Swiss Green Economy Symposium 2018
3. septembre 2018
The Swiss Green Economy Symposium 2018 #6th edition ist the occasion to discuss in depth the meaning of sustainable profitability. The innovation Forum #12 questions the possibilities of using performance indicators to measure impacts on society and on environment. ROI ist one tangible indicator but it isn’t sufficient to mesure the impact on society or […]
The Swiss Green Economy Symposium 2018 #6th edition ist the occasion to discuss in depth the meaning of sustainable profitability. The innovation Forum #12 questions the possibilities of using performance indicators to measure impacts on society and on environment. ROI ist one tangible indicator but it isn’t sufficient to mesure the impact on society or environment. What are the best options we have? ROS, ROE,… or different KPIs?
ROI is the indicator we usually use to calculate the impacts of on investment. In our business setup we generally have a strong capability in defining the investment amount but the return is in most of the cases somewhat blur. The main question we raise in business: is it in our budget? If the answer is yes, we go for it. Business cases with a strong analysis of the return on investment of a campaign or project is the exception and when it’s properly done, we always expect macro level and macro thinking.
What do we generally expect from a sustainability investment. By that we mean an investment in a field outside “formal” thinking, outside the scope of a business. This investment isn’t part of the classical account classification and definitely not part of any budget. Sustainable investment has no budget. Therefore the business case is an absolute necessity. The aim of the management is to try making tangible what is by nature intangible. Investment into sustainability belongs for a large part to intangible assets. It’s an investment where we’re not able to exactly measure the return for the business. What will bring this investment in return? As a consequence, we tend to reduce the scope to the fields we know best: reduction of consumables (energy, water), reduction of production costs, reduction of environmental risks… This belongs to 90% to the CSR policy and strategy of a business.
But what about investing for the good into the society, targeting a longer return on investment that could be measured in KPIs like: integration rate of social disadvantage population, level of happiness of a region, amount a disable population having access to public transportation… ? Have we invested enough time into understanding what would be the benefits for society and for a business if the investment would be more societal driven than capital driven?
There is a relationship between Investment into society and ROI and ROS: Investment in society increases the sense of purpose, which increases the identification of employees and fosters emotional loyalty to the company. The translation of the emotional loyalty into KPIs is quite simple: Employee involvement, quality of service, productivity, fluctuation, absenteeism, innovation, customer focus,… The impact on profitability is definitely not to underestimate! Another favourable factor is the reputation increase of the business which have an impact on loyalty, repurchase rate, customer experience, market shares, brand values, new customers (access to market)…
In our business cases and if you have a look at the huge amount of PhD research material in this field, you’ll notice, that the impact of sustainable investment amounts on average:
- -2,7% cost reduction (% of total turnover)
- +4,7% turnover increase (% total turnover)
And we’re not referring to the impact on society itself. This comes on top. Of course this will depend on what business model you choose to invest into society and how deep you’ll be able to root it into your organisation and into the society.
Society.Vision’s business model and approach is one key to take the win-win-win benefits of investing into society. There are big wins for the society, for the employees and for the business!
Have a look at the programm of the innovation forum 12 at the SGES 2018: https://sges.ch/if12-2018/