February 11, 2021
2021 – When Social Values Meets Company Filed Accounts – are you ready?
In 2017, Emmanuel Faber, CEO of Danone said, “A revolution is cooking, what are we going to do about it?”
In 2019, the Business Round Table, chaired by JP Morgan, said – businesses have responsibilities, not just to their shareholders, but to customers, employees, suppliers and to communities.
Transition from “risk thinking” to “Impact thinking” is now a prevailing force within Equity Investor forums, with $31 trillion diverted from traditional businesses, to those who can demonstrate their ESG credentials and impact
Growing pressures from consumers, supply chains, governments and action groups has meant that businesses can no longer sidestep or ignore the calls for reform, and to integrate their operations with the social values that drive individuals’ behaviours, whole economies, and all communities
In 2019, the Impact Weighted Accounts Initiative (IWAI) was established to ascertain the principles and framework for the filing of Impact reports alongside Financial reports, by all larger companies (500 employees +)
The principle is simple: you cannot manage what you cannot measure
In the near future, GAAP accounts (General Accepted Accounting Principles) will be filed alongside GAIP reports (Generally Accepted Impact Principles)
The measurement systems needed, must be able to demonstrate Transparency, Authenticity and Trust to appear alongside the company balance sheet
When Investors can correlate the business performance with their proven Impact, then the flow of money will move towards those who are performing above the average. Consumer behaviour will then exaggerate the top line, as the flow of consumer choice and spend diverts to those businesses who are able to demonstrate social and environmental IMPACT
There are two main forces, driving this Movement:
Firstly, the consumer, whose voice is heard by the spend patterns they establish. Following and buying from those businesses who can demonstrate and reliably report on ESG principles, connecting with their stakeholders, community, and planet
Secondly, the tsunami of requirement within SUPPLY chains. As with the GDPR regulations, where customers insisted on demonstrable compliance to remain as a supplier, so will this manifest in due course with Impact reporting and values
Estimates of a tipping point, are 50 out of the 500 companies in the Fortune 500 list in the USA, or closer to home, 10% of the spend of the UK Government being based on Impact suppliers.
For more information about measurement, strategy, marketing, and or starting the shift needed to demonstrate Transparency, Authenticity and Trust, contact me philip.webb@investorsincommunity.org or my team info@investorsincommunity.org
