm enables rural farmers across the developing world to access vital knowledge without access to the internet. This approach does not only achieve increased profits and sustainability in farming, but also an attractive business that Tier 1 Investors such as Localglobe have invested in.
The impact-driven business goes mainstream
Even tech giants like Apple are undergoing a vast shift. When they gathered their community of developers to introduce a bunch of new products the company decided to open the presentation with Lisa Jackson, VP Environment, Policy & Social Initiatives at Apple. This action went beyond a mere PR move, announcing groundbreaking robots that recycle iPhones at their end of life and vast projects that lead to transforming all Apple facilities to 100% green energy.
The times where positive impact should be left to CSR departments and NGO’s are over! Let’s get rid of what CSR is and put our time and resources towards figuring out how our business models can achieve meaningful impact, not as a nice-to-have, but as a main objective of doing business!
