Business purpose drives value generation

The purpose is a strategic lever of value generation and its profitability is more than proven. Companies with a defined and integrated purpose, whose focus is on improving their financial results and on common well-being, obtain a better performance, a highest market valuation And they create more shareholder value compared to the rest.

This need to incorporate ESG (social, environmental and governance) aspects is a trend that has no turning back and that will force companies to transform themselves, making impact a management tool.

“The Purpose increasingly demands the professionalization of business leaders”

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A New Committed Leadership

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The activation of purpose and the management of social, environmental and governance impact is becoming an element that requires a greater professionalization to company leaders.

To address this issue, José Antonio Labarra, CEO of ROADIS, a leading company in the development, operation and asset management of transportation infrastructure, recently met with Ángel Pérez Agenjo, managing partner of Transcendent, at a meeting organized by APD on Business Purpose.

https://www.youtube.com/watch?v=RkHACmHbdlE&t=1s

The purpose as a management tool and a lever for generating value

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The five advantages of purpose in companies

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There are a number of competitive advantages that differentiate a company that works and activates the Purpose from others. These include:

• Increase profitability and market value. Purposeful companies improve their market value faster than others. However, the purpose has a positive impact that goes far beyond the companies' income statement, since it also generates many other benefits.
• Improves reputation and legitimacy to operate: By publicly declaring its purpose, a company demonstrates its commitment and the benefits it brings to its stakeholders and to society as a whole, and this clearly enhances its reputation. Therefore, those companies that define and activate their purpose significantly reduce the risk of a corporate scandal that will erode their license to operate.
• It allows you to manage and retain talent: Business purpose is a differentiating element that can be beneficial for these three aspects since, from the point of view of Human Resources management, it constitutes a true strategy of employer branding.
• Customer Loyalty: It emphasizes the unique and distinctive contribution that the company makes to the big problems we face. For this reason, it has the potential to generate stronger relationships with its customers who tend to be more attracted to companies that transmit authenticity and that they consider to be worthy of their trust, when a company sets and activates its Purpose awakens interest and attraction on the part of its customers.
• Investor interest increases: Investors are increasingly integrating ESG criteria into their decisions and are interested in the social and environmental performance of companies.

In the case of ROADIS, its Purpose is in the creating value in those communities where it operates through profitable investments in major infrastructure projects. To do this, it relies on 4 major attributes: ethics, prosperity, innovation and security”.

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The process of transformation towards sustainability

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The company led by Labarra decided in 2019 to take a step forward and adopt sustainability as part of your business model and, above all, as a lever for creating value in order to become an active part of the transition to a more responsible and sustainable economic model.

According to its CEO, “we define a Master Transverse Sustainability Plan to all areas of the company offering a framework for action that would allow us to have a solid position in the business context, as well as to become an active part of the transition to a more responsible and sustainable economic model”.

For his part, Pérez Agenjo points out that “the market rewards purposeful companies and punishes those who don't have it. That is already part of the new business paradigm. And that's why, for 43% of companies sustainability policies and the management of ESG parameters have become a Urgent topic”.

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Measuring impact, a key tool to avoid “Impactwashing”

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Pérez Agenjo assures that establish an impact measurement system of the company, setting some indicators and managing to bring them to the center of corporate strategy is one of the first steps in combating the already known `Impactwashing'.

For the CEO of ROADIS quantify and measure impacts it is essential to know and analyze the impact that is generated both on society and on the environment. A quantification that is not easy, but that is necessary because what is not measured cannot be improved.

“Quantifying and measuring impacts is essential to know and analyze the impact that is generated”

To this end, they have established a system for measuring the company's impact, and have Set some indicators with the objective of bring them to the center of corporate strategy.

“At ROADIS we have developed a methodology for measuring economic, social and environmental impact of our assets in order to identify the medium and long-term effects generated by the assets we have on users, employees, communities, the environment, suppliers, institutions and any other relevant actor in the environments in which we operate. It's a valuable tool that we use to identify and quantify impacts from a broader point of view. A methodology based on the best practices of the Impact Management Project (IMP)”, concludes Labarra.