To solve the big problems of this world companies must transform themselves into Impact Enterprises, argues Bart Hartman, founder and Chief Entrepreneur of NOTS.
For a long time we have believed that the world's biggest problems such as poverty, the depletion of raw materials and the ever-increasing mountains of waste, would be solved by governments, the United Nations and NGOs. Unfortunately, they haven’t. On the contrary, these problems are getting bigger and more challenging every day, and we need to fundamentally change the way we address them.
Fortunately the number of people aware of this is growing. Right across the world we see start-ups introducing innovative approaches, and here at NOTS we call them ‘Impact Enterprises’.
We define Impact Enterprises as companies that have the objective to create maximum positive impact – for their customers, employees, business partners and the public at large, as well as for the environment. For an Impact Enterprise, profit, turnover and growth serve as a means to get sufficient capital from investors and to sustain the positive impact generation of the company – they are subordinate to creating maximum positive impact.
Taxi Electric, a company that only drives with fully electric cars, is reducing air pollution in Amsterdam and promoting electric driving. And here at NOTS, our Blue Charcoal project in Mali reduces methane emissions and stops deforestation with an innovative charcoal production method.
These are great examples. But we cannot rely on start-ups alone because their impact is not large enough. Of course start-ups can grow into big companies. But we can’t wait for this; the world’s problems are growing too fast. Therefore the world needs the power of big, established companies. We must convince boards, employees and shareholders of as many companies as possible that the transformation into Impact Enterprises is essential to solving our planet’s big challenges. ‘Impact Entrepreneurship’ must become the new way of doing business – the only way.
You might be asking yourselves if Impact Enterprise is just a new name for Social Enterprise. Not so. The missions of Social Enterprises and Impact Enterprises are different. According to the most commonly used definition, Social Enterprises aim to have a purely ‘social’ impact, whereas Impact Enterprises tend to serve a much broader range of purposes, including environmental.
A second reason is that Social Enterprise suggests that apart from its mission, its business operations and financing are ‘social’ too (grants and donations), which is definitely not the case with Impact Enterprises. A third reason is to explicitly create a link with impact investing, an approach to investing in which investment opportunities are not only evaluated on financial return but on social and environmental return too.
So how to do it? CEOs and shareholders that want to transform their businesses to Impact Enterprises must first redefine their missions and objectives, trading in profit maximization for impact maximisation. Most (listed) companies still maintain profit as their most important objective, but pioneers like Unilever, DSM and Philips are leading by example and showing that things can be different, alongside people like Dominic Barton, Global Managing Director of McKinsey & Company, who has called for ‘Long term capitalism’. This is much more than traditional Corporate Social Responsibility (CSR), which is as positive thing but not embedded right into the core of the business. And of course investors can play an important role here too – by asking companies to redefine their mission and objectives and pursuing impact enterprise goals.
If I have managed to convince you that transforming your company into an Impact Enterprise is a good idea, take a moment, in the shower or behind the wheel in a traffic jam, to think about your company’s different impacts and discuss with your colleagues. Like every kind of change, there will be resistance. People will say that the idea of Impact Enterprises is built on quicksand because you cannot measure impact. That is incorrect. But this does not mean it is easy! If the going gets tough, just be reminded of these beautiful Dutch expressions: ‘If it were simple, it would have been done already’, ‘Where there is a will, there is a way’ and ‘Cannot doesn’t exist’.
Bart Hartman is founder and Chief Entrepreneur of NOTS Impact Enterprises