ALL CORPORATIONS SEEK to differentiate themselves and look for new ways to create value. But when many traditional routes have been exhausted, how does an organisation change the way it does business?
We believe there are people within companies with the foresight, courage, ingenuity and compassion needed to step up to the challenge of creating long-term business value, while serving the needs of society and the environment.
These are no longer binary objectives. Profit and impact are no longer on opposite ends of a spectrum, requiring a trade-off of one for the other.
Profit and positive outcomes are not mutually exclusive, requiring a trade-off of one for the other. This creates a virtuous cycle where more positive outcomes can lead to more value for the company, which leads to the generation of even greater positive outcomes and organisational resilience.
Building this type of resilience is not easy and requires new ways of thinking within the corporation. This can be supported and encouraged through the relationships that a corporation creates externally and through the activities it undertakes to create value for all stakeholders.
Together, these actions will sustain the behaviours needed to act in accordance with the new way of thinking and can form part of a wider corporate change initiative.
By leveraging financial and non-financial corporate support, innovation within corporations can better serve their core business purpose. Innovative enterprises outside of corporations will have access to scalable knowledge and capacity; and more financial capital will flow into businesses and strategies that create positive outcomes.
Any businesses that will be here in 50 to 100 years will need to be actively contributing to the well-being of society. During periods of intense change, large corporations seeking opportunities to flourish will need to help to ensure there are stable economies where they can operate. Where is the unrealised potential?
Businesses are very proficient at measuring the output of what they do through financial statements. But businesses also create other forms of value – which can have positive or negative effects on society and on the environment. Beyond the value we can measure in dollars, pounds and cents, this is about how businesses serve a need in society.
In the past, companies operated on a strictly dichotomous basis. They would make as much money as possible – maximising shareholder return – and then allocate a portion of this return to a charitable giving programme, often with very little connection to the core business as a way of doing well.
Today more and more businesses are rejecting this binary notion of making money on one side, and having impact on the other.
Instead, they are actively exploring ways to do both at the same time – realising that creating positive outcomes for society and the environment is not a distraction from profit, but rather can reinforce and enhance it.
When they experience these sorts of aligned investments, everyone wins: the entrepreneurs, the business, customers, local communities and future generations. Value is generated for shareholders and wider stakeholders.
The Multilateral Investment Fund is a member of the Inter-American Development Bank Group.
