Blackrock is the world’s largest asset management firm and its CEO Larry Fink just made huge moves for corporate sustainability. In a letter to the CEOs of companies under management, he underscored the importance of a long-term growth strategy that takes into consideration the impact the company has on the world, as well as the impact the world has on the company. All of this is in the name of sustainable financial performance, of course, but since money speaks loudly, this is the connection we as sustainability professionals need.
“Your company’s strategy must articulate a path to achieve financial performance. To sustain that performance, however, you must also understand the societal impact of your business as well as the ways that broad, structural trends – from slow wage growth to rising automation to climate change – affect your potential for growth.”
This nicely resonates with the B Corp Certification and the Public Benefit Corporation (PBC) status in the United States. Companies in the US who have achieved certain standards of social and environmental performance and have been certified as B Corporations are required to re-incorporate as a PBC. To maintain PBC status, you must submit an annual report that outlines how your company has created public benefit, what other specific benefits it has created, and the challenges encountered. The results of the B Corporation assessment can be used as supporting evidence for this annual report. This is the kind of report is that Fink is looking for.
Even if you aren’t incorporated as a Public Benefit Corporation, we can see with Fink’s letter that there is an urging for full articulation of the path to achieve financial performance and all of the factors – internal and external, environmental, social, and economic – may help or hinder that effort. A conversation with the Sustainability Accounting Standards Board (SASB) showed that analysts on the Street are looking for this information in order to accurately assess the potential of a company’s performance. Too often philanthropic or charitable giving vehicles are mistaken for long-term integrated sustainability strategies. The MultiCapital Scorecard helps companies measure progress and disclose financially material information – real information on how their practices impact their financial performance and how they intended to mitigate their exposure to environmental, social, and economic risk.
Not only is this a shift in reporting methods, it is a shift in the way employees view their relationship to work and impact. Enter Positive Impact Pioneers: intrapreneurs who are “positive deviants” and “good rebels” who think constructively and for the long-term, challenging the way business as usual is done. Identifying and tapping into these Positive Impact Pioneers can shift the culture of the company to think in a more integrated manner. We have seen increased performance when the environmental and social factors are connected with the financial bottom line. Employees also report feeling more connected to the purpose, engaged, and prideful of their work.
“Without a sense of purpose, no company, either public or private, can achieve its full potential.”
Contributed by Betsy Fischer, Associate Consultant.