Sir Ronald Cohen and Paul Polman urge companies to increase their level of ambition in the face of major challenges and generate net positive impact

Madrid, October 16, 2024 — Impact Day 2024, the leading impact event in Spain, was attended this year by Sir Ronald Cohen, known as the “father of impact investing” and president and co-founder of GSG Impact, and Paul Polman, former CEO of Unilever and business leader who promotes systemic change in the world.

The event, organized by the Impact Observatory -an initiative of the sustainability and impact consultancy Transcendent and the law firm Ontier- was a meeting of leaders already committed to sustainability and social impact who seek inspiration at the highest level.

In front of more than 300 businessmen, executives and company directors, both Paul Polman and Sir Ronald Cohen urged that the level of ambition be increased in the process of transforming the business model towards “a purely positive impact”. As Polman explains, “we need to build net positive businesses, that is, companies that take responsibility for the impact they generate on the world and improve the well-being of all people.” And the fact is that, he added, “the cost of inaction is already greater than the cost of action”.

To this end, he argued that it is necessary to transform the traditional business model, currently based solely on maximizing profits or profitability for the shareholder, into a “purely positive” model, which involves measuring all the impacts generated by a company to “give more than it receives”.

From the perspective of financial opportunity, Cohen insisted that the new approach based on the trinomial profitability-risk-impact is not only a lever for generating value, and a tool for facing challenges, but also a great business opportunity. “The question of when global transparency will come to the new impact accounting is no longer “if” it will come but “how soon” we will have it,” Cohen explained.

In this regard, Cohen announced that just this week the International Foundation for Impact Assessment (IFVI) has released the methodology, models and a database with nearly 100,000 elements to assess and monetize environmental impact.

After years of work, this milestone marks a before and after because it demonstrates three aspects that are key: That impact accounting is feasible on a large scale, that impact accounting is valuable and relevant to decision-making, and that significant progress is being made to expand the way in which we conceptualize impact.

Steps are being taken, but neither are they enough nor is progress being made fast enough

Cohen and Polman agreed that the positive impact must go beyond conventional sustainability because it is not about “causing less damage”, but rather about transforming business models so that companies, as Polman defends in his book “Clearly Positive”, give back to society and the planet more than they extract. This implies a production model that repairs, restores, and regenerates, increasing the well-being of all stakeholders, from employees to investors, to customers, suppliers and communities.

Positive impact becomes a strategic business opportunity when companies seek to solve social and environmental challenges through their activities, positioning positive impact as a central element in corporate strategy.

Spain is facing a series of social and environmental challenges that require a coordinated response from the private and public sectors. Although many companies are already integrating the impact into their business strategies, especially forced by increasingly demanding European regulation, “not enough progress is being made, and it is not being done quickly enough”, they agreed to point out.

In addition, significant challenges persist that require innovative solutions, which require investment in new technologies and greater collaboration between the public and private sectors, but also with other organizations.

In a context of political, economic and social crisis and increasing complexity, the opportunity lies in companies not only responding to regulatory requirements and those of their stakeholders, especially shareholders, but also to lead a radical change in their “business as usual” business model to work on a different model.

This approach requires collaboration and coordination, financial and non-financial resources, and innovation and technology. But, above all, as Polman emphasized, it requires courageous, committed and ethical leadership that puts the interests of all its stakeholders and society in general at the center of decision-making.

The impact economy offers Spanish companies, a business fabric made up mostly of SMEs, the opportunity to design new business models, explore new markets, develop products to provide innovative solutions to the great challenges we face. The use of new technologies is a lever that can bring social impact to scale.

The major challenges faced by Spanish companies in the face of impact

With the growing demand for transparency, due to the new social awareness on the part of consumers and investors, companies are under a high degree of scrutiny about the impact they generate.

European regulation is also pushing towards greater transparency of the damages caused by companies. This is, as he explained María Herrero, president of Impact Observatory and partner of Transcendent, one of the biggest complaints from companies, especially smaller ones. “The excess of Spanish regulation means more than 1 million pages published in the Official State Gazette, it weighs equivalent to a dozen cows, a height comparable to the Sagrada Familia, or a straight line length equivalent to the Madrid-Murcia route, that is, 378 km”, as explained by the CEOE when referring to the regulation of companies.

The Spanish company is also concerned, according to the CNMV, about the geopolitical crisis with the conflicts in Ukraine and the Middle East, whose immediate effects are uncertainty, the threat to supply chains and the rise in prices of raw materials, especially energy resources. There is also concern about the rise in rates that generate volatility in markets and increases the cost of credit and financing for companies, concerns about the evolution of exchange rates, the impact of increasing regulation on climate and sustainability, and an environment of greater digitalization, which increases security breaches in information systems.

That's why the bigger the storm, the more resilient companies have to be. For Polman, “clearly positive” companies will be better positioned to face all these major challenges that jeopardize the company's own long-term survival.

Companies that lead with commitment

The event, presented by Pedro Rodero, president of Ontier Spain and vice-president of the Impact Observatory, and by Ana Ruiz, partner of Transcendent, culminated in a round table moderated by Alejandra Kindelán, president of the Spanish Banking Association (AEB), What has he counted with the participation of Elena Valderrabano, global director of Sustainability at Telefónica; Teresa Parejo, Director of Sustainability of Iberia; Sara Ramis, Director of Customer, Marketing and Sustainability at Barcelo Hotel Group; Manuel Rua; Director of Sustainability of Amadeus, and Ángel Pérez Agenjo, managing partner of Transcendent.

All of them have analyzed the fundamental role of companies, demonstrating leadership and commitment to an economic model that promotes sustainable and responsible growth.

The meeting was a unique opportunity to understand, firsthand, the paradigm shift driven by the new trend of impact, or “purely positive” thinking, which maintains that impact must be the engine that drives business decisions, leading them towards the greatest economic opportunity of our time: the search for solutions to major global challenges, especially climate change and inequality.

‍