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!
For Angela Wilkinson, Secretary General and CEO of the World Energy Council a successful energy transition does not lie in grandiose projects. Rather, local initiatives that enthuse citizens will be a great help. ‘This way, we succeed more effectively in putting people at the center of the energy revolution.’
Read moreThe longing for a society that is cleaner, more innovative and more equitable is how one of the three young professionals at our roundtable powerfully summarizes the essence of the energy transition. It is about time for policymakers, scientists, citizens and the industry to act together. Optimism is important, but must not take over. ‘Sit back with the idea that everything will turn out fine? We are f*cked!’
Directors and supervisory directors are under the magnifying glass of both the media and society. During a breakfast session by Management Scope and Allen & Overy, top female executives exchanged thoughts on how they perceive this and what consequences it has, and subsequently came to four inspiring insights for not putting the brakes on excessively. ‘It cannot be that we all do nothing because we are too afraid.’
The longing for a society that is cleaner, more innovative and more equitable is how one of the three young professionals at our roundtable powerfully summarizes the essence of the energy transition. It is about time for policymakers, scientists, citizens and the industry to act together. Optimism is important, but must not take over. ‘Sit back with the idea that everything will turn out fine? We are f*cked!’
Directors and supervisory directors are under the magnifying glass of both the media and society. During a breakfast session by Management Scope and Allen & Overy, top female executives exchanged thoughts on how they perceive this and what consequences it has, and subsequently came to four inspiring insights for not putting the brakes on excessively. ‘It cannot be that we all do nothing because we are too afraid.’
What is the best way to encourage companies to become more sustainable? And how do we ensure that they take into account the external effects of their activities more? In addition to executives, according to David Veredas, professor of Finance and Sustainability and director of the Center for Sustainable Finance at Vlerick Business School, governments also have a role to play: ‘They should encourage market parties to behave responsibly.’
On his first hundred days as CEO of Rabo Carbon Bank, Roland van der Vorst says: 'Measurable impact for the bank, the customers and the world.'
Behind ESG goals lies a huge scope of issues. The amount of work involved in implementing ongoing improvements in sustainability is so vast that it delays (and for some even paralyzes) the process. The authors, associated with Valcon, recommend a pragmatic approach: start with what slows down progress and split up the enormous task into parts.
What is the best way to encourage companies to become more sustainable? And how do we ensure that they take into account the external effects of their activities more? In addition to executives, according to David Veredas, professor of Finance and Sustainability and director of the Center for Sustainable Finance at Vlerick Business School, governments also have a role to play: ‘They should encourage market parties to behave responsibly.’
On his first hundred days as CEO of Rabo Carbon Bank, Roland van der Vorst says: 'Measurable impact for the bank, the customers and the world.'
Behind ESG goals lies a huge scope of issues. The amount of work involved in implementing ongoing improvements in sustainability is so vast that it delays (and for some even paralyzes) the process. The authors, associated with Valcon, recommend a pragmatic approach: start with what slows down progress and split up the enormous task into parts.
How can you help farmers invest in and recover the costs of sustainable milk production? Are consumers willing to pay extra for climate-neutral dairy? How do you measure and report on non-financial KPIs? Hans Janssen from FrieslandCampina on the role of the CFO in focusing on sustainability and the associated dilemmas. ‘We want to map out the entire chain, from grass to glass.’
Read moreAre companies and investors just trying to make more money under the guise of ESG? Or does the call for sustainable business and investment threaten returns and thus a healthy business community and the jobs of ordinary citizens? Professor Robert Eccles outlines the polarization and advocates pragmatism.
How can you help farmers invest in and recover the costs of sustainable milk production? Are consumers willing to pay extra for climate-neutral dairy? How do you measure and report on non-financial KPIs? Hans Janssen from FrieslandCampina on the role of the CFO in focusing on sustainability and the associated dilemmas.
As one of the participants in the round table on sustainability, international climate objectives and responsibility within the chain puts it, ‘In the past, we were the polluters and sustainability was regarded as a bad problem.’ Nowadays however, that image has been overturned and the directors have come to realize that they can offer products ‘that will help the world move forward’. To fulfill their responsibility properly, however, they will need to be given time and scope. ‘We need to move away from one-dimensional thinking.’
As Chair of the Jonge Klimaatbeweging (the Youth Climate Movement in the Netherlands), Aniek Moonen represents a generation that is certain to experience the effects of climate change. That is why she is calling upon politicians and businesses to take action now. ‘The long-term perspective needs to play an increasingly important role. That way, we can minimize the pain of climate change for today’s generation and for future generations.’
As one of the participants in the round table on sustainability, international climate objectives and responsibility within the chain puts it, ‘In the past, we were the polluters and sustainability was regarded as a bad problem.’ Nowadays however, that image has been overturned and the directors have come to realize that they can offer products ‘that will help the world move forward’. To fulfill their responsibility properly, however, they will need to be given time and scope. ‘We need to move away from one-dimensional thinking.’
As Chair of the Jonge Klimaatbeweging (the Youth Climate Movement in the Netherlands), Aniek Moonen represents a generation that is certain to experience the effects of climate change. That is why she is calling upon politicians and businesses to take action now. ‘The long-term perspective needs to play an increasingly important role. That way, we can minimize the pain of climate change for today’s generation and for future generations.’