Capitalism based on profit maximization is broken
This transformation must be led by the CEO with the commitment of all senior management of companies because it is a business opportunity and a competitive advantage.
Measuring and managing impact under a standard model that makes transparency, management and comparison between companies possible are the major challenges ahead of us.
The meeting between José María Álvarez-Pallete, executive president of Telefónica, and Gonzalo Gortázar, CEO of CaixaBank, with Sir Ronald Cohen, president of Global Steering Group for Impact Investment (GSG), which promotes a new impact economy, at a table moderated by María Herrero, partner of Transcendent, served to discuss the need to redesign a new capitalism, which pivots around social impact.
The debate, which took place within the framework of VII Ship2B Impact Forum, highlighted that it is necessary to redefine capitalism because the system focused only on maximizing shareholder benefit, which has lasted until today, is broken. During the debate, attention was drawn to the strategic importance of impact, which represents an opportunity and a competitive advantage that improves the income statement of companies due to its direct impact on financing and on their economic and reputational costs. In this way, it not only maximizes the positive impact but also limits the negative impact on the lives of people and the planet's resources.
During their interventions, everyone agreed to point out that “the moment of impact has come” and that this transformation towards capitalism 2.0, based on the company's social purpose and social impact, is not merely recommended, but is already essential. In the same way, they pointed to the need for CEOs and top management of companies to lead this transformation and land it in the strategic plan, thus reaching all layers of the company.
https://www.youtube.com/watch?v=Y8OBlqjRaMI
In fact, in companies such as Telefónica or CaixaBank, it is something they are already working on, as explained by their top managers. With bonuses to its managers linked to achieving sustainability and social impact variables, promoting impact investment and also funding for social entrepreneurs, mobilizing assets, connecting millions of lives through cleaner and less polluting fiber optic networks and, above all, transmitting to the entire organization the need to generate, measure and manage the impact on its operations, products and services.
A process of organizational transformation and a transversal mentality that, in addition, has been accelerated by the coronavirus pandemic, which has placed people more than ever at the center of financial and business decisions.
Ahead are major challenges, such as measuring and managing the impact on specific KPIs because “what is not measured cannot be managed”, they said. It's the era of impact transparency.
For this reason, and according to María Herrero, partner of Transcendent, it is necessary to “integrate the chip of impact and social purpose into the business model itself and adopt business models that include a positive impact on its products and services, so that the more successful the company is in its sales, the more impact it has”.
Sir Ronald Cohen He recalled during the talk what he reflects in his new book Impact Driving Real Change: “This is the impact revolution and each of us has a role as consumers, employees, savers, employers, investors... We are all and must be part of a new 2.0 capitalism of growth and shared prosperity where no one is left behind.”
