The need for “business positive impact” has never been stronger. In this article, we explore art as a means for the sustainability efforts made by enterprises. In brief:
- As the interest in sustainability grows, companies are searching for new measures to create positive impact in environmental, social and governance areas
- Enterprises engaged in activities with great social impact experience from investors the highest interest
- Business collaboration with the arts is becoming increasingly present and can deliver important value in sustainability ventures
In search of business positive impact
The acceleration of corporate social responsibility (CSR) has never been stronger. In the past few years, corporate leaders have been increasingly focused on this approach and aware of their impact on humanity. The environmental, social and governance rules are experiencing historically high interest worldwide. The emerging taxonomies and regulations in Europe also point out social and environmental issues as irreversibly linked together. Enterprises who embrace this approach can have compelling business positive impact.
A study published by the European Capital Markets Institute has found that companies integrating an ESG approach are recognized to be more resilient in times of crisis. The emergencies of the past few years, including climate change, the armed conflicts and the covid pandemic, have further underlined the strong need for business to consider the sustainability issues. In a recent report linked to the ongoing CSRD directive preparation, an analyst of the European Committee highlights that “the pandemic and the health crisis now ravaging all continents has put the spotlight on vulnerabilities and our dependence on the natural environment. It drives home the message that markets do not operate in isolation, but instead are embedded in societies and the natural environment. This realization will fundamentally change our long-term risk perspective and the way we prepare for the looming climate crisis.”
The regulations across the world follow the trend. Sustainability and financial reporting are about to be placed on an equal footing in Europe.
“A business that makes nothing but money is a poor business”, said the famous Henry Ford. Decades after, we see that saying in action, when companies are looking for new ways and methods to build their business positive impact. Implementation of sustainability strategies can allow entreprises to carry out more efficiently their operations and comply with the expectations of stakeholders and regulators.
Increasingly important social impact
While the measurement of environmental factors of business enters the mainstream approach, international strategy advisors such as Ernst and Young point out that the social factors in sustainability are likely to become increasingly important. Some studies already report that 71% of individual investors want to integrate a positive social impact into their investment objectives.
The social and societal dimension of enterprise activities is often seen as an area more challenging to describe, because its outcomes are not as easy to quantify. Indeed, many characteristics (personnel skills, tacit knowledge, corporate culture and values, business reputation, trust and quality of relations) are playing an essential role in corporate success, and yet can prove difficult to nail down in numbers.
However, the quantification challenge does not make those factors any less critical in building long lasting value and business positive impact. Many methods have been already developed around the subject, such as the WICI Reporting Framework, which introduces the definition of intangibles. In this regard, the WICI approach distinguishes the categories of human, relational and organization capitals.
- businesses are fueled by their human capital and pursue many efforts in this area by improving the knowledge, skills and well-being of people working in a company. This also includes focusing on the employees’ talent, charisma, leadership capacities, humanity, empathy or resilience. In short, the business positive impact is often achieved by creating a great place to work in, and helping employees to build their passion, purpose and meaning of their job.
- companies also improve their efficiency by stepping up the organizational capacities of the organization. This reflects creating business approaches and processes that will leverage the enterprise skills. This field, comparable to the governance aspect of ESG, relies on implementing new procedures and information systems, and it often includes embedding in the organization a new systematic ways to foster innovation, out of the box-thinking and the problem-solving capacity of its team.
- organizations thrive in the supportive business environment. Good connection of the company to its eco-system is essential and often referred to as a relational or social capital of the enterprise. Enterprises focused on that field cultivate trusting and long-lasting relations with their communities and stakeholders. Whether it comes to partners, customers, suppliers, or local communities, they often work towards creating positive impact through volunteering, education and social good campaigns.
The intangible assets are strongly linked to creating value in organization and business positive impact. They are also crucial to ensure a cohesion of the enterprise and its environment. Because of their importance, there’s an emerging need for measures to impact the social areas connected to the enterprise’s activity. This search drives new trends which are are emerging to help in achieving this goal.