Societal Impact

As a management theme, social impact is here to stay, but the subject is by no means new. Below, we will give a brief overview. But first: what does it actually mean, social impact? The easiest way to understand the term is to put it in a sentence. Executives, up to the level of the executive board, are increasingly forced to think about the social impact of their company. Companies, so the thinking goes, are not just there to make a profit. What also has become important is the impact of business operations: for example, on local communities, on stakeholders, such as customers and suppliers, on the environment. One step further, companies are increasingly asked to be socially useful. The term 'purpose' is often used to describe this. The company must therefore be of social value.

Corporate Social Responsibility in the NetherlandsSince 2017, Management Scope has published the Management Scope Corporate Impact Index every year to highlight companies that are doing well in this area. Focusing on impact did not just fly into the boardrooms. The generation of millennials is deeply aware of the importance of the theme and is forcing companies to think.

For the millennials, the theme did not come out of the blue either. The current broad debate goes back a long time. The most successful large companies reflected on their social responsibilities decades ago. For example, during the industrial revolution in the Netherlands, Philips and Heineken took care of their employees by offering them housing. Entire neighbourhoods in Amsterdam (Heineken) and in Eindhoven (Philips) were created in this way.

Corporate social responsibility in the international contextLess long ago, on 23 June 1999, the Dutch House of Representatives organized a debate entitled 'corporate social responsibility in an international context'. The debate focused on whether the government should play a role in forcing companies to adopt corporate social responsibility (CSR) or whether this was the responsibility of companies – and the government's role was primarily in the international debate on impact. Several terms were already associated with CSR at that time: corruption, the environment, working conditions and so on. SMEs tended to talk about sustainable business, while the corporates opted for CSR. In the years to follow, CSR would be explored in many ways. In 2003 the Dutch Corporate Governance Code gave the Netherlands a code of conduct for good governance (self-regulation) for listed companies. Another example is the National Climate Agreement, which was drawn up in consultation between companies, interest groups and the government.

In an international context, the Organisation for Economic Development and Cooperation (OECD) introduced ISO26000 in 2010: an international standard for corporate social responsibility that provides practical guidelines. Legislators worldwide also came up with stricter legislation in the areas of corruption, the environment, employee abuse and so on.

Sustainable Business off the agendaThinking around CSR ran parallel with the shareholder model. The shareholder model assumes that the share price ultimately also reflects the long-term behaviour of executives. In other words: if executives do the right thing for their customers, but also for employees and other stakeholders, this will be reflected in the share price. This thinking is said to be flawed, however. First, because not all executives always have the best of intentions for the rest of the world. But above all, CSR would often become more of a ‘must-do’ for companies than a broadly supported management theme. Many companies appointed a chief sustainability officer or some similar officer, whose task it was to ensure that the company did not do anything wrong. And that was the end of the matter. Indeed, as soon as the economy falters or shareholders sulk, a theme such as sustainable business often disappears from the agenda altogether.

The emergence of Sustainable Development Goals This has changed in recent years due to pressure from society, as described above, but there is more to the matter. The United Nations had a perfect sense of the spirit of the times and in 2015 came up with the United Nations Sustainable Development Goals (SDGs). In Dutch, this translates to duurzame ontwikkelingsdoelen. The SDGs are social goals such as no hunger, no poverty and clean water and sanitation for all. The goal is to implement this agenda by 2030. These SDGs have caused a revolution in the business world. Whereas CSR was hardly ever on the corporate agenda, the goals of the United Nations are so ambitious that large companies can perfectly use them as a basis for their strategy (and nowadays, also their mission quite often). Shareholder thinking is increasingly being exchanged for a strategy based on long-term value creation. Philips, for example, claims to be aiming to improve the lives of 3 billion people by 2025, and DSM's mission is to create better lives for everyone. CEO Feike Sijbesma is considered a pioneer in the field of impact in the Netherlands.

Finally, great progress is also being made in implementation. Social impact and sustainable business practices are high on the agenda these days. Think of trends such as integrated reporting, an ESG policy or sustainable innovations. On to a better world!

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As a major financial service provider, NN Group can make a significant societal difference, according to CEO David Knibbe. The Group’s equalization of all forms of childcare and parental leave made the news recently, but more is happening. ‘If you focus on non-financial results, the financial results will follow automatically.’

David Knibbe (NN Group) on Societal Impact at the Core of a Company

As a major financial service provider, NN Group can make a significant societal difference, according to CEO David Knibbe. The Group’s equalization of all forms of childcare and parental leave made the news recently, but more is happening. ‘If you focus on non-financial results, the financial results will follow automatically.’

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